The pros and cons of mortgage

blomboy

I have a new job to start in 2012 which pays me 30K a year and I have enough cash saved for a 10% deposit on a house I have seen worth £170K, but I am still in two minds whether to go for a mortgage or just stick to renting, which is what I am used to..
Is going into a mortgage a good thing to do with my money? This is my first well paid job and something I am happy to stick with for a number of years, the main problem I see is that I will be paying roughly 1K a month on a mortgage and can easily rent a place for much lower.. Do mortgages actually benefit personal finances, is it a good time to get into the market and all those other noob thoughts keep cropping up, do you have any suggestions whilst I intentionally steer clear from the advise of high st mortgage advisors?
Thanks
JB

_Andy_

You'll struggle to borrow that high a multiple of your salary.

thomasdown

_Andy_ wrote: »

You'll struggle to borrow that high a multiple of your salary.

Totally agree with the above. Don't listen to a lender if they say they will lend you 5x your wage because even if they did (which they wont) the repayments will be very high! Put it this way me and my fiancee borrowed just over 3x our joint salary and got a 5 year fix mortgage with HSBC (£190k mortgage) which was the best rate and still is around for 10% deposit and the repayments on a 25 year term are £1073. My advice keep saving or find a place for your salary of about £115k max?

Wh05apk

If you want a house of your own, it's a good time, if you are looking as a financial investment, you could probably do better, a mortgage is simply a way to buy a property, I suspect that as you are needing to ask, you probably don't have your heart set on owning your own property at the moment, so renting (particularly as you have a new job) could be better for you.

Odette

Also it sounds like your single maybe or have no commitments? Life can change pretty quickly and you might want to up sticks and move. Having that freedom at the moment sounds (from what little I gathered from your post) to seem valuable to you atm.

HTH

jamesd

Are you renting a house now? More likely a flat. Buying a flat on a mortgage is likely to be a good move. Better still if you can do it with 25% deposit and interest only so your expenditure may be reduced compared to renting.

If your interest cost plus general homeowner expenses exceeds your rent it's not making you better off. So normally in a flat or declining market you'd start with a cheap place to maximise the amount of money that you can save or accumulate in equity.

In a rising market you might push to buy the most expensive property you can afford in the hope of making a profit on a larger amount of money.

Buying so soon after the prospective start of a new job doesn't seem like a good move. Too much risk to the job at the start.

Southend1

You won't be able to afford repayments of £1k/month on a £30k salary. Your take home will be just under £1,900 per month (less if you pay pension contributions/union subs etc). Once you factor in c. tax, utility bills etc etc there won't be a lot left for food etc. And what happens when interest rates rise?

s_glover

Spam, and has been reported as such

blomboy

I am taking all your good advice to heart. I reckon the best thing I can do is find myself a cheap and cheerful property to rent and keep saving for a better chance at offering a larger deposit.
Thanks folks!

newdud

£30k Pa income and you expect to pay £1k per month in mortage payments !
This a very high propotion of your income gone before you have done anything

You should set your sights lower