northern rock 125%???

maggiesasha

my wonderful boyfriend has now decided that he doesnt want to rent as we previously agreed as we'd be saving for a few years for a deposit so i got a quote from northern rock for their together mortgage with the mortgage being £76664 and a £30000 loan, both over 30 years (£650ish a month), which would just cover the fees and house sale price. are we mad to do this??? we dont plan on moving once weve bought a house as weve lived here all our lives and are happy here. its just renting is so expensive and we'd only be able to save around £150/£200 a month. help!

LouLouHelen

In my opinion it might be a bit risky because if the house prices go down you will immediately go into a negative equity situation :eek: - I'd get some advice.

I know how frustrating the renting game it - best of luck whatever you decide.

budgetflyer

Negative equity is only a problem if you plan to sell or borrow on the house. It will tie you in though.I suppose if its a lot less than renting then it may make sense,taking into account all the repairs,upgrades etc your landlord pays for will now become your responsibility. Id also budget at least 30% more for interest rate increases in future.

Woby_Tide

LouLouHelen wrote:

In my opinion it might be a bit risky because if the house prices go down you will immediately go into a negative equity situation :eek: - I'd get some advice.

I know how frustrating the renting game it - best of luck whatever you decide.

On 125% mortgage house prices can go up 24% and you're still in negative equity you mean !

But if OP is not moving as they say, the risk is 'minimal' on paper but still a real one due to various other factors

ManAtHome

Sounds like the lenders dream - mortgage and consolidation loan wrapped into one. Needs a VERY careful read through the T&Cs - it's unlikely you'll be able to move to one of the low-rate deals for some time. By the way, what sort of interest rate(s) are they offering.?

Thefunkygibbons

Have you budgeted for the remaining expenses?

Hopefully things like ultities and council tax will not be much higher

But what about furniture, cooker, etc

Whilst you may have some of these, the initial cost of setting up house can catch one out.

In addition, you need to have frank discussion with the bf on whether your view of risk and the importance of paying down debt are shared.

This is a high risk strategy especially since house prices are more likely to go down than up

maggiesasha

yes we will be able to cover the furniture etc. do you think our better option is to rent and save for a few years towards a mortgage and go into it when we have a deposit behind us? (and are hopefully getting paid more with less debts!) thanks.x

Thefunkygibbons

In my opinion, yes

You are paying a premium for a product such as this

You will get a much better deal if you have a deposit (preferably higher than 10%) when you do buy

I am not going to predict house prices but the general view is that they will be going down or flat at best for a few years, so I would not be taking the risk when the market does not seem to demand one

Get_Real_2

maggiesasha wrote:

are we mad to do this???

Don't do it - at least not now ! Wait and watch house prices fall, and read this

http://business.timesonline.co.uk/article/0,,8214-1763282,00.html

the writer of the article is trying to persuade you to keep renting, so you have to ask, what's in it for them (vested interest) and look critically at the pros and cons. The borrowing you describe though, sounds highly risky.

Also try http://www.firsttimebuyerhelp.co.uk/ although you aren't necessarily buying for the first time in your life, you could be buying at the wrong time if you buy now at these prices with so little deposit to fall back on.

Regards

G Real

Scott

I wouldn't take a deal like that. It's only asking for trouble.

It's because people are taking mortgages like this, on high income multipliers, that repos are up 50% on last year by the 6 month mark. That's a big increase.

There's nothing wrong with renting for a while longer, you'll probably end up saving money anyway. Prices are unsustainable right now.