Five-times-salary mortgage offer... ???

[MrsBonfire]

Five-times-salary mortgage offer

all I can say is blimey!

and to verify that more people are entering the country than leaving an article on the bbc news site today

Yep, I would far rather 'waste' money to live in a house I want to live in and in an area I am happy in.

Same here, Callisto.

I lived in a bad area once, and I'd rather rent forever if the only place I could afford to buy was in a place like that.

5 x both? Really? Crikey. Mind you, my salary is paltry compared to DH so prob wouldn't have made a whole lot of difference.

Interest only mortgages worry me if it is your own house (ie not buy to let) because it means you have no fall-back position if interest rates rise ie to switch to interest only.

The mentality of wanting to buy... I'm not sure if that's the cause or effect of the fact that renting in this country is so miserable to have to do. I've been renting for 4 years and hate it. It's not like in Europe where you have long leases and the house is "effectively" your own. I hate having to call the landlord about broken radiators and not being able to put up a picture hook without permission. So relieved to be moving into a place I can make into a home.

Very true, twelve.

Europe extends more rights to tenants.

Completely agree, CD. And to pay all that money without even making a dent on what you owe. Too much risk there for me.

You do have to put down 25% deposit, and you have to be earning a minimum of 50k a year from what my DH said (thus excluding us!!)
it's not going to be for the standard first time buyer. The mortgage co's need to do something for 1st time buyers though, without exposing themselves too much iyswim

Well in the current market at least you gain equity so I can see if you can afford it then it's not so bad. However if you are stretching yourself on a 5x income multiplier and your mortgage is interest only I feel that it won't be long before you can't afford your repayments.

They were talking about a 6% base rate on the news last night in the next year, which is a worrying thought if you are mortgaged to the hilt

I just couldn't bring myself to take such a gamble. It must be hell constantly worrying about whether the B of E will put up interest rates by 1/4% or not.

CD, how are you gaining equity if you are only paying the interest?

Because of prices rising

Some people are more than happy to take the risk. We are in a medium-sized 3 bed terrace which is really going to be too small when my kids hit their teens. But we can't sensibly afford to move and can't see it will be much different in a few years time. A friend of ours who seems to treat property as an investment first and a home second (used to own several buy-to-lets too) told us to borrow the most we possibly could get our hands on (interest only) over the longest time we could as long as the current repayments were affordable, to ensure that we had the accomodation we needed now whilst the kids were with us, and then sell the place when they left home and use the equity to buy somewhere smaller. The idea of borrowing that much, even for a finite period, puts the frighteners on me but she was quite unfazed about it all. So there must be people out there who would do this.

It's not going to be a problem when they introduce 100 year mortgages which we can then pass on to our kids.

Then, as well as starting their adult life with student debt, when they inherit our houses in their forties and fifties, they'll inherit the mortgages that go with them, meaning they'll have to sell the house to pay off the mortgage. There might be a bit of equity left over. So in effect, mortgages will just be a combined life-long rent for us and savings plan for our kids.

And qui bono? Why the banks, of course!

Ah, but what if they drop? It's rather simplistic but I do believe that what goes up must come down. No idea when of course. But, there is a lot of risk if you are only gaining euity which might be positive and might be negative.

This drives me wild.
All it will mean is that estate agents encourage peope to push prices up more and more.

We're buying atm, and all the estate agents - well, mainly Foxton's, who were desperately pushy - say 'oh we can get you a mortgage so that you can afford something far more expensive than you thought!'. I have just refused to go and see something that they are marketing - it is £50k more than anything similiar in the road, and what are they telling me? 'oh, competition in that road is rising - have a talk with our mortgage advisor, we can find you a bigger mortgage'.

I'm having none of it.

These mortgages are a fast lane to trouble. A 0.5% increase in interest rates could sink you.

Uwila they won't drop - the 100 year mortgage is the plot to keep them up!!!

Doesn't always work for them Blu. I viewed a property which was on at a certain price with Foxtons, and Keatons had it 70K more expensive. Unfortunately viewed with Keatons before we realised. Offered the Foxtons asking price and the vendor refused. Upped it to what we thought was the top of the fair market price (£40K below the asking price) and were outbid. Sale then fell through with other buyers and we were phoned to ask if we were still interested. We decided we weren't and have now noticed that the vendor is so desperate to sell it now, that he's dropped the asking price to £10K lower than we were willing to pay 2 months ago.

Glad the agents and the greedy vendor have got their come uppance.

Incidentally, the house I'm buying is in London, where prices are expected to rise by 10% in the next year becuase of the shortage of properties. I don't think I would do interest only in an area where the housing market wasn't so fast.

twelve, I agree with you about the pitfalls of renting. I know people who have been moved on 4 or 5 times every 6 months/year or so. That is so depressing when you have a family, schools etc. It is just not a great option in this country, unlike Europe. We did it for years, but bought before having children.

That is why people are currently having to mortgage a whole lifetime's earnings away just to afford something that our parents would have considered "modest". I feel the whole system in this country is barmy and very unfair on young people at the moment.

Anyway, I admit this is one issue I have very strong views about, so I doubt many people see it that way.

My mum and dad bought a 4 bed, double garage house in 1989 my mum was a teacher and my dad was a lab technician and it was well within their means. I don't think I will ever be able to afford that.

I will be a nurse (probably with no job ) and my partner works in retail and is going down the management path right now. We can barely afford a car, I feel trapped beyond belief, how will we ever be able to better ourselves or shock horror buy a house (in the extremely inexpensive area we live in) thats not in a bad area, that has a drive way etc etc.

We do own a house though which we bought using inheritance and we bought it because we felt we needed to get on the property ladder before it became impossible.

I don't know anyone else within my age range - early 20s who has bought or can afford a house and all of my friends are graduates. Why bother?

a nurse with no job? I thought there was a shortage?! What's this place coming to???

Smurfgirl. In your early twenties you don't need the detached house/driveway. We are only just moving to one of those and I am 35. At the moment, the four of us live on a two-bedroom terrace. And it's fine, really. We could do with more space now, and in a few years we will need an extra bedroom (ds 5, dd 2.5) but it is entirely manageable. All this talk of "family houses" annoys me a bit really. I have firends who wouldn't have a child until they had a big house, big garden, a "family home". Of course they bought it on two salaries and once they DID have the children they started to feel the pinch. Whether it's loss of one income or paying for childcare children are expensive and play havoc witht the mortgage repayments. You are on the ladder now. Just bide your time. You are in a better position than many. And don't buy into the hype about what kind of house you need to bring your family up in.

BBS we bought this house (3 bed terrace) with the plan to have our children here not having a driveway won't stop me!

MrsB currently 2/3rds of newly qualifed nurses do not have a job I qualify in 2008 hopefully it will have changed byt then!!

Smurfgirl, most of the western world is crying out for nurses. You could work in Europe, Canada, Oz, NZ for more money, better lifestyle and be able to afford a house.