Remortgage woes

[simongt]

In 1996, before she met me, my wife took out a 50% mortgage on a shared ownership contract when the house was worth £50k. We paid the mortgage off a few years ago thanks to an annuity that had matured. Latterly we, thanks to an inheritance, were able to buy the other 50% of the house a couple of years ago when the value had gone up to £200k. Thus 26 years later, we paid the other half off which by now was twice the cost of the original house - !
But at least it's all our now.

 

[SpokeyDokey]

Unless you can save a hefty deposit , a mortgage is going to be a huge anchor these days . My wife’s first flat , zero deposit mortgage . This is going back to 92 ish . It was affordable . Same flat now you would need to earn £50k salary if using the 3x multiplier plus at least a 10% deposit.
It’s just not comparable now and that’s the real issue.

However I do take your point on the other expenses . Some folk are running about in very nice motors and it’s all debt.

For sure the average wages to purchase price ratio is tougher these days but one of the reasons why is that the last 15 years of very low interest rates have pushed up affordability and then demand and supply takes over to drive up prices.

And initiatives such as self-certification re self-employed income plus only 5% and even 0% deposit mortgages have hardly helped.

On top of that, it seems that virtually everyone expects to own a house these days - fair enough but that also pushes up demand.

Back in the 70's myself and most friends had precisely zero belief that we would ever own our own homes - we were almost all from poor families.

My real points were that crazy multipliers have distorted the market and that people who have more sensible multipliers, (probably the norm) of 3+1, with hefty mortgages really should be able to take 5% or 6% rates in their stride.

 

[Jameshow]

However with house prices flat for the past year and inflation racing away at 8pc the prices of houses are actually falling. Inflation isn't going to come tumbling down as it's built into many products due to upstream costs, the war in Ukraine etc etc.

 

[Gwylan]

Well, my theory involves the concept of parallel economies.

There's normal money and there is property money.
There is an exchange rate, but it is not parity.
Other rules include the fact that you can move money from real money to house money easily.
The return journey requires some quantum conditions to be applied. And there are different exchange rates for this direction.
There is considerable disruption in

However with house prices flat for the past year and inflation racing away at 8pc the prices of houses are actually falling. Inflation isn't going to come tumbling down as it's built into many products due to upstream costs, the war in Ukraine etc etc.

How can people expect the government or "they" to help people who entered into an agreed with their lender.

We had to go (1975) to an interview with the local building society to get a mortgage.

Then we got 3+1.
We knew that the repayment should not be more than 25% of our nett income.

That was with a 10% deposit.

No mortgage agent and advisors, middle men what have you. My mother assured me I was a fool. Not the only time. I would die in penury.

 

[PaulSB]

I'm not sure I agree with the "then and now" comparisons but I can't provide the data, make accurate comparisons etc. so won't argue the point.

What I do recall is the very real difficulties fluctuating mortgage rates gave my family when I was much younger. My wife and I find it hard to understand how young people afford what they have to pay today simply through the vastly greater sums they have to borrow.

We didn't bother with multipliers or affordability. Our gauge was simple. My wife worked for the NHS, my work was less secure. The rule was simple, if our mortgage plus household costs could be covered by her salary we could afford it, if not we couldn't afford it.

One of the big threats we face as a society, a time bomb already ticking, is the retirement of "generation renters." In retirement we own our house outright and enjoy a good life. If we had to pay rent our quality of life would be hugely reduced and I would probably be working part-time, possibly still full-time. I dread to think how those who are renting in retirement will cope.

Without being mortgage free I could not have retired at 62 and would have waited another 4¾ years till my state pension kicked in.

 

[rogerzilla]

The economy needs big house price falls for sanity's sake, and they are long overdue. Some people will be in negative equity for a while but that doesn't equate to unaffordable - the mortgage payments shouldn't change. You do get people throwing in the towel when they realise they have no equity left, which was a problem in the early 90s. We visited a lot of abandoned houses.

 

[Jameshow]

The economy needs big house price falls for sanity's sake, and they are long overdue. Some people will be in negative equity for a while but that doesn't equate to unaffordable - the mortgage payments shouldn't change. You do get people throwing in the towel when they realise they have no equity left, which was a problem in the early 90s. We visited a lot of abandoned houses.

8pc inflation is a fall if house prices don't rise. 8pc fall = a 16pc fall in real terms.

 

[Hicky]

I gets my goat generally speaking…war in Ukraine, water companies saddled with debt looking at the taxpayer for bailout, oil companies/utilities taking the piss etc….the Iraq and Afghan war, we never had an effect on the economy like the above instances I mention…the companies are wringing the last drops of cash out of the great unwashed and….”ofwat are keeping tabs on Thames water” sodoff, they should have been all over them like flies on sh*t.
It is clearly a failure of duty(by a regulator!!!).

As for mortgages, if my deranged ex wife has sense, the home we raised our kids in(all paid for, in my name long before we married, she contributed stuff all to bills/repairs etc for the 9 years since we split) will leave it well alone as it’s promised to our sons as soon as they learn financial responsibility, if not they’re stuffed as she’ll blow it in short order.

