Maxed Out Mortgage

[Bloo Loo]

Yes, surely she must have some friends who know who's good and who isn't.

she's a teacher. knows nothign except public service....knows nothing about the real world of EAs and mortgages.

All she sees is how much is coming in and how much is going out. If her friend the EA knows someone...so much the easier.

People like this are just financial canon fodder.

[Timm]

+100

and Ill add, this is the problem with teachers (especially primary school teachers). Teaching is all about being social and making social connections and gaining trust, and being positive. Unfortunately that puts them in the worst possible position when it comes to buying things, they fall into the group think trap, act like a herd and believe things they are told/sold.

Yup, I'd agree with that too.

QTC: Lives with teacher.

[winkie]

Just found out our daughters house move involves getting a maxed out mortgage to four and half times wages, she is only a school teacher and feel £160,000 mortgage will cripple her once interest rates rise,

Whats your opinion? are we over concerned we had thought lax borrowing had ended.

At least she has not been conned into a interest only mortgage.

Recommended that mortgage repayments should be no more than 35% to 40% of net monthly income, a long term 5 to 10 year mortgage should be considered, it would be a stretch and she should not go ahead if she has other loans, credit cards or debts to pay on top.

to update on replies.

she is single going alone at 29 moving from shared ownership keyworker flat to first fully owner a 2 bed terrace house total cost of house £198,000. We are throwing in nine grand to help with deposit she saved 2 grand the rest is equity.

she is not prepared to wait and thinks we are out of touch and thinks its her last chance to get on the ladder as they are rising again. [area is addlestone newhaw byfleet areas]

A freehold house is far better than a shared ownership property, if she has sold it well done...it is not the last chance to get on the property ladder, has she considered renting?

If the property has two beds, if she did go ahead and buy she could always let out the spare room, to another teacher perhaps... If she is buying on the understanding that prices still have further to fall and she is prepared to sacrifice a few of lifes luxuries for the next few years, and she is determined let her go for it.

[guilty as sin]

Thanks blue loo and timm cant wait till she pops round will send her this thread now to read

This is getting stupid she is just like a lamb to the slaughter she is getting her mortgage through the estate agent also

who is supposed to be getting her a better deal through the abbey

GAS

[Velgud]

she is single going alone at 29 moving from shared ownership keyworker flat to first fully owner a 2 bed terrace house total cost of house £198,000. We are throwing in nine grand to help with deposit she saved 2 grand the rest is equity.

She only managed to save £2k... and she's now about to borrow £187k...

oh dear. .

[Guest มร หล&#3]

Now you have it.

Mortgages are available and at high earnings related. You know it's over. You're in stage 3 now. Fear.

HPC.......RIP.

For those with jobs.

[Bloo Loo]

For those with jobs.

course, Sibley Dibley, there has been no lending whatsoever in the last two years.

and this girl cant raise the deposit without help.

and she hasnt sold her share in the exisitng house yet.

boom times are here.

[winkie]

Now you have it.

Mortgages are available and at high earnings related. You know it's over. You're in stage 3 now. Fear.

HPC.......RIP.

Fear not...the only ones that will fear are those over indebted, over leveraged and those who bought the dream of money made from debt without a way to repay it.

[durhamborn]

I feel for you, that's tough. Dismissed as an out-of-touch miserable old scroat, you are forced to watch your daughter screw up.

I think you should refuse the 9K for her own good, but you'll need a bl**dy thick skin. It depends on how you see your parental role. She appears to think you're a UOF but should cough up anyway!

£190+ for a terrace .I paid 27k 12 years ago.She will be finsihed if she buys that on one persons teachers wage.Its ludicrous.

Interest rates at say 6% shel be paying 9K a year on interest alone.Being a teacher she should be ok in servicing the debt,but could be facing 25 years sitting looking at the walls.

Talk her out of it whatever you have to do.A terrace FTB for nearly 200k.Wish i was selling her it thats for sure.

[durhamborn]

Now you have it.

Mortgages are available and at high earnings related. You know it's over. You're in stage 3 now. Fear.

HPC.......RIP.

