First-time buyers opt for longer term mortgages

Graham_Devon

CLAPTON wrote: »

Yes, life is a bit of a risk. None of us know for a fact we will be alive tomorrow.

However, such advice would have held good even over the last 5 years.

- interest rates have dropped like a stone so even if one's income had stayed static, the mortgage payments would have dropped significantly as a proportion of income.

- and as I've tried to explain to you, even where pay rates stay static, a great many people have benefited from the effects of pay scales and promotions thus increasing their incomes.

-mortgage forbearance has eased the problems even for people whose financial circumstances worsen

-if those hadn't taken out mortgages back then they would have wasted lots of money on rent and be no nearer being property owners.


Given where we are, it makes excellent sense for young people with reasonable job prospects to buy rather than rent.

I was asking whether your specific angle on wage inflation would have held firm should have have suggested the same in 2007, which, for all intents and purposes, I can't see why you wouldn't have.

Not whether the good fortune of the recession saw a gamble play off purely because of forbearance and low interest rates.

J_i_m

The way I see it from my perspective a longer term mortgage doesn't necessarily enable you to buy a more "expensive" property.

The most practical part of the flexibility is that it could bring down a monthly repayment and therefore be more "affordable" in real day to day life terms.

I'm of the position that I'd rather pay more in the long term (i.e. higher total cost) if it meant that I was paying a smaller monthly installment and would have less pressure on my budget in a real time monthly basis.

It's not about the end cost to me, it really doesn't worry me if I end up having to pay x grand more in interest with a 30 year term than a 25 year term, it's the real time affordability now today that I'm concerned with.

A longer term mortgage can lower monthly repayments and therefore it's more "affordable". It's no good having a smaller total cost figure if you can't actually meet the installments

When I buy my first property, I am far more likely to opt for a 30 year term (over a 25 year term). Because I believe it would offer me in my circumstances the best flexibility that I would need.

If I end up being in a position to "overpay" and settle the mortgage early then brilliant, yet equally I might also elect to direct that part of my income to savings to be used for something else (i.e. another deposit on my next property, retirement fund etc).

I really don't view longer terms as either more risky or irresponsible than shorter terms. I think it all comes down to the circumstances of the individual (or couple) buying the property.

Thrugelmir

wotsthat wrote: »

A 30% increase in pay over 10 years is only about 2.5% pa.

Average pay for the majority is running at around 1%.

With deficit issues to deal with. The Government of the day is unlikely to lift the downward pressure on public sector pay. Automatic incremental grade increases are going to.

CLAPTON

Graham_Devon wrote: »

I was asking whether your specific angle on wage inflation would have held firm should have have suggested the same in 2007, which, for all intents and purposes, I can't see why you wouldn't have.

Not whether the good fortune of the recession saw a gamble play off purely because of forbearance and low interest rates.

why have you deliberately missed out my comment on the increase in wages?

what's the point of doing that?
If you disagree then fine say so. but why distort what I have said?

Graham_Devon

CLAPTON wrote: »

why have you deliberately missed out my comment on the increase in wages?

what's the point of doing that?
If you disagree then fine say so. but why distort what I have said?

Nothing has been distorted. I am clearly responding to your initital comment which was...

CLAPTON wrote: »

rubbish even now but we are talking medium term 5 or 10 or more years

plus of course inflation will reduce the debt by at least 30% over 10 years but probably much much more

I do disagree and have given you reasons why.

CLAPTON

Graham_Devon wrote: »

Nothing has been distorted. I am clearly responding to your initital comment which was...


I do disagree and have given you reasons why.

I don't mind a sensible debate but reread your post above #32

the_flying_pig

40 years, for anyone who's well into their twenties or older, would be fairly stupid, though not nearly as bad, of course, as IO with no repayment vehicle.

i took out a 20 yr mortgage last year at the age of 36, so as maths fans will realise it won't be paid off til i'm 56, and i wasn't *entirely* happy about that, i toyed with the idea of making it a 15 yr mortgage instead, which would have bumped up monthly repayments of course.

IMO having your mortgage paid off by 50 is a great aspiration that realistically will be beyond many people. but having it paid off by 60 is a near necessity.

it's daft to think that most or even many people are going to be able to carry on working productively into their seventies. the story from last week about the actor jack nicholson retiring was a good reminder of that - http://www.mirror.co.uk/3am/celebrity-news/jack-nicholson-quits-acting-because-2252428

CLAPTON

the_flying_pig wrote: »

40 years, for anyone who's well into their twenties or older, would be fairly stupid, though not nearly as bad, of course, as IO with no repayment vehicle.

i took out a 20 yr mortgage last year at the age of 36, so as maths fans will realise it won't be paid off til i'm 56, and i wasn't *entirely* happy about that, i toyed with the idea of making it a 15 yr mortgage instead, which would have bumped up monthly repayments of course.

IMO having your mortgage paid off by 50 is a great aspiration that realistically will be beyond many people. but having it paid off by 60 is a near necessity.

it's daft to think that most or even many people are going to be able to carry on working productively into their seventies. the story from last week about the actor jack nicholson retiring was a good reminder of that - http://www.mirror.co.uk/3am/celebrity-news/jack-nicholson-quits-acting-because-2252428

If one takes out a 30 or 40 year mortgage you are not chained to this mortgage for that period.
One can simply overpay once your earnings and/or expenses allow.

a long period is simply a way of minimising the payments during the early years

chucky

Graham_Devon wrote: »

Jesus that's poor. So much so you are not even trying to hide your twisting anymore.

Now that's desperate. You really are trying to say someone else twisted something.

What this man said, this is becoming more and more common with you...

CLAPTON wrote: »

why have you deliberately missed out my comment on the increase in wages?

what's the point of doing that?
If you disagree then fine say so. but why distort what I have said?

MrRee_2

Thrugelmir wrote: »

Average pay for the majority is running at around 1%.

With deficit issues to deal with. The Government of the day is unlikely to lift the downward pressure on public sector pay. Automatic incremental grade increases are going to.

Incremental rises going? Not in my lifetime ........ look at Teachers, they still have payscales, still climb them automatically, this isn't changing with the new pay agreement either as all schools will retain scales. It stinks, but that's the truth.