chat with mortgage advisor

In_For_A_Penny_2

lisyloo wrote: »

Agree aardvark - as rates have fallen prices have risen.
However I've always said it was primary done for the banks/ business and not primarily for. Indivividuals or the housing market.

Still waiting to have the main point elaborated as to why it's unaffordable if the calcs show it can all be afforded under stress conditions ??

The OP is getting a bit of a hard time on this one. I agree with OP sentiments - To have £50 left over at the end of the month is living a pretty tight budget. . . ok, so you reckon everything is factored in but a broken down car/boiler/ etc not to mention inflation is not a position I would want to find myself in. Not sure why you find that so hard to understand.

Maybe you're arguing over semantics and what "affordable" means? Ok, its affordable - just about. A precarious financial position to be in if you ask me.

lisyloo

Sorry if you think that - I'm just trying to understand.
I find it hard to understand because it's not been elaborated on.

Inflation ( on the main mortgage bill) is included as discussed to 7% which is a pretty high stress test.
There might be an assumption that wage inflation covers other bill inflation. Is that a concern? Possibly.
If things like car & household maintenance aren't included then that's an issue, similarly pensions, life insurance, clothes, gifts, entertainment, holidays etc.

No I don't think this is semantics,
The details of what is and isn't included are crucial to whether this is affordable of not, but no-one seems to want to elaborate on that.

I'm sorry if you think that's being difficult. I call it discussion/education.
I simply can't see how anyone can judge whether it's affordable or not without examining the basis.

I would still like to know, what significant expenses are missing from the costs that make the calcs unfit for purpose.
My motivation is learning so sorry if it came across in any way as point scoring.

If it is unaffordable the I'm simply asking to know why.
What items are missing from the calcs?

From my own point of view I think it's reasonable to sacrifice holidays.
I don't think it's realistic to sacrifice pensions, insurance, clothing, household maintenance, car maintenance, going out, gifts (pbirthdays & Xmas) , clothing etc. Modest budgets are ok but to pretend you're never going out of never buying any clothing is unrealistic.

The way the calcs are done is fundamental and not picky semantics.

What would be really handy to aid understanding is to know what major items are missing from those of you who believe it's unaffordable.

In_For_A_Penny_2

Lisyloo - Agree - I too am interested in how it is all calculated, I'm guessing there is a degree of variability in what various mortgage providers factor into the equation.

My concern with all of this is that, even factoring in for fairly liberal potential interest rate rises (up to 7%?) and including all the things you mentioned - there are still a lot of unknowns and certain outgoings that are impossible to predict.

The current imbalance between rising inflation and below inflation wage increases means that £50 left over at the end of the month is a concern going forward. Its would be too narrow a margin for me personally to be happy to proceed.

Do people get a written report at the end of their mortgage application to see what was included?

Carl31

lisyloo wrote: »

If that is AFTER 7% interest rates i.e. worst forseeable case and all living expenses are included then I don't understand what the issue is.

Can you explain why you think there is a problem if all expenses and rising interest rates have already been accounted for?
What scenario are you forseeing that I'm missing?

Well - my understanding is that it includes the worse case scenario on interest rates and all living expenses and they STILL have money left over.

Why do you think it isn't affordable?

I'm open to the possibility I've got something wrong but please elaborate so I can understand.

No, this is based on applicants current situation. Ie before rate rises

hence why iI thought it odd, as I went in thinking our 'buffer' would be too low. Buffer also being before potential rate rises.

To clarify, the impression I got was that this particular institution was ignoring the stress test, and lending a bit wrecklessly, given what happened in 2007, I found it a little concerning

HAMISH_MCTAVISH

Carl31 wrote: »

No, this is based on applicants current situation. Ie before rate rises

hence why iI thought it odd, as I went in thinking our 'buffer' would be too low. Buffer also being before potential rate rises.

To clarify, the impression I got was that this particular institution was ignoring the stress test, and lending a bit wrecklessly, given what happened in 2007, I found it a little concerning

I reckon your advisor is talking nonsense..... Or you've got the wrong end of the stick.

All mortgages today have to be stress tested to 7%+, unless they're already an expensive 5 year fixed. But even then, most institutions are stress testing.

noodle_doodle

Carl31 wrote: »

I went in thinking our 'buffer' would be too low. Buffer also being before potential rate rises.

What size of mortgage are you getting where a rate rise may cost you another grand a month? :shocked:

Bantex_2

Thrugelmir wrote: »

The whole point of good mortgage lending is to lend to the best risks and minimise repossessions. Simply isn't profitable enough otherwise.

Are you sure, think mortgage securities are still being traded worldwide.