Remortgage woes

[Alex321]

This is true, but you now own a 6 year old car, well out of warranty in most cases, which will start to cost money in repairs. So it's not long before you go through it all again.

There are many ways to run a car but, apart from true bangernomics, where any major fault leads straight to the scrapyard, it's always a balance between a known high cost or an unknown risk.

Modern cars tend to be much more reliable than cars from the 80's or 90's (or older). A 6 year old car is not often going to be developing major faults for quite a while yet, unless you have been doing a LOT more miles than average, and even then probably not.

My current main car (insignia diesel estate), and my wife's car (petrol Micra) are both 2015 registrations, and neither have had any significant faults so far. Tyres have been the most expensive jobs on them. I'm expecting both to last us a few years yet.

OK, both are quite low mileage, but my previous few main cars had all done around 210K - 230K miles and were 8-10 years old before we got rid of them because they were starting to develop expensive faults.

 

[SpokeyDokey]

Yes, it has become common to be able to get 3 times total household income, or even more.

In response, but not directly aimed at the above member.

I wonder what percentage of mortgages were supplied on that basis?

Surely, people must've known that that is a high risk scenario especially if overlaid onto an incredibly low interest rate situation.

Even so, I am still trying to fathom out why a repayment mortgage of eg £200k over 35 years with an interest rate of 6% is 'unmanageable' at £1140 per month (BBC figures).

With two people earning £67k between them (3 times joint earnings multiplier) assuming an equal salary split, plugging £33500 into an online 'what will I take home' calculator gives a net income of £26800 as an individual and, thereby, as a couple £53600.

So, where is the difficulty in making £13680 of mortgage repayment?

Similarly at 2% their repayments would've only been £7956 - I would've thought that some 'rainy day' provisioning, from their roughly £44k net salary balance after paying the mortgage, was in the offing.

I guess I am struggling with some of the sensationalist headline stories.

NB: I realise shorter term borrowing will use different numbers.

 

[Jody]

Mine’s 11 years old, 35k miles, excellent condition. Owned outright, doesn’t cost much to run. Hardly a banger and no debt. A lease would cost £5k a year from taxed income for 3 years, I doubt I’ve spent anywhere near 5k on maintenance in 10, full service history

I'd be reluctant to let that go unless your circumstances change and push comes to shove.

 

[vickster]

I'd be reluctant to let that go unless your circumstances change and push comes to shove.

I do quite fancy a change though I’ve been looking at something electric

 

[Gunk]

So, where is the difficulty in making £13680 of mortgage repayment?

Because the couple also lease two brand new cars, owe DFS £2000 for a sofa, and are paying off Barclaycard for the family holiday they had in Florida last year. They also have a couple of frothy coffees a day and Sunday lunch out every week at the local pub This is how a lot of people live, a complete Pollyanna lifestyle.

 

[Beebo]

View attachment 695986

Do the maths on those numbers.
Over 35 years the repayment on £400,000 at 4% is £744k.
At 6% it’s £968k.
That’s one hell of an anchor around the waist of anyone trying to raise a family.

 

[Grant Fondo]

I might just ask the bank if they will keep me on 1.5% for another 5 years?

 

[SpokeyDokey]

Do the maths on those numbers.
Over 35 years the repayment on £400,000 at 4% is £744k.
At 6% it’s £968k.
That’s one hell of an anchor around the waist of anyone trying to raise a family.

But over time those monthly payments become very small relative to their incomes as they rise. And the value of their property (usually) increasing over time is a major upside especially for any family as they come along.

Also, for £400000 mortgage using 3 x joint multiplier & 50/50 salary split there is at least approx' £135000 gross income and £96400 net income coming into the household per year. Or £3.37 million (excluding any salary increases) net income over the life of the mortgage.

Ultimately, if someone doesn't want the 'anchor' then don't buy a house.

I am not sure what you are trying to say tbh. If someone wants to buy a house using someone elses money there Is a cost. That's life. 6% is still cheap borrowing. There is no such thing as 'free' money.

Your OP was about affordability, my last post was precisely about that and questioned why people are unable to afford mortgage payments when they seemingly have enough income to do so.

The 'anchor' as you put it is totally irrelevant to my post.

What's your view on the content of said post?