Mortgages are available,they always were.Stage 1 hasnt even got going yet Sibers.Dont you see whats happening at the long end of US treasuries?,Look at the curve from the shorties.Gilts to follow.Then do you think anyone will lend on mortgages at 4.5%?

Its taken interest rates at 0.5% to see 20% off house prices.What will 5% do?.

[Goat]

Can I repeat my earlier post; have a look at the various houseprice websites (there's a link in the resources section); show her just how little the same houses were selling for in 2001; show her again for 1998.

[eightiesgirly]

Your putting in NINE GRAND!!!! Ho Ho, have a guess who's going to take the negative equity hit ??

[Guest มร หล&#3]

£190+ for a terrace .I paid 27k 12 years ago.She will be finsihed if she buys that on one persons teachers wage.Its ludicrous.

Interest rates at say 6% shel be paying 9K a year on interest alone.Being a teacher she should be ok in servicing the debt,but could be facing 25 years sitting looking at the walls.

Talk her out of it whatever you have to do.A terrace FTB for nearly 200k.Wish i was selling her it thats for sure.

+1

[winkie]

£190+ for a terrace .I paid 27k 12 years ago.She will be finsihed if she buys that on one persons teachers wage.Its ludicrous.

Interest rates at say 6% shel be paying 9K a year on interest alone.Being a teacher she should be ok in servicing the debt,but could be facing 25 years sitting looking at the walls.

Talk her out of it whatever you have to do.A terrace FTB for nearly 200k.Wish i was selling her it thats for sure.

I agree...but when will the madness stop?

http://www.rightmove.co.uk/property-for-sa...tyType%3Dhouses

[mitchbux]

to blo fly

Yes we will be showing her this thread we will be wearing full protective gear!!!

Now it is getting worse the estate agent has recommended a solicitor 25 miles away from where she lives

GAS

NOOOOOOOOO!

They are bl00dy hopeless.

As others have suggested, sell up and rent. That much for a two bed house is complete madness, how much would renting the equivalent property be?

We bought last year, but we paid not much more than that for a 4-bed detached in a good area, that work permitting we'll be in until we peg it. Mortgage 2 x one salary and the monthly payments on our 20-year repayment mortgage are significantly lower than renting the same house.

Guess what, I still think we were mad for not banking the equity and sitting it out. We only did it because both children were in application year, there was nothing suitable to rent at the time, and we'd found someone we could squeeze on price.

Our loss in equity will be the pretend money we made on the previous house, not savings or donations from the bank of Mum & Dad.

[spivT]

I can understand her urgency - but she needs to take a step back and look at the bigger picture.

The economy as a whole is stuffed for the forseeable future - the public sector cuts are yet to commence and she could potentially find herself on a lower salary or worse within the next 12 months. A few months patience could save her a lifetime of grief and regret.

If she really wants to buy then let her - a lot of friends I know are in the same mind set - those bought as little as 6 months ago are already regretting their decision. Those bought before that are already in negative equity and cannot remortgage and are dreading SVR rises or substantial base rate increases. Sometimes people just need to learn the hard way, no matter how painful it may be. But I would seriously think twice about helping with the 9k - why not ask her to save the difference ... in that time the market may have dropped even more; voila ! you were right, she has bettter off (better LTV) and nobody has lost any money ...

Buy houses with your head - not your heart ... if you can`t do that let the banks surveyor value it - that should but the brakes on it

public sector cuts don't include teachers.

i've long suspected this job for life aspect, good [better than most] annual pay deals, give some teachers a sense of nothing can touch me complacency to go in and buy at the limit.

Or maybe now they don't have much faith in asset deflation, but then what do they know. they're teachers. How does the old saying start...?

those who can....

Edited May 28, 2009 by spivtastic

[jaspers]

Op : Has your daughter seen this?

[juvenal]

£200K for a terrace in Addlestone?

Famous as a chav town.

[BLOW FLY]

Op : Has your daughter seen this?

Or....

This.....:

http://market-ticker.denninger.net/archive...-ALL-OF-IT.html

Just read round the subject FFS and take a closer look before you commit to years and years more financial slavery......

