Small Steps Out Of Massive Debt!

shaundiamonds

GeorgianaCavendish said:

Apologies for the mind-dump post, I'm trying to get my head around this and I'm really scared of getting it "wrong"  

As a veteran of several house purchases and sales and friends and family the same, you can really tie your head in knots with house purchases. My advice is not to worry too much about "getting it wrong" as there are so many moving parts you will inevitably get part of it "wrong", but to get on the ladder as soon as possible - everything is flexible in the future as long as you don't commit to a ridiculous tie in.

GeorgianaCavendish

astrocytic_kitten said:

I think starting with a 90% mortgage is totally fine, especially if you’ll be overpaying right out of the gate. Interest rates are so low right now too. I’d also agree to not throw your EF at the deposit to get to a lower LTV. I mean, it partly depends on the size of your EF, but you want to be left with a decent figure both for emergencies and for random costs that come up. Moving is just so expensive. I’d been renting so many different flats for so many years before I bought I thought I already had everything I needed other than a bed and sofa, but all the little things (I already had an ironing board and hoover but I needed to buy a mop and bucket, for instance) really add up even before you get to anything that needs fixed (I needed a plumber pretty much as soon as I moved in). 

I think your instincts on this are pretty spot on! As far as affordability goes, my view is that mortgage lenders stress test incomes so robustly these days that if you’re offered the mortgage you’ll be able to afford it. Unless you’re taking a very long fixed deal they’ll be making sure you can afford it if interest rates rise a fair bit, not just now.

Thank you! It is really reassuring to hear from others who have been there before   I totally agree on all the unexpected costs, I definitely don't want to have to borrow money straight away to fix unexpected problems, or buy a mop  

GeorgianaCavendish

shaundiamonds said:

GeorgianaCavendish said:

Apologies for the mind-dump post, I'm trying to get my head around this and I'm really scared of getting it "wrong"  

As a veteran of several house purchases and sales and friends and family the same, you can really tie your head in knots with house purchases. My advice is not to worry too much about "getting it wrong" as there are so many moving parts you will inevitably get part of it "wrong", but to get on the ladder as soon as possible - everything is flexible in the future as long as you don't commit to a ridiculous tie in.

Thank you! This is really reassuring - I really appreciate you stopping by and helping me calm down

astrocytic_kitten

You don’t want to count on house prices rising and I know there’s chat in a few different areas about currently being in a bubble and the possibility of falls especially if interest rates rise…but bear in mind that on the balance of probability prices are likely to rise (especially over the longer term), so as well as salaries increasing and costs like driving lessons falling away you’ll have a lower LTV after your initial fix, putting you in a better position then. My lender has a standard formula based on your postcode with the percentage they expect it to have increased by, they use it to calculate LTV when you’re coming to the end of a fixed rate deal and they want you to stick with them for another one. (This was a total shock to me when I phoned up at the end of my initial fix and discovered they considered my new LTV to be better than I did 😂). So basically I agree that you’re unlikely to regret buying once you’re able to, rather than waiting for perfect conditions.

badmemory

If you are planning on staying for 15 years or more then even a price drop should not cause you too many problems.

GeorgianaCavendish

astrocytic_kitten said:

You don’t want to count on house prices rising and I know there’s chat in a few different areas about currently being in a bubble and the possibility of falls especially if interest rates rise…but bear in mind that on the balance of probability prices are likely to rise (especially over the longer term), so as well as salaries increasing and costs like driving lessons falling away you’ll have a lower LTV after your initial fix, putting you in a better position then. My lender has a standard formula based on your postcode with the percentage they expect it to have increased by, they use it to calculate LTV when you’re coming to the end of a fixed rate deal and they want you to stick with them for another one. (This was a total shock to me when I phoned up at the end of my initial fix and discovered they considered my new LTV to be better than I did 😂). So basically I agree that you’re unlikely to regret buying once you’re able to, rather than waiting for perfect conditions.

Definitely! I think being prepared to move forwards at 10% and trying to be relaxed about any changing circumstances is the way to go (if I am capable of being relaxed 😖 ) 

GeorgianaCavendish

badmemory said:

If you are planning on staying for 15 years or more then even a price drop should not cause you too many problems.

Absolutely! Once we have a property I’m completely prepared to ride out a drop in values. 

Fortune_Smiles

Your plans sound eminently sensible to me GC.  I would be taking exactly the same route if I were in your position.

Fortune x

GeorgianaCavendish

Fortune_Smiles said:

Your plans sound eminently sensible to me GC.  I would be taking exactly the same route if I were in your position.

Fortune x

Thank you Fortune, that is really reassuring! x 

teamkathy

Hi @GeorgianaCavendish! I’m new to the forum and just embarking on my debt-busting journey and road to financial stability.

I’ve been reading your diary over the last month, and just wanted to say a massive well done!! You’ve done an amazing job and have given me a lot of inspiration, so thank you A lot of what you have said regarding emotional spending has resonated. I always feel too, that I’m just going to spend the money anyway, so I might as well get it out of the way. I can’t trust myself with savings. But as I am discovering on my own journey, it’s about dealing with the underlying issues and not beating myself-up when I fall back to old habits. Small steps and making a realistic budget; I guess it’s all about progress and not perfection

I just wanted to say a massive thank you for sharing your journey and being so open and honest. I want to wish you all the best - you deserve that house! x