 

[Alex321]

But over time those monthly payments become very small relative to their incomes as they rise. And the value of their property (usually) increasing over time is a major upside especially for any family as they come along.

Also, for £400000 mortgage using 3 x joint multiplier & 50/50 salary split there is at least approx' £135000 gross income and £96400 net income coming into the household per year. Or £3.37 million (excluding any salary increases) net income over the life of the mortgage.

Ultimately, if someone doesn't want the 'anchor' then don't buy a house.

I am not sure what you are trying to say tbh. If someone wants to buy a house using someone elses money there Is a cost. That's life. 6% is still cheap borrowing. There is no such thing as 'free' money.

Your OP was about affordability, my last post was precisely about that and questioned why people are unable to afford mortgage payments when they seemingly have enough income to do so.

The 'anchor' as you put it is totally irrelevant to my post.

What's your view on the content of said post?

Well, when I said 3 times joint salary "or even more", I hadn't looked up current values.

It seems that MOST lenders now will lend up to 4-4.5 times the joint salary, with quite a few lending up to 5 times joint salary (and we are talking major building societies/banks like Nationwide or Halifax here).

https://www.onlinemortgageadvisor.co.uk/mortgage-affordability/how-many-times-wage-borrow-mortgage/
https://yescandomoney.com/guides/mo...ortgage lenders offer a,borrow up to £120,000.

So a couple earning £40K between them could get that £200K mortgage you list above. Not so much "spare" left in that.

Plugging 20K twice into a "take home" calculator gives monthly take home of £1,468.54 per person, £2,936.08 for the couple. And at 6%, they would be paying (according to your calculations above) £1,140 in mortgage, leaving them about £1,800 per month to pay council tax, energy bills, food, transport, and any other outgoings. If you haven't got kids, that is doable, but not easy. And it is 25% less available income per month than at 2%.

 

[Jameshow]

This is true, but you now own a 6 year old car, well out of warranty in most cases, which will start to cost money in repairs. So it's not long before you go through it all again.

There are many ways to run a car but, apart from true bangernomics, where any major fault leads straight to the scrapyard, it's always a balance between a known high cost or an unknown risk.

That's the dodgy middle ground ime....!

 

[fossyant]

I do quite fancy a change though I’ve been looking at something electric

Mobility Scooter ?




Sorry

 

[Jameshow]

Because the couple also lease two brand new cars, owe DFS £2000 for a sofa, and are paying off Barclaycard for the family holiday they had in Florida last year. They also have a couple of frothy coffees a day and Sunday lunch out every week at the local pub This is how a lot of people live, a complete Pollyanna lifestyle.

You been snooping again...!

 

[SpokeyDokey]

Well, when I said 3 times joint salary "or even more", I hadn't looked up current values.

It seems that MOST lenders now will lend up to 4-4.5 times the joint salary, with quite a few lending up to 5 times joint salary (and we are talking major building societies/banks like Nationwide or Halifax here).

https://www.onlinemortgageadvisor.co.uk/mortgage-affordability/how-many-times-wage-borrow-mortgage/
https://yescandomoney.com/guides/mortgage-affordability/income-mortgage-multiples/#:~:text=Most mortgage lenders offer a,borrow up to £120,000.

So a couple earning £40K between them could get that £200K mortgage you list above. Not so much "spare" left in that.

Plugging 20K twice into a "take home" calculator gives monthly take home of £1,468.54 per person, £2,936.08 for the couple. And at 6%, they would be paying (according to your calculations above) £1,140 in mortgage, leaving them about £1,800 per month to pay council tax, energy bills, food, transport, and any other outgoings. If you haven't got kids, that is doable, but not easy. And it is 25% less available income per month than at 2%.

Well, those multipliers are insane.

The lender is irresponsible and the mortgagees cannot have thought through the risk factor.

I hope there are not many mortgages out there granted on these terms.

Dumb and dumber comes to mind and I am very short on sympathy for those concerned tbh.

£20k salary is not far off minimum wage - at what point did minimum wage earners start getting hefty mortgages I wonder?

 

[Gunk]

Well, those multipliers are insane.

The lender is irresponsible and the mortgagees cannot have thought through the risk factor.

Too late now

 

[vickster]

Mobility Scooter ?




Sorry

Nah I don't want a Tesla