Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Jojo6
    • By Jojo6 15th Sep 19, 7:59 AM
    • 4Posts
    • 0Thanks
    Jojo6
    House buying worries
    • #1
    • 15th Sep 19, 7:59 AM
    House buying worries 15th Sep 19 at 7:59 AM
    Two weeks ago my partner and I reserved a new home. Wed been trying to sell our current house for two years. The house is in an excellent location in catchment to an outstanding secondary school. The house will be bought with the support of Help to Buy. The house is 600k. Our deposit will be 80k as we will be having 120k from Help to Buy. The company will be paying our stamp duty and our legal fees. The house has been reduced in price as the ones that are the same and neighbour it sold for 25k more.
    But Im starting to worry that were making a mistake and need some clarity. Our new mortgage rate is 1.8%which I appreciate is low. Its a 5 year fixed. Im worried about what happens in 5 year time. I know I sound stupid and that in hindsight this should have been something that wed thought about before reserving the house, but I felt under pressure to find something. I do think the house is lovely, its the money side! We have been stress tested and apparently we will be fine but I still feel sick. My current mortgage is fixed at 4.7%. In 5 years time, if this is the rate that we need to fix at, we will be paying over 2200 a month for our mortgage and then the help to buy repayments on top which are currently 175 a month but if the house is valued higher, will be more than that. This is not at all ok for me. We will be living far too tightly. Am I overthinking this? Has anyone got some advice or can someone give me some reassurance if there is any?
Page 1
    • warby68
    • By warby68 15th Sep 19, 8:15 AM
    • 1,360 Posts
    • 10,871 Thanks
    warby68
    • #2
    • 15th Sep 19, 8:15 AM
    • #2
    • 15th Sep 19, 8:15 AM
    You need to stress test yourself!!

    We have no idea what your income is, what other commitments you have or plan to have and therefore how affordable this property is.

    On the face of it, its a large jump if you only currently have 80k equity - that's the only general observation I could make. Newbuild and HTB may mean you don't easily recoup your money if you needed to move in say 3 years for some reason.

    I suppose the underlying question is are you using Help to Buy to get a property you really can't afford?
    • Cakeguts
    • By Cakeguts 15th Sep 19, 8:24 AM
    • 6,659 Posts
    • 10,479 Thanks
    Cakeguts
    • #3
    • 15th Sep 19, 8:24 AM
    • #3
    • 15th Sep 19, 8:24 AM
    I think buying an expensive house to get an outstanding local school is more of a risk than the mortgage interest rates. That school could be down graded next inspection and then you have a very expensive house in an area with a not very good school. What will that do to the value of a nearly new house?



    I can't help you with the mortgage interest rates because when I bought my first house they were 11%.
    • Crashy Time
    • By Crashy Time 16th Sep 19, 10:49 PM
    • 8,390 Posts
    • 2,973 Thanks
    Crashy Time
    • #4
    • 16th Sep 19, 10:49 PM
    • #4
    • 16th Sep 19, 10:49 PM
    I think buying an expensive house to get an outstanding local school is more of a risk than the mortgage interest rates. That school could be down graded next inspection and then you have a very expensive house in an area with a not very good school. What will that do to the value of a nearly new house?



    I can't help you with the mortgage interest rates because when I bought my first house they were 11%.
    Originally posted by Cakeguts
    Good point.
    • shinytop
    • By shinytop 17th Sep 19, 7:07 AM
    • 509 Posts
    • 588 Thanks
    shinytop
    • #5
    • 17th Sep 19, 7:07 AM
    • #5
    • 17th Sep 19, 7:07 AM
    OP, if you like the house, think it's a good price and can afford it, just go for it and enjoy your new home! It sounds like all of these apply for you. Five years is a long time and there will be other good mortgage deals available then.
    • RelievedSheff
    • By RelievedSheff 17th Sep 19, 7:14 AM
    • 492 Posts
    • 482 Thanks
    RelievedSheff
    • #6
    • 17th Sep 19, 7:14 AM
    • #6
    • 17th Sep 19, 7:14 AM
    OP you need to make your own mind up if you can afford the payments or not.
    • kazwookie
    • By kazwookie 17th Sep 19, 7:18 AM
    • 10,972 Posts
    • 130,647 Thanks
    kazwookie
    • #7
    • 17th Sep 19, 7:18 AM
    • #7
    • 17th Sep 19, 7:18 AM
    How much do you earn?


    How many of you are there?


    If you are worrying now, you are possible right to worry. Walk away from the 'deal' and find something of less , that won't worry you.



    But we do not have enough details to help you.
    Sun, Sea

    • AdrianC
    • By AdrianC 17th Sep 19, 7:26 AM
    • 24,758 Posts
    • 24,132 Thanks
    AdrianC
    • #8
    • 17th Sep 19, 7:26 AM
    • #8
    • 17th Sep 19, 7:26 AM
    The house is 600k. Our deposit will be 80k as we will be having 120k from Help to Buy.
    Originally posted by Jojo6
    So a 400k mortgage.

    Our new mortgage rate is 1.8%which I appreciate is low. Its a 5 year fixed. Im worried about what happens in 5 year time.
    You look at the market and remortgage...

    My current mortgage is fixed at 4.7%.
    And how much are you currently borrowing?

