MSE News: Government house buying scheme launched

ILW

RenovationMan wrote: »

They seem to be saying that you shouldn't have kids until you have bought a house. Considering that the average age of a first time buyer is 38, it seems that we will have a lot of geriatrics turning up with their kids at University Graduations.

Could be a bit of chicken and egg there. The reason FTBs cannot save for a deposit is because they already have the kids. An average working couple without children should be able to save £1000 per month if they want to.

RenovationMan

spikyone wrote: »

But that's exactly what the proposal is about, making it easier for people who can't really afford a house - whether they already have a property or not - to get a mortgage.

A lot of families can perfectly afford to buy a house, they are already paying far more in rent than they ever would in a mortgage. They just don't have enough left over each month to get a huge deposit together.

The answer is to have better tenancy laws but, just like 'reasonable' house prices in the South East, it isn't going to happen.

The_J

RenovationMan wrote: »

A lot of families can perfectly afford to buy a house, they are already paying far more in rent than they ever would in a mortgage. They just don't have enough left over each month to get a huge deposit together.

The answer is to have better tenancy laws but, just like 'reasonable' house prices in the South East, it isn't going to happen.

Exactly, I cannot for the life of me work out why people don't understand this?

GMS

The_J wrote: »

Exactly, I cannot for the life of me work out why people don't understand this?

Because there are agendas for different people who want house prices to crash in order to buy for the perceived 'correct' price. Years of rent payments waiting for the crash which could have paid for half of the house are forgotten.

Property needs to be viewed as a home, a place to sleep and keep the rain off your head. They are not investments unless you are able to sell them. You can't sell your home without buying another so it is not an investment.

The usual 'save more' line is beginning to wear thin. People are being squeezed for every penny they have and if rent costs more than a mortgage then how can they be expected to save?

As long as the lender and the buyer are happy with the terms and the risks involved then that should be the end of the matter. These loans will be strictly underwritten and available only to the applicants who can demonstrate good financial history. Therefore even IF there is negative equity there is nothing to suggest they would walk away from a/ their home and b/ their financial commitment.

Unfortunately some people will refer to every single incentive and stimulus as a scam.

Idiophreak

brit1234 wrote: »

What happens when the current student population come out with £60k of debt instead of about £30k at the moment, how will they buy?

They won't pay any more each month, so it won't really make a huge difference...?

spikyone wrote: »

OK, look at it this way - if you can't afford to (or simply won't) save for a deposit, what evidence is there that you're financially savvy enough to manage a mortgage? Don't forget that on top of the mortgage there are bills, maintenance costs, etc, etc that are an additional drain on a FTB's expenses, and one which a lack of deposit shows they may be unprepared for. Moreover, if you have only a 5% deposit, your payments will rocket if/when interest rates return to a more normal level. Setting a higher deposit requirement is simply protecting people from themselves!

Sometimes, I like to imagine a world where everyone has 100% mortgages and someone introduces a 90% mortgage on a lower rate. "It's a con!" cries brit1234 "it's just a way of banks holding *your* money to manage *their* risk!"

Anyway, on the above, your suggestion is a little patronising, really. Why is someone any less capable of managing their household finances when buying than when renting? Rentals don't require a 50k deposit "as evidence of your financial savvy". And if you're worried about exposure to interest rates, what would be wrong with scaling up the multiplier with the amount of deposit? So you can borrow 2.5 times your wage with no deposit, 3 times with 10% and 4 times with 25%...

My wife and I, like a lot of young FTBs, have good wages and could *easily* afford a 100% mortgage on a decent property...and I really don't see any issues, for us, with doing that...Yes, we'd pay interest on the full amount, but that would be our choice. Why should we have to waste 10 years renting just to "prove" that we can afford it?

The only reason for banks applying LTVs < 100% is for their own protection (which is quite understandable!)....people on this board really need to stop making out like it's in the interest of the consumer.

I wonder if someone will start selling gap insurance for 100% mortgages...

ILW

Idiophreak wrote: »

They won't pay any more each month, so it won't really make a huge difference...?



Sometimes, I like to imagine a world where everyone has 100% mortgages and someone introduces a 90% mortgage on a lower rate. "It's a con!" cries brit1234 "it's just a way of banks holding *your* money to manage *their* risk!"

Anyway, on the above, your suggestion is a little patronising, really. Why is someone any less capable of managing their household finances when buying than when renting? Rentals don't require a 50k deposit "as evidence of your financial savvy". And if you're worried about exposure to interest rates, what would be wrong with scaling up the multiplier with the amount of deposit? So you can borrow 2.5 times your wage with no deposit, 3 times with 10% and 4 times with 25%...

My wife and I, like a lot of young FTBs, have good wages and could *easily* afford a 100% mortgage on a decent property...and I really don't see any issues, for us, with doing that...Yes, we'd pay interest on the full amount, but that would be our choice. Why should we have to waste 10 years renting just to "prove" that we can afford it?

The only reason for banks applying LTVs < 100% is for their own protection (which is quite understandable!)....people on this board really need to stop making out like it's in the interest of the consumer.

I wonder if someone will start selling gap insurance for 100% mortgages...

Why can you not save a deposit over the next few years?

Idiophreak

ILW wrote: »

Why can you not save a deposit over the next few years?

I could, obviously. But why *should* I? I'd be paying more each month in rent, I'd not be building any equity and I'd not have the stability owning a home provides.

ILW

Idiophreak wrote: »

I could, obviously. But why *should* I? I'd be paying more each month in rent, I'd not be building any equity and I'd not have the stability owning a home provides.

Only for a few years though. do you really want to buy, or not?

You go with the situation as it is at the time.

spikyone

RenovationMan wrote: »

A lot of families can perfectly afford to buy a house, they are already paying far more in rent than they ever would in a mortgage. They just don't have enough left over each month to get a huge deposit together.

What they're actually doing is paying more in rent than they would be with a mortgage with 0.5% base rate. If base rate hits 5% those families will probably be paying about the same amount. That's what I mean by affordability; not just "can I pay for it right now" but "can I pay for it into the future". Just look at the numbers from last week's news story on SVR increases - on a £150k mortgage, an increase from 3.5% to 3.99% works out at an extra £50 a month. It's not hard to see what happens if base rate goes back to a more realistic 5-10%...

Idiophreak

ILW wrote: »

Only for a few years though. do you really want to buy, or not?

I've bought already, on shared equity (I know, boo, hiss, right?)...Meant I could own the home now, instead of in a few years time, start paying off the mortgage and enjoy lower monthly payments.

I'm the "want it all, want it now" generation - and quite unapologetic for it. If there's a good reason for not having something now, I'll happily wait...but that's just not the case with buying a house...