Is it really that hard?

princeofpounds

I love the way people use variable rates and nominal rates on mortgages, as if that gives any real indication of the lifetime cost or more importantly real-terms cost of a mortgage...

Linton

lisyloo wrote: »

I think it's harder for young people now to get good career jobs.
There's far more competition because we are educating about 50% of the population to degree level, plus immigration, plus we can offshore (I'm not saying those things are bad per se).
House price are high without doubt which makes it hard for people to save for pensions and I'm concerned about a time bomb there but politicians dont' see concerned with anything but the short term.

Of course moaning has now gone to greater levels because we have social media.

I think it's harder and I have no vested interest in saying that.

I dont think it is, overall, harder for young people to get good career jobs. In my day most young people simply didnt have the chance whereas the few who reached university and studied a usable subject were more or less guaranteed a good job. So for most people the choices are far better now than they were say 50 years ago.

The mistake people make is to equate the niche value of a university degree then with one now. It is simply meaningless for the young to compare their hard life as poorly employed graduates with the life of their university educated parents/grandparents. Had they been alive then they probably wouldnt have gone to university.

Maelwys

princeofpounds wrote: »

I love the way people use variable rates and nominal rates on mortgages, as if that gives any real indication of the lifetime cost or more importantly real-terms cost of a mortgage...

I think that's why some posters have been quoting their earnings and mortgages here so that we can work out a rough idea of what their repayments were as a percentage of their take-home pay?

I'll generally quote my Fixed rate figure, as I know that's what my mortgage interest rate is going to remain at until I switch to another deal. I suppose I could quote the post-fixed-period variable APR rate, or the average APR over the entire term, but since I'm not going to keep the mortgage after the fixed rate expires, those figures are kind of meaningless.

(If rates go up, then rates go up. In which case I'll still aim to find the least expensive rate out of the available deals when my fixed period ends; and if that rate is higher than the interest rate I'm getting post-tax on my savings then I'll start overpaying the mortgage instead of saving my excess money!)

chewmylegoff

Generali wrote: »

Do grads actually earn £40k? As half of kids are now going to Uni it seems pretty unlikely that many of them are earning about 50% above the median household income.

I can think of a couple of ways that you could walk out of Uni (with a maths/IT PhD) into a job earning a solid 6 figure sum but there are probably fewer than 100 jobs like that worldwide.

We have one of the best grad schemes in London outside of the investment banks and city law firms. Starting salary is £30k and you don't get significant payrises through the 3 year scheme - you might be on £35k by the end of it if you're good.

chewmylegoff

Maelwys wrote: »

One (young?) man's experience...

I graduated with a 2-1 in a Computing Science Hons degree in Summer 2004 and took a gap year whilst looking for jobs, so I pretty much entered the job market exactly 10 years ago in Spring 2005.

1. My first job was temporary contract stuff for BT (driving around NI doing computer installations) which was minimum wage + mileage claims. That lasted 2 years.

2. My second job was as a Computer Technician in a Secondary School, earning about £13.5k a year but commuting by car for at least 2 hours a day. That lasted another 2-and-a-half years.

3. My third (and current) job is as a Systems Engineer with reasonable levels of pay (currently 5-and-a-half years here, progressing from £25-30k and it'll cap out at about £32k).


Financially, I basically had to stay living with my parents for the first job and saved my wages each month. By the second job, I was paying 'rent' of a few hundred pounds a month and still saving. I bought one second-hand car for £7k (which I still drive 7 years later) but no other big outgoings.

Immediately after graduating I had maybe £2-3k in the bank, plus student loan debts of about £6k. When starting that third job I had about £15k in the bank and about £5k of Student loan debts.

After working for a little shy of two years at that third job I'd managed to save around £30k, which got me a reasonable deposit on a nice semi-detached £128k house that was only 3 miles from where I work (saving a small fortune on petrol!). Last year I finally paid off my student loan completely.


Basically, 6 years after graduating I was in a position to be able to afford a mortgage, and I'm currently another 4 years down the line sitting on a mortgage of about £91k (at just under 2.4%) with no student loan and making regular payments into the NHS pension plan. I've savings of around £10k in the bank (earning 2.4% interest after tax) and about £400-£600 left of my wages each month getting added onto that.

The only thing my original broker insisted upon was that I keep the critical illness and decreasing-term-life-insurance up until the mortgage is fully paid off (which seems a sensible enough precaution to me).

