Buying a house?
- Thread starter ChrisFilter
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ChrisFilter
Like a boss.
Blimey.. you know your shit Zenie.. I'm impressed.
Not sure how good this would be for chris, but a LOT of people I know (including one guy who's a very shrewd businessman/millionnaire) are currently doing offset mortgages, buying everything on credit cards, and paying back when they have to. They say the amount they are saving is huge.
Interest only is pretty good, but you have to remember that the money you don't put back will get charged interest on. With interest only, you're more likely to put in less, and spend more, because you don't HAVE to pay back the capital. So if you have the willpower to make sure you won't spend to your limit, then great!
And make sure they don't apply the rule of 78 to any mortgages you get. I've been informed that it'll be illegal to do this in the UK, but I think it was fairly recent law, so it might not have come into play yet.
Interest only is pretty good, but you have to remember that the money you don't put back will get charged interest on. With interest only, you're more likely to put in less, and spend more, because you don't HAVE to pay back the capital. So if you have the willpower to make sure you won't spend to your limit, then great!
And make sure they don't apply the rule of 78 to any mortgages you get. I've been informed that it'll be illegal to do this in the UK, but I think it was fairly recent law, so it might not have come into play yet.
ScallyWag II
New Member
zenie said:Usually that's for 10% Overpayments, which I think you'd need a repayment mortgage for.
Interest Only might be a good idea for filter, it lets him get on the housing market an dmeans he can put money into a repayment vehicle, as and when he chooses.
yep tis a repayment mortgage that i've got, but i'm in the fortunate position of having bought "at the right time"
when i split with my ex, the house we'd had for 2 years (after 8 years being in negative equity on our 1st home!) had gone up by 100k!! 
so i was able to put down approx 50% deposit on the house i'm in now but having no financial nouse whatsoever did what me and the ex had done before...got an endowment. got no choice but to carry on with it for a few more years til it's worth something, it certainly won't pay for the mortgage...so beware of endowments ime. i changed it to repayment a year ago and have already reduced it by a third and the repayment time to 12 years. hope to have it down by more this year.having said all that, i first bought a flat nearly 20 years ago, so by rights i should nearly own the damn thing!
good luck chrisfilter! just beware endowments!
Sorry, my original post wasn't very clear. I meant doing your month purchases, like food and other goods on your credit card, and paying off those before any interest gets charged. That way, you get your salary offset on your mortgage for as long as possible. The people I know doing the offset mortgage transferred their original mortgage over to it, after they'd paid their fees and lived in the house for a few years.
ChrisFilter
Like a boss.
Here's a quick question:
When I said to my parents that it's probably best for them to take out the mortgage in their name, they said no 'cos I should get myself on the ladder as well, and that we'd get a joint mortgage. Does this mean we might be turned down based on my debt (6k) and poor credit history? Their credit history is exemplary, not sure about size of deposit, but might be looking up to 50k?
When I said to my parents that it's probably best for them to take out the mortgage in their name, they said no 'cos I should get myself on the ladder as well, and that we'd get a joint mortgage. Does this mean we might be turned down based on my debt (6k) and poor credit history? Their credit history is exemplary, not sure about size of deposit, but might be looking up to 50k?
Reg in slippers
Well-Known Member
1 - your parents will not be eligible for a 35 year term mortgage, possibly only 10-15 years
2 - this means that if they take it out, the monthly repayments, even on an interest only package will be topping £1,500 a month
3 - they could go for a buy to let, now this is a good option as they then rent it out to you and another tenant
4 - interest only vehicles are in effect mortgage fraud, be fully aware of this: if you for some reason you get to the end of the term and don't pay back the capital, or if the market dives, you will be liable for the capital; at the very least defaulting means repossession time
5 - offset mortgages are a great sale for a finance company, encouraging you to spend, spend, spend, means that you pay back at say 5.5% but over the term of the mortgage - ie very expensive in the long term. to operate an offset to your advantage you need to be strict about how you drive teh payback schedule
6 - save like there's no tomorrow to get the lowest mortgage possible, and allow approx £12.5k for moving fees
i'm going for a lie down now
2 - this means that if they take it out, the monthly repayments, even on an interest only package will be topping £1,500 a month
3 - they could go for a buy to let, now this is a good option as they then rent it out to you and another tenant
4 - interest only vehicles are in effect mortgage fraud, be fully aware of this: if you for some reason you get to the end of the term and don't pay back the capital, or if the market dives, you will be liable for the capital; at the very least defaulting means repossession time
5 - offset mortgages are a great sale for a finance company, encouraging you to spend, spend, spend, means that you pay back at say 5.5% but over the term of the mortgage - ie very expensive in the long term. to operate an offset to your advantage you need to be strict about how you drive teh payback schedule
6 - save like there's no tomorrow to get the lowest mortgage possible, and allow approx £12.5k for moving fees
i'm going for a lie down now
zenie
>^^<
Reg in slippers ahs some good points there.
However having a BTL mortage normally incurrs a higher rate, and as it is most lenders will lend past retirement age.
As for your credit history, when you apply for a mortgage you will have a credit report done on you - now things like your debt different lenders work out in different ways.
Some lenders take the annualised payments and subtract that from your salary before doing income multiple to work out how much you own.
I.e. you earn 30k less 2.4k (loan repayments) a year = 27.6k x a multiple of say 5.1 (the highest multiple I can find right now for a FTB but there is higher around) = £140,760
Other lenders work it out as total amount owing deducted from salary and some work it out as total amount owing deducted from your loan (mortgage) offer.
Because you are in a good position with your deposit amount many lenders will be happy to give you the money because they thing well if you get repossessed then we can have that as well.
Filter, do you have a financial advisor at work at all?
I'm not qualified to be telling you this info in a professional capacity as I haven't done a CMAP.
However having a BTL mortage normally incurrs a higher rate, and as it is most lenders will lend past retirement age.
As for your credit history, when you apply for a mortgage you will have a credit report done on you - now things like your debt different lenders work out in different ways.
Some lenders take the annualised payments and subtract that from your salary before doing income multiple to work out how much you own.
I.e. you earn 30k less 2.4k (loan repayments) a year = 27.6k x a multiple of say 5.1 (the highest multiple I can find right now for a FTB but there is higher around) = £140,760
Other lenders work it out as total amount owing deducted from salary and some work it out as total amount owing deducted from your loan (mortgage) offer.
Because you are in a good position with your deposit amount many lenders will be happy to give you the money because they thing well if you get repossessed then we can have that as well.
Filter, do you have a financial advisor at work at all?
I'm not qualified to be telling you this info in a professional capacity as I haven't done a CMAP.
ChrisFilter
Like a boss.
Reg in slippers said:
Cheers this Reg
1 - Uh oh.. I guess of course, no guarantee they'll be alive in 35 years time.. (not there's any guarantee I will be) sad thought
2 - Uh oh.. I wonder if we have 3 names on the mortgage they'll extend it to 25 years? I suppose I could always look at a 3 bedroom place, and rent two rooms out, but this is another price jump, much more of a gamble, and asking more from parents.. I'm ridiculously lucky that they're in a position to help as it is, don't want to take the piss.
6 - £12.k?!
Criminal isn't it.. is there any answer the housing situation in London / the UK?
