mortgages

madsambray

why oh why is it so difficult to get a mortgage on a low income? when i actually have to pay out more in rent to a private landlord so im unable to save yet the banks etc say i do not earn enough to pay back the loan help :mad: :mad: :mad:

kamaran

go to a mortgage broker, they should help you find something

Jacster_2

It might be different where you are....

Where I live, if I rent a property of a particular standard, I'd pay less in rent than if I owned it and had a (say) 95% mortgage.

MarkyMarkD

madsambray wrote:

why oh why is it so difficult to get a mortgage on a low income? when i actually have to pay out more in rent to a private landlord so im unable to save yet the banks etc say i do not earn enough to pay back the loan help :mad: :mad: :mad:

Because:

(1) if you own the house, you have commitments to repair and insure it which you don't have as a tenant;
(2) if you have a mortgage, the rate can increase (possibly significantly) meaning that the mortgage repayments become more than the rent;
(3) if you are on a low income, you are (judgementally) more likely to lose your job or get ill and be unable to work, and hence default on your mortgage.

(NB that is the lender's judgement, not mine, in (3)).

I honestly don't believe that people on very low incomes SHOULD buy houses - there is a significant element of risk involved in purchasing and people on low incomes can't necessarily afford to take those sorts of risks. In the last housing market crash, we had friends who were stuck in 1 bedroom starter homes for years with children born after they would, all things being equal, have moved house. They couldn't afford to sell because of negative equity, and because they didn't earn enough to save up to clear that negative equity. These friends would have been FAR better off renting.

meanmachine_2

Ask yourself WHY you think you need to buy a home.

Have you actually done the figures and found out that it would be cheaper to buy than to rent? Or are you keen to do so, just because you think everyone else is doing it?

There's a reason why people rent and others buy. Renting might seem expensive now, but what if interest rates doubled? You'd probably be homeless. And who would you be blaming then? The banks, or yourself?