Good time to get a mortgage?

englandcrew

Hi, Im hoping to get some views on whether I should get a mortgage.

Me and my partner have £37.5k in savings and earn around £40k combine salary a year.

People keep saying now is the best time to get a mortgage, is this correct. I appreciate its probably not a yes/no situation but any views/experience would be greatly appreciated. Thanks

originalmiscellany

Well key questions:
a) What's the cost of the house?
b) Do you have any unpaid debts?
c) Any late payments in the past few years?
d) Can you survive if interest rates rocket to a norm of 5% or an abnormal 10%?

englandcrew

a) Looking at around 150k roughly.
b) No debts at all, only commitments are car insurance/ phone, the usuals
c) No late payments between us ever
d) We couldnt survive if they hit 10 %

Would you recommend fixing the rate for reassurance?

originalmiscellany

So then - quick calculations:
House 150k - 37 = 113k mortgage.
It will be under 3 times your joint salary which is pleasing.

So then, I feel... and it's just my thoughts:
interest rates are going to be low for a few years to go then rocket to normal levels quickly...
Current mortgages are higher than the "best ever", so I'd be tempted to fix at 5 years and aim to get in the habit of saving as much as possible, as overpaying on your mortgage from the word go will be the best thing you can do!

I wish I'd overpaid (even £25 a month) from the word go, as it would have sped up my mortgage free day even faster.

originalmiscellany

http://www.moneysupermarket.com/mortgages/
HSBC - 3.28 for 5 years is a fantastic deal! but does have a huge set up fee of 2,000...

Thrugelmir

englandcrew wrote: »

People keep saying now is the best time to get a mortgage, is this correct.

If the right property comes along to make a home at the right price then its the time to buy.

Tomorrow it may be sold.

englandcrew

originalmiscellany wrote: »

http://www.moneysupermarket.com/mortgages/
HSBC - 3.28 for 5 years is a fantastic deal! but does have a huge set up fee of 2,000...

Is that the 60%LTV one? If so I dont have a 40% deposit

Thanks for your replies. Judging from feedback, its upto indivivdual circumstances whether it is right or not. We will keep looking for a house and see what comes along

HappyMJ

englandcrew wrote: »

Is that the 60%LTV one? If so I dont have a 40% deposit

Thanks for your replies. Judging from feedback, its upto indivivdual circumstances whether it is right or not. We will keep looking for a house and see what comes along

40% is a big deposit but if you have at least 10% the interest rate is about 5% for 5 years which is still quite good.

Anonmouse

If you have £37,500 buying a £150k house then you have 25% equity, 75% LTV.

My preference - you really need to make your own decision - was to opt for a tracker mortgage to take advantage of the currently low base rate, HSBC Lifetime tracker is 2.99% (+up to £599 fee) or 3.29% fee free. This would make a minimum payment of £475 over a 30 year term which I am assuming should give plenty of room to move when the interest rates jump.

This mortgage has no limits on overpayment and no early repayment charges at all - so I am currently overpaying as much as possible to increase the equity and then aim to remortgage either with an increased LTV to secure a better rate or to fix when I feel I need to cap payments within my budget.

Would not recommend this route unless you will make overpayments early on as long term it is an artificially low minimum payment.

englandcrew

Anonmouse wrote: »

If you have £37,500 buying a £150k house then you have 25% equity, 75% LTV.

My preference - you really need to make your own decision - was to opt for a tracker mortgage to take advantage of the currently low base rate, HSBC Lifetime tracker is 2.99% (+up to £599 fee) or 3.29% fee free. This would make a minimum payment of £475 over a 30 year term which I am assuming should give plenty of room to move when the interest rates jump.

This mortgage has no limits on overpayment and no early repayment charges at all - so I am currently overpaying as much as possible to increase the equity and then aim to remortgage either with an increased LTV to secure a better rate or to fix when I feel I need to cap payments within my budget.

Would not recommend this route unless you will make overpayments early on as long term it is an artificially low minimum payment.

Thats a good option and something I have never considered before. How much overpaymetns a month would be needed to make it worth while?

Not sure my partner could handle the risk of a tracker mortgage tho!:eek:

Anonmouse

englandcrew wrote: »

Thats a good option and something I have never considered before. How much overpaymetns a month would be needed to make it worth while?

Not sure my partner could handle the risk of a tracker mortgage tho!:eek:

The point is that you pay what you can afford, if the base rate went up to 5% then repayments would be about £800 - so if you aimed to pay this each month it would shorten the mortgage whilst rates are low and you would be used to paying that amount when rates rise. If an emergency happens and you need money one month then you have flexibility to only pay £475, likewise if you come in to some extra money you can overpay with no penalties.

Important note: allow £500-£1000 to build up in an instant access saving account to act as a mortgage emergency fund before putting the overpayments against the mortgage.