There are always other options.......

BF

[winkie]

Or....

This.....:

http://market-ticker.denninger.net/archive...-ALL-OF-IT.html

Just read round the subject FFS and take a closer look before you commit to years and years more financial slavery......

There are always other options.......

BF

http://www.youtube.com/watch?v=cxlHiyBewSA

[Haventaclue]

Rubbish - in case you haven't noticed interest rates go up and down a hell of a lot over the 20/25 years of a typical mortgage. Right now, we are at all time lows and the only way is up. It's not unreasonable to take 6% rates as an average over 25 years.

3.5x salary is a long-term, well established standard for sensible lending.

Wow, interest rates have been at near zero for a couple of months and you've already decided that they are here to stay at this level for the long term?

You might want to read the gilts thread for a bit of a clue - that's if you have the intellectual capacity to understand it, which based on your post I very much doubt.

So now the bears view 6% as a 25 year average.... I think not. My reference to 'low' rates is and has always been 4 - 5%. Hence my doubling/halving scenario from the persistent bear harping of 10%+. And if you hadnt noticed you can't get a 0.5% mortgage. It has been a phenomena of this decade that rates hit 6% and lower, and something my generation found unbelievable when it did. (We paid 15% in the early 90's). Ive said before and Ill repeat again, rates will not hit double figures for a generation now. End of. And because of that belief, the old income multiples become unrealistic. When rates again bobble between the 8% and 12% mark, then yes Id agree with 3.5 x calculations. As it is 4.5 x is a sensible proposal (hence the banks are offering it).

As to the gilts, I watch copper............... but I wouldnt expect you to understand that either.

[Haventaclue]

Rubbish - in case you haven't noticed interest rates go up and down a hell of a lot over the 20/25 years of a typical mortgage. Right now, we are at all time lows and the only way is up. It's not unreasonable to take 6% rates as an average over 25 years.

3.5x salary is a long-term, well established standard for sensible lending.

Wow, interest rates have been at near zero for a couple of months and you've already decided that they are here to stay at this level for the long term?

You might want to read the gilts thread for a bit of a clue - that's if you have the intellectual capacity to understand it, which based on your post I very much doubt.

So now the bears view 6% as a 25 year average.... I think not. My reference to 'low' rates is and has always been 4 - 5%. Hence my doubling/halving scenario from the persistent bear harping of 10%+. And if you hadnt noticed you can't get a 0.5% mortgage. It has been a phenomena of this decade that rates hit 6% and lower, and something my generation found unbelievable when it did. (We paid 15% in the early 90's). Ive said before and Ill repeat again, rates will not hit double figures for a generation now. End of. And because of that belief, the old income multiples become unrealistic. When rates again bobble between the 8% and 12% mark, then yes Id agree with 3.5 x calculations. As it is 4.5 x is a sensible proposal (hence the banks are offering it).

As to the gilts, I watch copper............... but I wouldnt expect you to understand that either.

[porca misèria]

Just found out our daughters house move involves getting a maxed out mortgage to four and half times wages, she is only a school teacher and feel �160,000 mortgage will cripple her once interest rates rise,

Whats your opinion? are we over concerned we had thought lax borrowing had ended.

At least she has not been conned into a interest only mortgage.

Easily affordable at current interest rates. More challenging at 15%, and under water at 20%.

Get a long fix. At least ten years. And build up a pot during that time, in case of interest rate shock at the end.

[Pauly_Boy]

She only managed to save �2k... and she's now about to borrow �187k...

oh dear. .

Spot on, all she can save is £2k and you expected to put in £9k? Also, she's 29, what happens when she has children?

[Dr Renter]

Spot on, all she can save is £2k and you expected to put in £9k? Also, she's 29, what happens when she has children?

Ahhhhhh the MEW bank of Mummy and Daddy. One of the major contributors to rampant HPI. FTBers have not been able to afford property for years, and have relied on parents who desperately want little Johnny to get on the property ladder.

As for the OP.... I'm sorry but it sounds almost too stupid..... so I'm calling

Troll