Mortgage Payments - WHat Do Feel Comfortable Paying

[Doggy Styles]

You could get an interest only mortgage (there are still some about) and overpay while times are good - you are allowed to overpay 10% per annum. While times are bad, you just pay interest which is probably around £1200/month - which is roughly the same as renting. At least at the end of the day you end up with a London property - one of the few assets holding up these days.

Me too.

I was also wondering how you overpay an interest-only mortgage.

[BrilloPad]

Me too.

I was also wondering how you overpay an interest-only mortgage.

Once inflation kicks in the mortgage is going to be negligible relative to the value of the house.

[sbakoola]

Hi All

I am about to take the plunge and buy a house in Wimbeldeon. I have a 25% deposit and am looking to borrow 550K. Halifax have a 3.69% mortgage which means that monthly repayments are 3K a month.

In the grand scheme of things 3k a month is not a lot if you are on 525 a day - The problem is what happens if you lose your contract!! I have some savings left after the mortgage (about one years worth) in the war chest but the question for you intelligent folks are....

What mortgage monthly repayment wiould you start to feel stretched at? Is 3K a month in mortgage payment a lot??

I was on £18k salary/year paying off a flat around £50k in london many many years ago, the mortgage back then was only around £350 /month which paid off the capital also; but life was tough because the other living expenses brought me down. Now I got a £500k mortgage on my current place and I feel very comfortable on my £1.9k / month interest only payments. I got a big warchest to survive for 2-3 years without working. Back when I was paying only £350 / month for my old £50k mortgage I was living from month to month in an awful permie job without any means of saving.

Also made a 110% profit on my old £50k mortgaged place after I sold and making a 38% profit on my new place if I sold today and I feel more comfortable than ever.

So go figure.

[Doggy Styles]

Once inflation kicks in the mortgage is going to be negligible relative to the value of the house.

But how do you overpay an interest-only mortgage? Unless you change it to a capital mortgage. My little brain is struggling with that.

[alreadypacked]

I was on £18k salary/year paying off a flat around £50k in london many many years ago, the mortgage back then was only around £350 /month which paid off the capital also; but life was tough because the other living expenses brought me down. Now I got a £500k mortgage on my current place and I feel very comfortable on my £1.9k / month interest only payments. I got a big warchest to survive for 2-3 years without working. Back when I was paying only £350 / month for my old £50k mortgage I was living from month to month in an awful permie job without any means of saving.

Also made a 110% profit on my old £50k mortgaged place after I sold and making a 38% profit on my new place if I sold today and I feel more comfortable than ever.

So go figure.

You sound like the people in Dublin before the crash.

Now take off the rose tinted glasses:
The company you work for has gone bust, the agent too.
You have to sell your house, but the best offer is 30% of what you paid for it.

What now?

You don't think it will happen to you, they didn't think so either.

[sasguru]

I was on £18k salary/year paying off a flat around £50k in london many many years ago, the mortgage back then was only around £350 /month which paid off the capital also; but life was tough because the other living expenses brought me down. Now I got a £500k mortgage on my current place and I feel very comfortable on my £1.9k / month interest only payments. I got a big warchest to survive for 2-3 years without working. Back when I was paying only £350 / month for my old £50k mortgage I was living from month to month in an awful permie job without any means of saving.

Also made a 110% profit on my old £50k mortgaged place after I sold and making a 38% profit on my new place if I sold today and I feel more comfortable than ever.

So go figure.

Isn't interest only, in effect, renting? Never did understand that - unless you can get a nicer place.
But in the end the asset isn't yours.

[Doggy Styles]

Isn't interest only, in effect, renting? Never did understand that - unless you can get a nicer place.
But in the end the asset isn't yours.

But if you buy for 200K, and sell for 300K, you've only got 200K to settle up with your lender when you sell, leaving 100K in your pocket.

Or have I got that wrong somewhere?

[alreadypacked]

But if you buy for 200K, and sell for 300K, you've only got 200K to settle up with your lender when you sell, leaving 100K in your pocket.

Or have I got that wrong somewhere?

You are talking gross profit, you need to look at net profit.
Buying and selling cost, don't forget stamp duty.
How much you have paid in interest over rent cost.
Repairs, decorating etc.

How much of the 100K do you have left?

If you rented somewhere small and saved?

I think some people buy, because they can't save.

[Scrag Meister]

Isn't interest only, in effect, renting? Never did understand that - unless you can get a nicer place.
But in the end the asset isn't yours.

You can always make capital repayments when you fancy, bearing in mind you don't over do it and incur Early repayment charges.

My wife has a flat, from before I met her, that she rents out, on an interest only mortgage and we throw 10k at it when we get the chance, and it's still going to be paid off earlier than if it had been on repayment.

[Old Hack]

Trouble is with this is that it is a lifestyle question - huge house and garden = a lot of maintenance and isolation whereas a small house in London means much more time to go out and socialise as well as plenty of good contracts on tap.

It is a lot of maintenance, but it is a lifestyle choice. Schools are better out this way, the air is cleaner, there is little light pollution (or none at all where we live) and with 3 young kids, London would be the last place I'd want to be. We've 'done' London and moved away 3-4 years ago. If we sold all the houses, we could afford this one with a relatively smallish mortgage and it would be what we call an end gamer; we'd not need to buy again unless misfortune, health or other unforeseeable mishaps come up.

As for contracts, in my game they are all over the place anyway, so that's no great shakes.