Taking the biggest mortgage i can out

puregeordie

Love your title as a FTB. :eek:

Taking the biggest mortgage out in what many think is still a slowly declining housing market, good luck to you and sounds like you've already made your mind up. Maybe doing what some suggest maybe a better step, then you can step up the ladder when things are certainly getting better, and that way your covered and getting equity built up. Just my 2p, but good luck whatever you choose.

P.

EvilJaz

I'm far from making my mind up unfortunately.

What i am seeing is this. House prices in the next 5 years will only go up. If i buy a cheap flat i WILL have to 'upgrade' in three years. Then go through all the hassle an additional costs of moving out.Say finding a new house and all associated costs with selling the flat. Could be looking at £7,000?. With the house say near the £250k mark this year in 5 years that is likely to be over the 250k stamp duty mark and that alone would be £7,500+ stamp duty.

Which would equate to having to save £200 a month more to afford this. Based on the stamp duty being 1%.

Taking two different mortgages:

165k (cheapest) Flat meaning a 140k mortgage which would mean monthly repayments of £598.

or say 240k which would mean monthly payments of £1,014 but no need to move any time soon.

I've been reading other topics (for some reason they all seem to be American) from Google searches. And they are stating things like the mortgage should be more than 30% of your net income. I'm guessing being told a rough guideline by an 'expert' would be great. Percentage wise, what do you guys spent on your mortgage against next income (backdated to when you first took your mortgages out?)

Many many thanks

bigadaj

Why do you think house prices will go up, record low rates currently and prices have been flat for years, if rates did go up then prices would fall. Not probable but not impossible.

EvilJaz

Because in my area they are still going up?

By rates though i'm assuming your referring to interest rates?

Everything i've seen an looked into have all pointed that interest rates for the next 2 years will not go up. Just last week were there not discussions about negative interest rates?.

puregeordie

EvilJaz wrote: »

Everything i've seen an looked into have all pointed that interest rates for the next 2 years will not go up. Just last week were there not discussions about negative interest rates?.

Could even be as long as four years many people think.
http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html

Doesn't mean that house prices would dip further, nobody knows really, Personally I was planning to move soon but decided not to and build up more equity until things appear to be better generally, that way I know I will be in an even better position and feel better about the whole situ.

Also I do think houses prices have just about bottomed but just a slight dip further is not out of the Question.

EvilJaz

Yeah don't think there's going to be much change in interest rates any time soon.

I am thinking ill try save up some equity to get to 80% LTV and then the mortgage may not seem so daunting. At current rate will hit that in about 6 months time.

Guess i got to kick my savings plan and try get that down to like 4 months

motch

EvilJaz wrote: »

I'm far from making my mind up unfortunately.

What i am seeing is this. House prices in the next 5 years will only go up. If i buy a cheap flat i WILL have to 'upgrade' in three years. Then go through all the hassle an additional costs of moving out.Say finding a new house and all associated costs with selling the flat. Could be looking at £7,000?. With the house say near the £250k mark this year in 5 years that is likely to be over the 250k stamp duty mark and that alone would be £7,500+ stamp duty.

Which would equate to having to save £200 a month more to afford this. Based on the stamp duty being 1%.

Taking two different mortgages:

165k (cheapest) Flat meaning a 140k mortgage which would mean monthly repayments of £598.

or say 240k which would mean monthly payments of £1,014 but no need to move any time soon.

I've been reading other topics (for some reason they all seem to be American) from Google searches. And they are stating things like the mortgage should be more than 30% of your net income. I'm guessing being told a rough guideline by an 'expert' would be great. Percentage wise, what do you guys spent on your mortgage against next income (backdated to when you first took your mortgages out?)

Many many thanks

I'm glad you stated your first sentence, before starting your next paragraph.

There's no guarantee house prices will rise in the next 5 years. Most areas have been flat on average for the last few years (London and a few other areas admittedly a different case) and this is with everything thrown at it to stop the drops.

dotdash79

The thing is what if you buy a place and you discover that you need to do major works in the first couple of years. How will you afford that?

I've worked with someone who was living close to the edge and they had one little thing crop up (broken bolier) and it snowballed to them being made bankrupt and losing everything including job.

shortchanged_2

dotdash79 wrote: »

The thing is what if you buy a place and you discover that you need to do major works in the first couple of years. How will you afford that?

I've worked with someone who was living close to the edge and they had one little thing crop up (broken bolier) and it snowballed to them being made bankrupt and losing everything including job.

There's many people on here who would say that is ridiculous. But debt can seriously snowball out of control. All it takes is for a few expensive things to happen then bang before you know it you have an out of control mountain of debt.

dotdash79

shortchanged wrote: »

There's many people on here who would say that is ridiculous. But debt can seriously snowball out of control. All it takes is for a few expensive things to happen then bang before you know it you have an out of control mountain of debt.

It didn't happen overnight but over a couple of years, it was horrible like watching a car crash in slow motion. It was also like he was having the worst run of luck ever. He bought a diesel car to save money in fuel, turned out he had bought a stolen car and had it took off him.