First time buyer's

PROLIANT

Hello, this is the first time that I have posted in this part of the MSE forum's, basically my partner and I are looking at a mortgage and got an offer from Lloyds TSB (C&G) but had to cancel the offer because of the repayments, why do people bang on about the fact you can get a mortgage foe the same amount of money that you pay in rent? Not true, the mortgage was going to cost more than double what we pay in rent, at £634 per month less insurance etc no way, this was for £120K, £75k @ £435 per month, you cant buy a 1 bed shanty around my area for that, any advice please?

mell242

...but you're right, it may have been the case a few years ago, but it certainly isn't now!

My partner and I are in the same position as you. We live in Cambridgeshire and rent a wonderful detached property for 725 per month. We both earn good salaries and could get a mortgage for about 270,000 BUT this would mean living in a terrace property and having our repayments double what we pay in rent.

At the moment I just don't think that it is worth being broke, just so that we can say we own our own property. We are not ftb's, we sold out shared ownership home in London a couple of years ago to move to a better location and be happier. I think living somewhere you love, in an area you feel safe in, ideally for less money makes so much more sense than trying to get on the so called 'housing ladder'!

I would just carry on renting and hope that interest rates do come down...and just think of all that money you are saving :j

PROLIANT

I speak to guy's at work and they say when they fist purchased their home’s back in the 80's/90's they paid £13 -20K for a 3 bed house, now their homes are worth £150k +, ironic isn’t it.

dexters_mum_2

I bought my FTB house in 2000 for £30k and my repayments were just £121 a month, the house next door to me at the time was being rented out for £350 a month.

When we moved (due to a separation) I bought a house for £90k, mortgage of £81k and have recently remortgaged for home improvements and have a £91k mortgage, I pay £500 a month and the house next door also rents out, for £400 a month and I know the guy who owns the house has a larger mortgage than I do, so I really don't know how he copes.

Although I am not intending to rent my house out and I have a fair bit of equity now (about £30k), I really can see where you are coming from, I think if I were a FTB, I would seriously consider renting and purchasing when interest rates drop a bit and when/if house prices drop.

Good luck with it all!

kunekune

I don't know where the myth about mortgage being the same as rent comes from, but suspect it was only ever true of interest only mortgages. Which only an idiot would take out. We pay £675 a month for a house that the LL bought for £210K (I suspect our mortgage is being subsidised, in effect, by the builder's incentive of £500 a month towards the mortgage). I am looking at a house that is for sale for £200K, slightly bigger than this one. We are lucky in that we can get a mortgage at the base rate, but even then the interest would be just over £700 a month on a 20 year term. In a market that was steady or possibly rising, and with sufficient spare income to repay the mortgage as well as paying the interest (and preferably overpay) that isn't bad. This isn't that market (though it might not put me off, LOL).

I would say, though, that it is odd that you didn't know roughly what your payments would be before you put in an application ... bearing in mind the cost of applying for a mortgage, that seems a little short-sighted. Or was this just an agreement in principle? Next time, I'd suggest you look at the calculators or a comparison site before you get into discussion with a lender. It's a lot less stressful!

Fluffi

Mortgage payments being equal or less than rent is true for me. Its not a myth for everyone!

Flats in the same blocks as mine with exactly the same layout and size as mine are asking for rents either equal to or more than my mortgage payments!

That said my mortgage rate is fixed for the long term at lower rate than what is being offered by the banks right now, otherwise at current interest rates it would be slightly more expensive to buy.

minimike2

Mortgage on my old house, which, kunekune, was not interest only was £230 a month when rents were at £400. (Are you a mortgage professional? I guess not, interest only mortgages DO have thier place and to tarr all with them as idiots is rediculous).

Now in that area renting is about the same as a traditional mortgage would be.

Rents WILL increase short term as people find it harder to buy, landlords mortgages get more expensive etc. How much is yet to be seen.

kunekune

No need to be rude, minimike. But I will modify what I said about interest only - only an idiot would take one out without a safe repayment vehicle. Otherwise it's no different from rent, but with more risk - relying on prices to rise and nothing more is just gambling in my opinion. And without knowing how long ago you had your old house, it's not a very helpful example.

poppy10_2

kunekune wrote: »

I don't know where the myth about mortgage being the same as rent comes from

It used to be the case (before house prices went crazy) that a mortgage would be around the same or cheaper than renting. Hence the old "renting is just dead money" line. The difference is that back then, lending criteria were much stricter, so if you couldn't save up a 10% deposit (and/or didn't have a high enough income to satisfy the bank.)
We are seeing a return to those days now.

LillyJ

My mortgage (repayment) will be the same as my rent. It depends where you live.
We are moving literally around the corner (next street) into the same size house, but it is much nicer and better maintained.

Yes we will have extra costs on top of when we were renting eg insurance but our mortgage repayments are the same. Looking at interest only (which is the same as renting really) the mortgage would have been a fair bit cheaper.

UK007BullDog

My mortgage is less than 50% of the going rents charged around my patch. But this is as I bought my home before the millennium.