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A Mortgage Broker Said To Me


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It was calculated daily .. if that helps / makes a difference. the rate was 3.49 % (?)

(he showed me many option so that % might be off)

It makes a slight difference if worked out daily or monthly but not that much. At 3.49% payment would be £766 a month not £964 which is closer to 5.3%.

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It makes a slight difference if worked out daily or monthly but not that much. At 3.49% payment would be £766 a month not £964 which is closer to 5.3%.

well i am really confused now as the only rate above 5% he showed me was on a 10 year fixed rate for 22 years. 180000 came out at 0ver 1200 pm

964 was on a 33 year mortgae...

I spoke to him to see what possibilities were open to me. Nothing more . We havent even looked at a single house.

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I think you should hurry up and buy, we need to clear the last of the greater fools.

so how long is it ?

every year they are going to fall . some on here predict a slow edging down over ten years . if that's the case why would i be a greater fool , considering my situation to not buy now ?

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well i am really confused now as the only rate above 5% he showed me was on a 10 year fixed rate for 22 years. 180000 came out at 0ver 1200 pm

964 was on a 33 year mortgae...

I spoke to him to see what possibilities were open to me. Nothing more . We havent even looked at a single house.

If someone wants to double check my figures? Think they are right though.

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I too was recently offered a mortgage in principle for 5 x salary. I calculated that repayments were no issue at current levels, but if they rose 1-2% I'd be really struggling to pay it back. I was surprised and horrified that such loans are still being given out.

I accept there is probably not going to be such an increase over the next 6-24 months, but rates will certainly be going up at some point and all would do well to accept that.

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yes there are houses to rent, we do already but its small and £1000 per month on a mortgage would give us a better standard of living than £1000 in rent (around here BN2) . Our rent is uncommonly good £850, as its not gone up in ten years.. nor have the kind of improvements been made that would make the house up to 'modern' standards.

What does standard of living mean? It doesn't just mean the size of the house or area that you are living in, it also means have £300 left over at the end of the month to save or blow on a treat. Take on a massive mortgage, get stuck in negative equity, rates spike and you're living on mince if you can hang on at all. The strain of a repossession and insolvency will make a debt-free cramped house seem like some idyll of domestic bliss.

This bubble has forced a lot of people to make some tough choices - should they jump into the market at crazy prices or should they tolerate cramped housing without mod cons? Wait till SVRs get to 5%-6%, see what prices are doing by then.

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No ones mentioned moving out of la la land yet?

To the OP - you clearly cannot afford what you aspire to. Either earn more or move to a cheaper location.

Or, Feck it, just buy a damned Brighton house. It helps push things closer to the brink for the rest of us.

if it wasn't for complicated family conections i would be back in the north west with a nice house and a small mortgage.

But i wont be leaving my eldest son and his mother wont agree that he comes with me . If she could be persuaded to move north she would have to bring the father of her other child who would have to leave his daughter from a previous relationship...

There isnt exactly cheaper options near here and its important to me that my eldest son lives near both his parents..... and we have to think about schools.

Earning more is a real possibility, the broker chose to use my figures for 11-12 which are not entirely representative as i had 2 months with out working so as to be home with the new baby and help with the little one. (and my rates are about to increase )

I really havent put life on hold by living in rented accomadation as some on here love to advise . i have got on with it .. owning a house has never been a priority .. Like i said i was looking at possibilities because we really do need more space ( thats not to say the argument of painting the walls a color you like etc is not appealing)

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No ones mentioned moving out of la la land yet?

To the OP - you clearly cannot afford what you aspire to. Either earn more or move to a cheaper location.

Or, Feck it, just buy a damned Brighton house. It helps push things closer to the brink for the rest of us.

Isn't the broader point that really nobody can afford these prices, in fact the economy can't afford these prices - that's why it can't be sustained. Just because everyone else is setting themselves up to get their face ripped off, doesn't mean that you have to join in.

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Isn't the broader point that really nobody can afford these prices, in fact the economy can't afford these prices - that's why it can't be sustained. Just because everyone else is setting themselves up to get their face ripped off, doesn't mean that you have to join in.

1. This thread is about the OP's seemingly agonised decision making, not three bigger picture.

2. Even if it was, this thread shows there are plenty more bears out there still waiting for the right time to buy. Therefore this sucker is not going down, because it isn't until everyone is in.

