First-time buyers opt for longer term mortgages

MrRee_2

All the youngsters taking out 40 year mortgages now are doing it as they are cheaper ....... they know, and we know, that they will not have that mortgage in 40 years.

So, it doesn't matter one jot what the starting length is.

grizzly1911

MrRee wrote: »

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.

This suggests otherwise.



What are the main changes to teachers’ pay? The main changes are:

• removing pay progression based on length of service and linking all pay progression to performance
• giving schools the option of increasing individual teachers’ pay at different rates based on their performance
• replacing the current threshold test for progression from the main to the upper pay range with new simpler criteria
• discontinuing the current Advanced Skills Teacher (AST) and Excellent Teacher (ET) designations, and creating a new pay range for leading practitioners whose primary purpose is to model and lead the improvement of teaching skills
• giving schools more freedom to determine starting salaries of teachers new to the school
• removing any obligation on schools when recruiting to match a teacher’s existing salary.

http://www.education.gov.uk/schools/careers/payandpensions/teacherspayandconditionsdocument/a00218073/q-and-a-21st-report-2012#faq10

Amongst other things.

There will be payscales no doubt as you wouldn't want a junior teacher receiving the same pay as a deputy head surely.

Those payscales will become very blurred through these new policies. It would slo suggest that any pay pot increases will not automatically be received by individual teachers.

Bankers continuing to receive large bonuses continues though.

dotdash79

Maybe the people buying know that it's expensive for the first few years and that keeping outgoings low at the beginning helps them budget (for furniture, unexpected works, etc, etc)

ChopperST

dotdash79 wrote: »

Maybe the people buying know that it's expensive for the first few years and that keeping outgoings low at the beginning helps them budget (for furniture, unexpected works, etc, etc)

We have recently bought our "forever" home and have taken a 35 year term mortgage, not for reasons of affordability but using our monthly required payment as a minimum for the reasons stated above but also we are planning on having a family in the near future and my wife is self employed so while she is off she will not be earning.

In the interim we are overpaying / saving roughly £1k a month to allow us some flexibility into the future. Our mortgage allows 10% overpayments per annum during our fixed term and I'd imagine many others do so the rise in longer terms may not be solely linked to rising costs.

We could have easily afforded a much higher monthly payment and shorter term but taking the mortgage out in this way allows flexibility into the future should we so need...

MFW_ASAP

dotdash79 wrote: »

Maybe the people buying know that it's expensive for the first few years and that keeping outgoings low at the beginning helps them budget (for furniture, unexpected works, etc, etc)

In the old days you could take out an interest only mortgage for the first few years of owning a house and use the spare cash to carry out any renovations, decorating, or to just help while you settle into your new finances. Since the hysteria about IO mortgages they have been removed and so I guess people are trying to make things a little easier for themselves by having longer mortgage terms.

There is no real logic for having 25 year terms anyway. The days when you stayed in the same house, or even with the same lender for the full term of 25 years is long gone. As long as people are mortgage free by the time they retire, that's all that matters.

Before the Nanny State stopped me, I used to always have an Interest Only mortgage. I really liked the flexibility to make overpayments in fest times and have the option to have low monthly outgoings during famine times. I was not alone in doing this.

Rather than making people more financially secure by withdrawing IO mortgages, they have actually done the opposite. Another ill-conceived knee jerk reaction to a non-problem.

ChopperST

Totally agree MFW_ASAP.

I've always had interest only mortgages and made overpayments against the products and saved and invested the difference depending on interest rates.

I guess the financial system is dumbing down to the lowest common denominator so those of us that used interest only to our advantage are penalised for those who "didn't realise" the loan had to be paid back at term.

dotdash79

It looks like people are using this information to say that houses are unaffordable, whilst for some people they are stretching themselves a lot of people are thinking about the future and planning correctly,

wymondham

Mortgages getting to be indefinite ........ isn't this called Rent?

grizzly1911

ChopperST wrote: »

Totally agree MFW_ASAP.


I guess the financial system is dumbing down to the lowest common denominator so those of us that used interest only to our advantage are penalised for those who "didn't realise" the loan had to be paid back at term.

And those that had no intent to provide for capital repayment whether deliberately or through misfortune.

jamesd

wymondham wrote: »

Mortgages getting to be indefinite ........ isn't this called Rent?

No. It's called being sensible and giving yourself the maximum possible flexibility and maximum efficiency in clearing the mortgage with things like pension lump sums or on death from your estate or when your income rises when the state pensions start.