Just had an offer accepted on a house - our deposit is smaller than we thought. Panicking.

user1977

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

"Needing" to remortgage isn't a situation which ought to arise - that's the reason for the "stress tests".

EssexHebridean

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

In that situation people would usually keep their heads down and stick with a new deal with the current lender. If someone "needs to" remortgage in terms of taking further lending against the property, then that would be a different matter I'd imagine. 

@user1977 I think a lot of people would describe a wish to remortgage to take further borrowing to "improve" the property as a need - and there are probably a few scenarios in which that could fit - mostly though, that new kitchen/bathroom/extension/roof terrace is probably more of a want than a need I suspect. 

RHemmings

user1977 said:

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

"Needing" to remortgage isn't a situation which ought to arise - that's the reason for the "stress tests".

In another thread someone mentioned being stuck on a SVR rate when, if they weren't in negative equity, they could have remortgaged for a lesser rate. 

There are a lot of people who are now experiencing difficulties because they fixed at very low interest rates and are coming to the end of their fixes. 

Remortgaging (see my definition below) happens.

EssexHebridean said:

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

In that situation people would usually keep their heads down and stick with a new deal with the current lender. If someone "needs to" remortgage in terms of taking further lending against the property, then that would be a different matter I'd imagine. 

@user1977 I think a lot of people would describe a wish to remortgage to take further borrowing to "improve" the property as a need - and there are probably a few scenarios in which that could fit - mostly though, that new kitchen/bathroom/extension/roof terrace is probably more of a want than a need I suspect. 

By remortgaging I didn't mean taking on additional borrowing, but by changing mortgage product and potentially mortgage provider. E.g. at the end of a fixed term. This is, I believe, quite common. 

theoretica

bigolsausage said:

I want to keep £10k back for land tax, legal fees and emergency fund. 

How much of that is emergency fund?  Arguably, this could be your emergency, and worth considering to use that bit for the deposit and refill your emergency fund after buying.

user1977

EssexHebridean said:

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

@user1977 I think a lot of people would describe a wish to remortgage to take further borrowing to "improve" the property as a need 

They probably need a sense of perspective then (or a dictionary...) 

Or just lump it in the "need to sell" category if you want. The point really was that being in negative equity isn't intrinsically a terrible thing (and there are other factors which could prohibit a remortgage anyway).

BobT36

bigolsausage said:

FlyMeSomewhere79 said:

Your budget is pretty much the same as my partner and I with enough left over for some savings - and travel in our case as it's a passion of ours. 

You should be fine as long as your partner is careful with his spending. I once had a first boyfriend that was bad with money and getting a mortgage with him was a nightmare and he sign up to things in my name because of his dire credit score which then ruined mine for a short time. I left him 21 years ago for my current partner who is brilliantly shrewd with money thank god.

Thank you. A lot of the comments here are really baffling. Is a 10% deposit THAT much of an issue when house prices are through the roof? I feel like some people here need a reality check. 

His spending has GREATLY improved since we met, and it wasn't even that bad. He's only ever had about £2k of debt at the most. This is all paid off, he saves money every month. He was mistaken in the fact that the deposit money was moved to another account (as some of it was) and thought it was all safe and protected. I'm not worried about him. He was HORRIFIED when he realised, I've never seen him like that. I thought he was going to cry. And I've never seen him cry before. 

I know that this is really a kick up the bum for him. We all make mistakes. 

Yes, because that other 90% is now a LOT more, despite salaries not being much higher to compensate.

90% of £100k is £90k. 
90% of £500k is £450k. Huge difference, isn't it. 

No idea why you were splurging on holidays when meant to be saving for a house and then pay off a mortgage but whatevs. Debt is not "free" money, it's LOST money.

Ensure he keeps a spreadsheet of his finances. I keep one and update it after I move money around each month. 
Easy then to total up how much I have in each of my accounts, excluding around £500 for "current account" money for food shops etc, and then total up the savings. Easy to then see what I have that hits the deposit target, and then anything "spare" above that which I can comfortably use for personal stuff, if required. Plus a buffer for moving, fees, and a good chunk to cover any emergencies. 

It's easy to "lose" money or splurge it, if you're not keeping track of it. 

nicmyles

"No idea why you were splurging on holidays when meant to be saving for a house and then pay off a mortgage but whatevs."

This type of comment is infuriating. So no-one with any future plans or apparently a mortgage should ever have a holiday? Ridiculous. Life's for living. Doubt you're as parsimonious as you're suggesting others should be.

Ksw3

Are you in a chain? It can take 6 months to buy chain free, most of those I know in a chain took over 12 months so you might end up saving it again by the time you need the money. 

BobT36

I've not had a holiday (besides a short weekend stay in the Lake district, mostly funded by Virgin vouchers obtained from a bank switch) in over 10 years. Because I've been saving for a house. 
A secure, comfortable roof over my head at a good price is far more important than whimsical trips away. I can do the latter once I've secured the important stuff, like a house (as it's not getting any easier, or cheaper). 

But everyone has their own priorities. However with prices like these, one would do well to look ahead. Life is indeed for living but unless your finances are amazing, you may end up living that life in rented forever.

MobileSaver

RHemmings said:

user1977 said:

RHemmings said:

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage? 

"Needing" to remortgage isn't a situation which ought to arise - that's the reason for the "stress tests".

There are a lot of people who are now experiencing difficulties because they fixed at very low interest rates and are coming to the end of their fixes.

There will always be a small minority who make bad decisions and/or just have really bad luck but the vast majority of new mortgages are fixed for at least two years and most are actually fixed for five years or more so the number of people who might find themselves in negative equity after five years is going to be tiny.