Seniors Please Advice

dimbo61

Why do you think house prices will not carry on rising ?
Yes London prices may start to slow down because they have gone Mad over the last 2 years ( supply and demand)
The rest of the country may well go up even with Interest rate increases ! Not enough new housing and so many people looking for a home.
If you can get a £225K mortgage then you have a very good income and the INTEREST ONLY payment on £225K is £730/750 a month.
If you can save £1666.66 a month ( £20K a year) I think you can afford a mortgage and overpay but it is your call!

mazibee

.Thanks getmore4less & dimbo61

Current rent I am paying is £1,000 PCM

With the job we are doing (all circumstances remain constant we can save approximately £20K year.

At present we have £25K for deposit.

After 5 years I am assuming (£20K x 5 = £100K + £25K = £125K but assuming that we will have £100K after five years)

I am not a number guru and expert in these mathematical mortgage calculations so will like know different scenarios before making one of the biggest decision of my life.

Taking the above mention mortgage with 10% deposit is no problem, but I need to satisfy myself by facts and figures so that after a certain period I don't repent the decision.

R_P_W

mazibee wrote: »

.Thanks getmore4less & dimbo61

Current rent I am paying is £1,000 PCM

With the job we are doing (all circumstances remain constant we can save approximately £20K year.

At present we have £25K for deposit.

After 5 years I am assuming (£20K x 5 = £100K + £25K = £125K but assuming that we will have £100K after five years)

I am not a number guru and expert in these mathematical mortgage calculations so will like know different scenarios before making one of the biggest decision of my life.

Taking the above mention mortgage with 10% deposit is no problem, but I need to satisfy myself by facts and figures so that after a certain period I don't repent the decision.

Yes and also in those five years you will pay over 60k in rent!

gallygirl

R_P_W wrote: »

Yes and also in those five years you will pay over 60k in rent!

But you could consider the £730 per month mortgage interest they'd be paying as rent also.

OP - are there actually houses out there you would like to buy?

Personally I would buy as I would want to know it would be my 'home' - I wouldn't feel like that about a rental property and would always worry about landlord wanting to sell up etc.

It's not just a pure financial decision when buying a house - at least not for most people. Maybe you're over-complicating things by focusing purely on finances?

getmore4less

You rent for £1kpm have a £25k deposit and can save £20k year

Option 1 stay put and save
5 years time
£60k(assuming it does not go up) paid out in rent
£125k in cash


Option 2 buy for £250k

with £25k deposit £225k mortgage

OK lets do the new numbers based on the higher rates from your list.

Using a simple mortgage calculator(see link below)

with 3 different levels of saving/overpaying your range was £75k-£100k over 5 years

£225k @ 3.99% over 20years would be £1362pm.

£20k per year saving is lets says £1500pm add the rent £1kpm so you have £2500pm
(note that some mortgages have restrictions on overpayments)

In 5 years paying £2500pm on the mortgage you will owe £109k, paid off in 9 years.
use the calculator( £225000, 3.99%, 5y, interest only, payment £2500 ->calculate)

If you work on saving up to £100k that's £1250pm + £1k £2250pm, 5 years £126k, paid off in just over 10 years(£2277pm to pay off in 10y)

If you can manage the full £20k per year £2667pm after 5y £98k and paid off in 8y 3m.

to see the effect of rate rises just start at a higher rate for worst case.

eg @ 6% that's 2% rise.

normal payment over 20 years £1612pm

paying £2500 after 5 years £129k and the mortgage is paid off in 10 years


play with a simple calculator,
set to interest only and your potential payments.

http://www.whatsthecost.com/mortgage.aspx

renting a house £1k renting the money £750pm @ 4% £1k pays 5.33%

Depending on the mortgage restrictions you may not be able to overpay as much and will have to save the money, with this level of cashflow I would look at trackers that allow unlimited overpayments and/or offsets, even if rates rocket you can afford the payments(£225k, 20y, 10% is £2171pm)

mazibee

getmore4less thanks for the wonder explanation.

I got every thing except how you are calculating early payoff times.

Thanks again for the explanation.:T

Cyberman60

I'd buy now anyway due to the fact that house prices in all probability will rise over those 5 years, but if possible get an offset mortgage so that any monthly savings/income can offset the mortgage and reduce the necessary monthly payments.

getmore4less

mazibee wrote: »

getmore4less thanks for the wonder explanation.

I got every thing except how you are calculating early payoff times.

Thanks again for the explanation.:T

The term is not relevant except to set up the contractual payments.

What determines how quick you pay off a mortgage is the payment you make, the more you overpay over the contractual payment for full term the quicker the mortgage is paid off.

In a calculator you just use interest only and set the payment you want.

pcgtron

Don't forget, you are also buying a home.
I think you are over analysing this. It's obvious that in your current circumstances, you can afford a mortgage. If I were you, the financial part has been worked out. Now go buy a home.