Quite possibly, just quite possibly, the best thing the OP could do is overleverage till very old age without any retirement provision, as he will be saved by the prudence / robbing of other people.

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My ex has one very similar to the one posted. She pays 1200 pcm The LL says his last tenants were there for 2 years and the same for those before. My mate lived accross the road and has been friends with all the people who have lived there and the LL version adds up.

In brighton these rents are have become the norm.

because those "sale prices" have become the norm

tim

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so how long is it ?

every year they are going to fall . some on here predict a slow edging down over ten years . if that's the case why would i be a greater fool , considering my situation to not buy now ?

The government and BoE has thrown everything including the kitchen sink at keeping house prices high. How much more they can try I don't know, I didn't think they could manage it this long but one thing is for sure, house prices at 6 times median earnings is unsustainable. Something has to give, they may not fall in nominal terms but all that funny money would have to find it's way into earnings and that ain't happening when there are 2 billion people in China and India who will do your job for less. But all that funny money has got to go somewhere, the BoE kidding most if they believe the QE will be removed from the economy at some future point, no it's heading straight to the price of essentials. How are Jeff and July going to pay their mortgage when bread is £4 a loaf? There ain't no such thing as a free lunch. Merve the thieving scum sucking piece of shit may learn that just about the time he finds himself at the end of a rope. But you go right ahead and do what you feel is best, I invest/trade a little and always say that the only advice you can trust is your own.

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The government and BoE has thrown everything including the kitchen sink at keeping house prices high. How much more they can try I don't know, I didn't think they could manage it this long but one thing is for sure, house prices at 6 times median earnings is unsustainable. Something has to give, they may not fall in nominal terms but all that funny money would have to find it's way into earnings and that ain't happening when there are 2 billion people in China and India who will do your job for less. But all that funny money has got to go somewhere, the BoE kidding most if they believe the QE will be removed from the economy at some future point, no it's heading straight to the price of essentials. How are Jeff and July going to pay their mortgage when bread is £4 a loaf? There ain't no such thing as a free lunch. Merve the thieving scum sucking piece of shit may learn that just about the time he finds himself at the end of a rope. But you go right ahead and do what you feel is best, I invest/trade a little and always say that the only advice you can trust is your own.

I think the plan was, they intended the measures should kept house prices high for a couple of years, to stop the banks crashing because of the combined effect of a weak economy and loses on house repossessions, until the economy was strong enough for the banks to survive just the losses on house repossessions.

Unfortunately, the two-year bit of the plan has gone awry, by some considerable margin

tim

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I think the plan was, they intended the measures should kept house prices high for a couple of years, to stop the banks crashing because of the combined effect of a weak economy and loses on house repossessions, until the economy was strong enough for the banks to survive just the losses on house repossessions.

Unfortunately, the two-year bit of the plan has gone awry, by some considerable margin

tim

Yep, I fully agree the plan was to shore up the banks balance sheets with the added benefit of conning Joe that it was being done for their good. The trouble is you can't trust a banker, and the more that is thrown at it the more they have found that the bankers were lying about the size of the problem and the Government/BoE are now so deep in it that they cannot withdraw aid. But there ain't no such thing as a free lunch, the system will always assert itself and when its been messed about with as it has there is no telling where nor when it will. The best we can do is spread our own risks between foreign currencies, stocks, gilts and that metal whom shall not be named here.

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Amongst other things

that he could get me a 5 times salary mortgage with 33 years to pay it back with a 3 year fixed rate from santander. Infact he seemed most keen to sign up as the monthly repayments would be 'only' £964 on a loan of 180K.

( Only slightly above our current rent and way less than renting a suitable house for our growing needs although whether we can get a house suitable enough for ~250k is also questionable)

He also said that if interest rates go up to 1% he is bust and so are many others .. so therefore this wont happen.

I don't know ...

what do you all think ?

we really got to buy soon. I am 42 with three growing kids .

So I can't see what he was saying. If interest rates go up 1% he may go bust, but that is no reason for you to go bust is it?

I doubt I would buy at this moment in time, mainly due to the employment problem.

Have to be a very good deal to move me.

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so how long is it ?

every year they are going to fall . some on here predict a slow edging down over ten years . if that's the case why would i be a greater fool , considering my situation to not buy now ?

