95% mortgage for a single first time buyer?

Kynthia

In my opinion no-one would buy a house if they looked at interest rates of 15.4% long term, it's better stress test at more likely values. The thing to do is look at what you can borrow, look at what deposit you have, then look at the best fixed rate mortgage you can get now on that LTV ratio. What are the repayments as a percentage of your take home pay? Can you afford to live on this even if unexpected bills come in? Then look at what happens after the fixed term, what LTV would you be by then and what would the repayments be if interest rates were 7% then, could you survive for a while? If things got too tight could you let a room or move out somewhere and let the whole property rather than lose it (try not to buy somewhere that prohibits letting)? If the property was in negative equity for a while is it somewhere you'd be happy to stay for longer, would you outgrow the place in the next 5 years? What's likely to happen to your income over the next 5 years, will there be possible promotion and pay rises, remain static, or likely to decrease with children and childcare costs or the ending of overtime? Are you young enough to borrow over 35 years, overpaying when times are good but having the lower minimum repayment should times be not so good? Then when you've chosen somewhere you can afford, take the plunge. It's always scary.

Jaunty_One

Kynthia wrote: »

In my opinion no-one would buy a house if they looked at interest rates of 15.4% long term, it's better stress test at more likely values. The thing to do is look at what you can borrow, look at what deposit you have, then look at the best fixed rate mortgage you can get now on that LTV ratio. What are the repayments as a percentage of your take home pay? Can you afford to live on this even if unexpected bills come in? Then look at what happens after the fixed term, what LTV would you be by then and what would the repayments be if interest rates were 7% then, could you survive for a while? If things got too tight could you let a room or move out somewhere and let the whole property rather than lose it (try not to buy somewhere that prohibits letting)? If the property was in negative equity for a while is it somewhere you'd be happy to stay for longer, would you outgrow the place in the next 5 years? What's likely to happen to your income over the next 5 years, will there be possible promotion and pay rises, remain static, or likely to decrease with children and childcare costs or the ending of overtime? Are you young enough to borrow over 35 years, overpaying when times are good but having the lower minimum repayment should times be not so good? Then when you've chosen somewhere you can afford, take the plunge. It's always scary.

I think this is great advice Kynthia. Thank you so much!!

mrluke

In my opinion i don't think the base rate is going to change any time soon .

Look at Japan's as an example .

On the current H2B 5% deposit , i think the two year fixed seems a good deal . I think natwest's is ( 5% fixed ) and then is currently 4% SVR , so 3.5% over base rate .

There current 5 year fixed deal is 5.5%

So once you go onto the SVR ( if the BOE stays the same ) you will have a 2.5% leeway . I cant see the BOE jumping such a large amount , they will bring it up gradually to stop an economy melt down ! .

Angie_B

Jaunty_One wrote: »

Maninthethestreet: My average pay this year, since I was promoted in July is around £2580 a month. I've factored in all bills/council tax except home building/contents insurance if I'm honest. Not sure what a reasonable amount would be so I made an assumption that it would be about £50 a month. Was supposed to get a realistic figure and return to that budget!

Is that £50 a month for all bills? Or just for the building/contents insurance?

Also, if you are looking in London for under £250k you are undoubtedly going to be looking at flats, therefore you need to factor in ground rent and service charges as well, which can easily be another £100+ a month.