SOA Help

dotexe

Thankyou both. You are spot on.

I may lose £500 worth of reservation fees. But it's nothing compared to what could happen living one rate increase away from trouble.

Another member said elsewhere the market is unlikely to get away with us in the next year. If anything the end of the stamp duty exemption may help drag some prices down. We could hopefully come back with a bigger deposit and aim our sights a little lower and in the long run be a lot happier.

edit: littleskintdragon no I never really thought of that to be honest. I find speaking to these sales people almost unbearable let alone trying to negotiate with them! It's Persimmon. They offered us a 3k discount, 5% deposit and this platinum upgrade package. Wouldn't budge on anything more.

littleskintdragon

Don't b scared, they want your business, don't forget your doing them a favour not the other way around.

Good luck

InDeepDebt

How old are you and your partner?

Will your circumstances change in the future with things like kids, etc?

Do you want on the housing ladder?

How much is your second choice of house?

No one has a crystal ball with regards to the housing market and what the base rate is going to do. One thing is for certain, it will go up in the future (it can't really go down).

If you have a fixed rate at 4.39% then, after 5 years you will still owe £99k.

You have £200 savings per month. If you were to put this on your mortgage you would have a balance of £85k after 5 years. Put some of your overtime and that surplus on there too - making a monthly payment of £1000 and you have a balance of £72k in 5 years. If you can keep up those payments, you'd have paid off your mortgage in 12 years.

I know buying a house is one of the biggest decisions that you will make in life and it is a gamble but, IMO, it is a better gamble than throwing money at rental.

Jim

PS, I did all my workings in excel. If you want the formula - just let me know.

PPS - are you allowed to overpay on your mortgage?

dotexe

We're 26 and 25. So yeah want out of our parents homes and into our own place pretty bad but in order to save up our deposit we've stayed put up til now.

Your calculations do sound pretty good. I checked out the overpayment calculator before but may have read it wrong. IF I can overpay some each month and IF I continue to get overtime that could help.

I know we had hoped to get married and start a family in the next 5 years. That could throw a pretty big financial spanner into the works.

Yes we would be allowed to overpay by up to 500 a month.

Thanks for your help. I thought I had made my mind up to leave it but not so sure again now!

newbutold

I would take another look at the amounts allowed for insurance. £10 a month seems low, especially for buildings insurance.

tallyhoh

gem68 wrote: »

this is a debt free board,for people with debt problems.

as your only debt is mortgage and you have a surplus each month i think maybe move to the mortgage free wannabe board,it would be a little less insensitive!

Totally disagree, having looked at your SOA I see you have a surplus every month;)

rising_from_the_ashes

newbutold wrote: »

I would take another look at the amounts allowed for insurance. £10 a month seems low, especially for buildings insurance.

I think it looks OK as there is also £10 against Contents & £20 / month seems OK to me (as a comparison I pay £15 in total for both)

pennypusher

Hi, I have heard a general rule that if your mortgage repayment is 25% or less of your earnings you should be able to live comfortably with that. Have you thought of perhaps buying a cheaper property so that things are not stretched quite so tightly, or even considered buying the cheaper house you have seen, you should be able to get a deal on it. If you're not good at negotiating get someone who is to do it for you.

As you are concerned about your finances when the 5 year fixed rate is up do you have parents who could help you out if you need their help then.

Also consider how much you would pay in rent for the same sort of property, which seems the best deal for you, buying or renting?

I hope you find a solution that allows you to enjoy your life together and not spend all your time worrying about the finances.

Good luck

InDeepDebt

My opinion...

I would prefer to put my money into bricks and mortor (or wood and render in some of these modern houses) rather than be renting or living with my folks.

There is a risk that the market could crash. They've been saying that for thirty years now and, despite a few ups and downs, overall house prices are still fairly stable. It is a gmble though.
Base rate, who knows? What the OP does know though is that for the next five years his apr is stuck at 4.39%

Right, let's throw some figures at the mortgage.

113k to start paying £621 a month will take 25 years to pay off. He can overpay by £500, so that's £1121 a month. With the surplus plus savings - this is possible. Let's assume that you do this - in five years the capital balance will be about £65k.
Your circumstances change now and you decide to have a baby - you can't pay as much. You could reduce back to £621 a month and finish paying in about another 140 months OR you could remortgage and now pay about £420 a month and finish your mortgage over the original term.

Other things to think about.

You may get a better job or a promotion. Likewise, you may lose your job and get a lesser paid job. You may decide in a few years to move to a larger or more expensive house.

No one knows the future - some things you can help to influence such as your future pay and some you can't - such as the housing market and, to an extent, the apr on a mortgage. However, try to think forward and look to where you want to be when you're 36 - will you want to be in your own house?
What if the base rate goes up to 10% in the meantime - this will probably give a mortgage apr of 12% - how would this affect your repayments in five years time? How would it affect the repayments on a mortgage that you've seriously reduced the capital on.
What if the housing market does crash - are you bothered? If you can keep out of negative equity then does it really affect you?

It's your decision.

Another thought for you to ponder. Have you looked at a ten year fixed or longer? According to the media, they are available (so it must be true). For details of these types of mortgages, I think there is a mortgage board on here somewhere.

[EDIT] - apologies for any spelling mistakes - I'm at work and there's no smell checker on the browser that I use.

dotexe

Thankyou all for your advice.

We've decided to ditch this idea and aim for something smaller and more affordable. It might not be our dream house but we will be able to live comfortably, overpay while the rates are low and won't be scared to death when they rise and stay well clear of that dreaded negative equity.

Just an example. We could buy a house for 105k, get a mortgage for 85k (£420pm) and if we wished to overpay by £400 we'd have the thing paid off by the time I'm 36.

Meanhwhile we are together, able to focus on improving those salaries and who knows, maybe even get married and start a family a little sooner.

We'll get that dream house one day. Just might not be the direct route.