By my reckoning (which could be miles out) after 3 years you would be £14k better off if you bought, the same risk capital used between the scenarios you rent/buy. So all that is needed is a fall of about 8% nominal in house prices to wipe out that benefit. So what you need to ask yourself is do you think house prices will fall or not and if you think they will will they fall by 8% or more over the 3 years of the fix (although I can't see anything fixed for 3 years with Santander at below 85% LTV.

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180k mortgage at 3.49% for 33 years is £766 a month

180k mortgage at 5.29% for 33 years is £962 a month

180k mortgage at 3.49% for 22 years is £977 a month

180k mortgage at 3.49% for 15 years is £1285 a month

I hope I've made no glaring mistakes… but beware…

assuming no maintenance or insurance costs

assuming 70k deposit or money in bank earning 3%

assuming you spend 1300 a month (either 1300 rent or 1k mortgage + 300 saved)

assuming 180k repayment mortgage for 22 years with mortgage rate being 3.49%

then (approximately):

if house prices remain static for 3 years you will be better off by about £21k if you buy now

250k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 1% a year for 3 years you will be better off by about £13k if you buy now

242k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 2% a year for 3 years you will be better off by about £6k if you buy now

235k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 3% a year for 3 years you will be worse off by about £1k if you buy now

228k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 4% a year for 3 years you will be worse off by about £8k if you buy now

221k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 5% a year for 3 years you will be worse off by about £15k if you buy now

214k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

Personally I think it's (financially) worth renting when prices are dropping by at least 3% per annum (I'm in Yorkshire where they are) - unless I see a dream house in the village I want to live until Mort arrives.

Btw, every 10K borrowed at 3.49% over 33 years equates to paying back around 17k

so borrowing 180k means paying 303K

Every 10K borrowed at 6% over 33 years equates to paying back around 23k

so borrowing 180k means paying 413k

The average bank of england base rate since 1960 has been around 7% (mortgages are higher)

If it was me I'd be more inclined to get a 15 year mortgage at £1285 per month (3.49%) if I was going to buy (the interest is the reason to avoid mortgages). After 3 years increase the term if you have to.

Every 10K borrowed at 3.49% over 15 years equates to paying back around 13k so borrowing 180k means paying 231k.

Edited by ader
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if house prices remain static for 3 years you will be better off by about £21k if you buy now

250k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 1% a year for 3 years you will be better off by about £13k if you buy now

242k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 2% a year for 3 years you will be better off by about £6k if you buy now

235k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 3% a year for 3 years you will be worse off by about £1k if you buy now

228k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 4% a year for 3 years you will be worse off by about £8k if you buy now

221k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

if house prices fall for 5% a year for 3 years you will be worse off by about £15k if you buy now

214k house + 16k paid off + 11k saved - 6k lost in interest from your 70k deposit

Personally I think it's (financially) worth renting when prices are dropping by at least 3% per annum (I'm in Yorkshire where they are) - unless I see a dream house in the village I want to live until Mort arrives.

Btw, every 10K borrowed at 3.49% over 33 years equates to paying back around 17k

so borrowing 180k means paying 303K

Every 10K borrowed at 6% over 33 years equates to paying back around 23k

so borrowing 180k means paying 413k

The average bank of england base rate since 1960 has been around 7% (mortgages are higher)

If it was me I'd be more inclined to get a 15 year mortgage at £1285 per month (3.49%) if I was going to buy (the interest is the reason to avoid mortgages). After 3 years increase the term if you have to.

Every 10K borrowed at 3.49% over 15 years equates to paying back around 13k so borrowing 180k means paying 231k.

This calculation excludes the effect of stamp duty ,solicitor and surveyor fees, and estate agent fees on sale, on top of insurance and maintenance.

Sdlt is 2%, ea fees are 2%, maintenance depends but not free for sure. Solicitor and survey around 1.5k for buying and selling again.

So your calculation shows that assuming no house price increases renting is cheaper than buying over a 3to5 year period

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It's true that if buying there is also Stamp Duty and solicitors/survey costs (4.5k + 1.5k = 6k) and maintenance if lucky maybe only 1k a year so figures for buying are around 10k worse than I previously stated. No EA costs as you might never sell.

Realistically if buying you might have other costs such as new carpets, new washing machine etc.

But if prices don't fall for 3 more years then I don't think you'll have spent the whole 21k

And if prices fall by 2% a year you might lose 10k by buying now. To some that might not be a big deal.

If you think prices will drop by 10% or more in the next couple of years then wait.

Edited by ader
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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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