The purchase price home I have with the current partner is well below what the banks would lend us, zero debt, zero credit cards, own our cars etc…luckily the prudence we shown is now paying off as the belts tighten. I pity the younger generation looking at finding their way in the market.
Without someone suffering ie repos and a huge housing crash youngsters will never get on the ladder unless equity is released by parents by death or other means 😳

 

[sevenfourate]

I pity the younger generation looking at finding their way in the market.
Without someone suffering ie repos and a huge housing crash youngsters will never get on the ladder unless equity is released by parents by death or other means 😳

Right.

We had every intention of cashing in pensions, retiring early, downsizing / maybe moving abroad - and then spending every last penny we got before departing this Planet.

Despite my (Youngish) kids x 3 being prudent and saving / planning for houses; what they have saved compared to what they'll actually require to even 'get started' might well be poles apart at this stage.

So our plans of getting out of life early (And now the need to give the offspring a healthy bump; each) might well be effected by the modern financial pressures of kids wanting to 'enter' life now. Either that or we'll be taking the kids with us on our apre-work Travels and they'll forever be with us - the little Darlings

 

[DCLane]

Back when son no. 1 was born SWMBO questioned why we were putting money away each month for him. Even more so when son no. 2 arrived and we now had two monthly lump sums, which I'd also increased. It meant cheap holidays/no new car/etc. but I assured her it would be sensible in the long run. For years we had donated furniture, then items bought with my first 2008 ITV prize win (we've still got most of those! The second 2008 win I bought my lime yellow Saab 9-3 'vert' with plus we had a Center Parcs trip. And got the Honda CRV with 2022's win).

They both got the resulting savings at 18. And they could use them for university/travel/house deposit/etc. whatever they wanted.

That meant, whilst other parents we know struggled to fund their children at university, we've been OK and used any surplus to pay off the mortgage.

Both of my sons have been fortunate to access additional funding for university and, as a result, son no. 1 has invested the savings which should mean he will have a large deposit for a house if/when he decides to purchase one. Son no. 2's needed to access a bit of his due to racing costs this year, running a car and expensive university accommodation but is unlikely to need to next year. He should still have a decent amount left as well.

It seems to me that people's excessive lifestyle and encouragement to borrow more and more is coming to bite them.

I guess being brought up by an accountant rubbed off on me a little?

 

[Hicky]

Growing up with stuff all and knowing you can be genuinely potless in short order taught me to be prudent. I'm eternally grateful the first piece of paper I signed when I started at the Uni was a pension then I signed my contract, at 16 I didn't have any concept of how that would impact me, now 30 yrs later.
If left to me, our family finances would be more than comfortable but current Ms H inherited her fathers money burnsaholeinthepocket attitude. Alternatively her mother could turn a fiver into a tenner simply by holding it for half a day, she makes Martin Lewis seem frivolous.

 

[Gunk]

Growing up with stuff all and knowing you can be genuinely potless in short order taught me to be prudent. I'm eternally grateful the first piece of paper I signed when I started at the Uni was a pension then I signed my contract, at 16 I didn't have any concept of how that would impact me, now 30 yrs later.
If left to me, our family finances would be more than comfortable but current Ms H inherited her fathers money burnsaholeinthepocket attitude. Alternatively her mother could turn a fiver into a tenner simply by holding it for half a day, she makes Martin Lewis seem frivolous.

I started a personal pension at 22 (I’m now 58) best thing I ever did

 

[Fastpedaller]

I opted out of SERPS for a while (most people did?) and went back into state pension when we were advised. Looks like a good move, as I'm on track to get the max state plus a good addition from the CO-OP pension the SERPS went into (although it's gone down a chunk since last year.

I too feel sad for the youngsters - it's the greed of some from our generation that has caused some of this of course. They can't even run 'an old banger' these days, what with emissions regs. As for housing, If (a little word with a big meaning) the younger ones can't afford to buy (and investors or people from other lands don't buy) then a price fall is inevitable. Unfortunately, people can't help themselves........ If all buyers sat on their hands the prices would fall, but as soon as a drop happens someone 'takes the opportunity' rather than playing the long game. I guess it's human nature Remember many years ago when the petrol retailers were 'held to ransom' and one (Esso?) was avoided for a week? This could have forced a large (at the time) 6p a litre or more drop, but as soon as a rival dropped their price by 1p they were inundated, and it all ended very quickly.

 

[Hicky]

I do wonder when I listen to my 20yo son and his m8’s what planet they live on…their idea of a starter home isn’t 2up2down wreck they can do up and get a foot in…or “na m8 I wouldn’t want to live there!”. I have to admit usually I hear this from the more affluent ones.

 

[Gunk]

I do wonder when I listen to my 20yo son and his m8’s what planet they live on…their idea of a starter home isn’t 2up2down wreck they can do up and get a foot in…or “na m8 I wouldn’t want to live there!”. I have to admit usually I hear this from the more affluent ones.

I have an 18 year son and he has a rather inflated idea of what is achievable without getting a proper job, I blame YouTube