    In 5 years time, if this is the rate that we need to fix at, we will be paying over 2200 a month for our mortgage
    And at 1.8%, you're repaying 1,650/mo. So it's ~550/mo difference. What's your household monthly income, after tax?
    • Jojo6
    • By Jojo6 17th Sep 19, 7:17 PM
    • 4 Posts
    • 0 Thanks
    Jojo6
    • #9
    • 17th Sep 19, 7:17 PM
    • #9
    • 17th Sep 19, 7:17 PM
    Between us, we earn around 110k a year. At the moment our mortgage is for 236k but we are able to get a 29 year term and so always wanted to make this move our big move. We didn’t want to have to spend this much on a house but the house is beautiful and the location is very good and so, despite help to buy, we decided it should be a good investment. The move means that we are able to clear a small loan and small credit card bill which means our monthly outgoings will be no different to the amount that we pay now due to the 1.8% rate.
    • Jojo6
    • By Jojo6 17th Sep 19, 7:19 PM
    • 4 Posts
    • 0 Thanks
    Jojo6
    After tax, we bring in around 5500k
    • Cakeguts
    • By Cakeguts 17th Sep 19, 7:28 PM
    • 6,659 Posts
    • 10,479 Thanks
    Cakeguts
    Between us, we earn around 110k a year. At the moment our mortgage is for 236k but we are able to get a 29 year term and so always wanted to make this move our big move. We didn’t want to have to spend this much on a house but the house is beautiful and the location is very good and so, despite help to buy, we decided it should be a good investment. The move means that we are able to clear a small loan and small credit card bill which means our monthly outgoings will be no different to the amount that we pay now due to the 1.8% rate.
    Originally posted by Jojo6

    A new house is NOT a good investment in terms of money. It will drop in value as soon as move in. A house in an area with a school graded outstanding now but possible downgraded to inadequate in the future is not a good investment. So forget about the investment bit it doesn't apply and work out if you like the house enough to pay for it.


    I am a landlord and I can tell you what makes a good investment and what you are buying isn't.
    • sal_III
    • By sal_III 17th Sep 19, 7:38 PM
    • 1,373 Posts
    • 1,330 Thanks
    sal_III
    then the help to buy repayments on top which are currently 175 a month but if the house is valued higher, will be more than that.
    Not quite, the interests are only based off the initial amount borrowed. Only the repayment is based on sale price / RICS valuation.

    The chances of interests rates being much as high as 4.7% in 5 years are very slim. Even then you should be able to afford 2.2k mortgage payments with 5500 net monthly income, but only you know your exact circumstances.
    • Atomix
    • By Atomix 17th Sep 19, 9:39 PM
    • 247 Posts
    • 204 Thanks
    Atomix
    We had a slightly similar dilemma.

    It wasnt the monthly figure that put us off, it was the length of time.

    2200 every month for nearly 30 years....

    In x10 years ill be mortgage free and 54. (800 a month) which means i can sleep at night.

    Good luck - youre right to worry, but its the 29 years i would worry about.
    • Crashy Time
    • By Crashy Time 17th Sep 19, 11:18 PM
    • 8,390 Posts
    • 2,973 Thanks
    Crashy Time
    OP, if you like the house, think it's a good price and can afford it, just go for it and enjoy your new home! It sounds like all of these apply for you. Five years is a long time and there will be other good mortgage deals available then.
    Originally posted by shinytop
    How do you know this?
    • Crashy Time
    • By Crashy Time 17th Sep 19, 11:20 PM
    • 8,390 Posts
    • 2,973 Thanks
    Crashy Time
    Not quite, the interests are only based off the initial amount borrowed. Only the repayment is based on sale price / RICS valuation.

    The chances of interests rates being much as high as 4.7% in 5 years are very slim. Even then you should be able to afford 2.2k mortgage payments with 5500 net monthly income, but only you know your exact circumstances.
    Originally posted by sal_III
    How do you know this?
    • AdrianC
    • By AdrianC 18th Sep 19, 6:58 AM
    • 24,758 Posts
    • 24,132 Thanks
    AdrianC
    And at 1.8%, you're repaying 1,650/mo. So it's ~550/mo difference. What's your household monthly income, after tax?
    Originally posted by AdrianC
    After tax, we bring in around 5500k
    Originally posted by Jojo6
    So even 2,200/mo is going to see you with 3,300 clear per month - 110/day - for the rest of your lives and expenditure.

    The 550/month difference that you're worried about, which may or may not come about through interest rate rises, is 10% of your monthly household income.

    You can afford it. Easily.

    Whether it fits in with your current pattern of other expenditure... If you're earning 110k/year, about 4x the national household average, and still have debts... then I think you may need to consider prioritising a bit harder.
    • readysteadysell
    • By readysteadysell 18th Sep 19, 7:35 AM
    • 7 Posts
    • 1 Thanks
    readysteadysell
    its a big step up and you are right to be a little nervous. we are stepping up from a 500 per month to 1400 and although we've calculated we can afford it, it's still that extra cash you have to put out every month.


    try to sit down and work out what the minimum you need each month to live on (clothes, food etc), add the mortgage payments and see what you are left with.
    • Crashy Time
    • By Crashy Time 19th Sep 19, 9:54 PM
    • 8,390 Posts
    • 2,973 Thanks
    Crashy Time
    https://www.marketwatch.com/story/here-are-five-things-to-know-about-the-recent-repo-market-operations-2019-09-18
    • Crashy Time
    • By Crashy Time 23rd Sep 19, 1:43 PM
    • 8,390 Posts
    • 2,973 Thanks
    Crashy Time
    We had a slightly similar dilemma.

    It wasnt the monthly figure that put us off, it was the length of time.

    2200 every month for nearly 30 years....

    In x10 years ill be mortgage free and 54. (800 a month) which means i can sleep at night.

    Good luck - youre right to worry, but its the 29 years i would worry about.
    Originally posted by Atomix
    Many people will be paying even longer nowadays?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,558Posts Today

8,972Users online

Martin's Twitter