My mortgage's fixed deal is up again in August, and I ought to be able to switch to another 2 year fixed deal at 1.7% without spending much extra (I'm currently debating whether it's more cost effective to spend an extra £6.5k getting that down to a 1.5% fixed deal - It'd save me about £590 over the two years but would mean I'd need to put off getting a new bathroom for a while...) so I should be set for the next few years, even if the girlfriend ends up becoming a fiancee ...


My younger brother, on the other hand, is technically more educated than me (PHD) but has much higher student loan debts (hurrah for top up fees!) plus a mortgage, a spouse and a kid on the way... and no permanent job!

Of course your broker insisted on you keeping the life insurance and critical illness policies - that's where they make their money. Personally I see no point in having life insurance to pay off a mortgage unless it is a joint mortgage. It isn't going to help you if you do die so the only point of having the life cover is to ensure that your partner (especially if you have children) isn't left with a mortgage they cannot pay if you die.

Sounds like you are just shovelling money into a black pit (some of which ends up in the broker's pocket - he will be receiving an annual trail commission payment for selling you these products which is probably why he impressed on you that you should maintain the policy forever!)

MARTYM8`

Another of those if only they didn’t spend £300 on an Iphone these lazy youngsters could afford to spend £250,000 on a one bed flat threads!

How many of these posters could actually afford their home now on their current salary multiples – given house prices have risen 400% in the last 20 years and wages by much less.

How many youngsters today will be able to buy a home in London at one and a half times salary mortgage like my parents – who earned average salaries – did

How many of today’s youngsters get free university tuition.

How many can just walk straight into a decent job – as opposed to having to compete for a zero hours contract

How many will get final salary pensions – or indeed even a state pension

How many will get winter fuel allowances, free bus passes etc when they retire

How much of their taxes and hard work will have to go into paying off the debts created by their parents and grandparents and their votes.

What an appalling legacy we have left them – so stop sniping and count yourself lucky. You never had it so good!

Maelwys

chewmylegoff wrote: »

Of course your broker insisted on you keeping the life insurance and critical illness policies - that's where they make their money. Personally I see no point in having life insurance to pay off a mortgage unless it is a joint mortgage. It isn't going to help you if you do die so the only point of having the life cover is to ensure that your partner (especially if you have children) isn't left with a mortgage they cannot pay if you die.

Sounds like you are just shovelling money into a black pit (some of which ends up in the broker's pocket - he will be receiving an annual trail commission payment for selling you these products which is probably why he impressed on you that you should maintain the policy forever!)

I have a property in my name and a will. If I die then the mortgage is paid off and my parents (or girlfriend and potential future spouse) won't have to worry about settling my estate. And if I suddenly become paralysed from the neck down then I won't have to worry about payments.

Surely this is the whole point of insurance when you have a large debt, no?

It was an independent broker whom I know quite well (family friend, etc) and who talked me through the options before offering me a few packages. It's less than £15 a month for both policies combined, which at the time I thought was a fairly good trade for being able to not care about potential health problems over the next 25 years. The Critical Illness cover is even tailored to only kick in after the 6 months full-time sick pay I'd get from work. I'm intending to cancel both policies whenever I pay the mortgage off (which is currently on track to happen about ten years early!) and I don't really begrudge the Broker earning a tiny commission from my £4-per-week in the meantime.

I suppose it makes sense to be concerned given all the Payment Protection misselling scares and the like though. And apologies for the thread tangent!

chewmylegoff

They wouldn't have to worry about settling your estate if you died in negative equity with no life insurance either - your mortgage debt doesn't get transferred onto another person unless it was a joint mortgage with that person.

I get the critical illness insurance bit but personally I don't see the point of having life cover to pay off a mortgage unless someone else is on the mortgage with you.

I suppose it is easier to take that viewpoint though when work provides you with both a lump sum on death and critical illness cover as mine do.

This thread needs to be taken off at a tangent anyway...

michaels

16k income and 750k house with a 300k mortgage seems to be perfectly affordable

MARTYM8`

michaels wrote: »

16k income and 750k house with a 300k mortgage seems to be perfectly affordable

Yes – these young people just need to spend a bit less on ipads, foreign holidays, Sky and beer. If they did funding a £300k mortgage on a £16k salary is perfectly affordable!