Feeling scared at the amount of debt we're taking on

HAMISH_MCTAVISH

curedham wrote: »

Don't feed the http://en.wikipedia.org/wiki/Troll_(Internet)

Speaking of which, this thread has been linked to from one of those fringe doomer nutcase websites, so expect loads of fake responses trying to scare the OP.

HAMISH_MCTAVISH

cynicalgit wrote: »

What world do you live in?
Wages increasing by 10% p.a !!!
Are you for real?

Don't know about him, but my wages have doubled since 2007, and my OH has seen hers increase by 50%.

Plenty of people still getting good pay rises out there.

Even when "same-job" annual increases are slow, as has been the case for the last few years, career progression and promotion continue more or less as always.

robatwork

What you should do is consider the worst case scenario (well perhaps not worst, but getting there).

If you had to sell your house due to some financial hardship, are you sure you would get £500k or more for it? If that's the case then what you would actually lose would be moving costs, stamp duty, fees etc but at least you would be more or less back to where you are now (oh and mortgage redemption fee if applicable).

So the question you should ask yourself is - are you sure house prices will thrive in Surrey?

Seems to me London and leafy Surrey are pretty bombproof when it comes to house values, but what do I know.

lixandra

FANG wrote: »

What happens if one of you lose your job or become ill. The mortgage is a horrendous amount of money.

I cannot understand why people indulge in this Ponzi scheme and over pay for slave boxes.

FANG

Get insurance.

The rent is also a horrendous amount of money (in some cases higher than mortgage payments), and you still have to pay it if you lose your job and become ill. Plus, it's all money lost. At least some of the monthly mortgage payments go towards the equity (if repayment mortgages).

lixandra

robatwork wrote: »

So the question you should ask yourself is - are you sure house prices will thrive in Surrey?

Seems to me London and leafy Surrey are pretty bombproof when it comes to house values, but what do I know.

Nobody's sure of anything but if there's a drop in house values, good areas are the last ones to go down...

neiluk111

Why has nobody mentioned the impact of interest rates increasing?

What happens then?

constantly_skint

Thanks everyone for your comments, some good advice above.

getmore4less

There are two parts to a mortgage debt

The interest is the rent on the money, you need t o live somewhere so you can compare this to the rent you would pay to live somewhere.

it's not wasted money.

Then there is the capital payments this is the savings(increasing net worth)

what the savings buy you as they increase equity is a rent free future, the alternative is building a pot of cash/pension that will give more income in the future to pay rent.

While you build these pots you are effectively a wage slave.

I think the trick is to make a financial goal and work back to see if it affordable.

A good long term goal is to have enough alternative sources of income or capital you can draw down to retire or start to have choices.

I think it is sensible to have a target much earlier than the normal retirement date as this gives a more secure future and a chance to start living more while still fit and healthy.

As you get older the idea that you will be a wage slave to 65 gets a lot less palatable.

50 is a good target 55 at a push for a decent earner that gives 25-30 years earning.

A 20 year basic plan is : spend 1/3 : save/invest 1/3 : house yourself with 1/3.

After 20 years the saving should be enough to generate the spends.
A 25/30 year plan has room for kids.

One advantage of living in the expensive parts of UK is that there will always be the option to move somewhere much cheaper freeing up cash so the split can be slightly different with more aimed at housing.


Remember the key to financial future is not how much you earn but how much you spend, as income grows try to keep your spending increases at the lower rate, get tempted by flasher cars and better holidays and going out more is less money you can put towards securing your future increasing your net worth and the ability to replace earned income.
( There is a balance)

You also need to look beyond how affordable is the mortgage you also need to factor in your retirement income, to generate a net income of around £20k today you would need a pot of around £400k-£500k what's the plan for that.