Sign of the times..?

wymondham

The number of posts on this forum seems to have dropped quite a bit recently.... People seem to be having problems getting/keeping mortgages without the thought of getting rid of it early maybe ?? :rolleyes:

Gillybean

Possibly.

I'll be interested to see what calls Martin gets on R2 tomorrow. They've changed the topic to the credit crunch and mortgages, in the light of so many places pulling their mortgages altogether and people coming out of tie-ins only to find they can't find a new deal they can afford.

wymondham

sounds interesting, what time is he on ?

setmefree2

I don't understand how people get so bogged down in the cost of houses since the price you buy a house for is only part of what it actually costs. I think MFWers are living proof of that.

So, if I buy a house for £250k (in any market) and over pay it so that I clear the mortgage in 10 years I save myself £140k (roughly) over someone who does not over pay and continues to pay interest for 25 years. To concentrate solely on market values seems totally incorrect to me, since in the end the interest rate and length of term will have more of a bearing on what you truly pay for your house than what you actually paid for it in the open market.:money:

Yet people seem obsessed with what something cost- without really giving a thought to how much interest they pay and over how long...

ailuro2

I think it's like buying a car that has a higher running cost compared to one with low insurance and good MPG - both cars might cost £12K and have a similar residual value but what one costs more to have in the longer term?

Overpayers will have more equity in their home when compared to their outstanding balance, so if anything they are the people who will be able to get new mortgages compared to people who may be nearing negative equity. Banks want a low LTV rate, not to lend to someone who needs to borrow 100% or close to it.

Gillybean

Wymondham, he's going to be on the Jeremy Vine show, on the 'Your money and your life' slot, usually starts at 1pm.

I'll have to listen online later, don't think my 2.5yr old would be impressed with the hour of radio discussion!

JonnyBravo

setmefree2 wrote: »

For every 1% interest rise on a mortgage of just £100k over 25 years you will pay £25k extra

Can someone check my maths?

Many thanks

SMF2

100k 25yr mortgage.

5% Repayment mortage Total interest payable = c£75.4k
6% Repayment mortage Total interest payable = c£93.3k


so c£18k is more realistic in todays market.

Still understand the point your trying to make and of course it is still valid.

JonnyBravo

wymondham wrote: »

The number of posts on this forum seems to have dropped quite a bit recently.... People seem to be having problems getting/keeping mortgages without the thought of getting rid of it early maybe ?? :rolleyes:

I'm sure it must have something to do with it but lets be honest we're not an especially busy forum anyhow are we? :cool:

Things change slowly for people overpaying their mortgage and so their level of engagement with this naturally waxes and wanes. Hence the occasional drop off and rise in posting.... IMHO.

wymondham

JonnyBravo wrote: »

I'm sure it must have something to do with it but lets be honest we're not an especially busy forum anyhow are we? :cool:

Things change slowly for people overpaying their mortgage and so their level of engagement with this naturally waxes and wanes. Hence the occasional drop off and rise in posting.... IMHO.

true, but often this forum only has 20 users whereas the other mortgage/house ones have shot up recently.....

not that it really matters and i really must do something more worthwhile...!

setmefree2

For every 1% interest rise on a mortgage of just £100k over 25 years you will pay £25k extra on interest only mortgage and approx £18k on a repayment.

At the following rates of interest this is what just £100k costs over 25 years (repayment):-
7%, £212,034(£18,744 more than at 6%)
6%, £193,290 (£17,913 more than at 5%)
5%, £175,377

So if you have a £200k mortgage an increase of 1% costs £38k/£36.

setmefree2

So does that mean that for every 1% point rise in interest rates the market has to drop 18% for everything to stay the same?

Thx

SMF2