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  1. #1
    Arena Senior Member Crazed Rabbit's Avatar
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    Default Re: I'm getting a mortgage

    I don't think there's anything wrong with renting for a while. Cheaper than a mortgage, and it lets you find out what you like.

    Edit - Congrats on basically getting a mortgage with nothing but confidence though.

    CR
    Last edited by Crazed Rabbit; 11-24-2011 at 06:46.
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  2. #2

    Default Re: I'm getting a mortgage

    Nothing wrong with renting. Especially when the housing bubble is due to burst in a few years time ...

    But congrats nonetheless.

  3. #3
    Liar and Trickster Senior Member Andres's Avatar
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    Default Re: I'm getting a mortgage

    I have no idea what the prizes are in the UK, but you won't find anything decent for 50k.

    Also, allthough the law here says banks cannot give you more money than you can pay back with 1/3 of your income, banks here still give people way too big loans which they then have big difficulties with paying back.

    Ignore the advice and the offers of your bank, make your own calculations. What's your salary. How much will you spend on basic costs: heating, electricity, food, taxes, clothes, water etc. You'll also want to live a bit, so make sure you have a budget for free time too. And of course, you need to be able to save something each month if you're going to stand on your own feet; to deal with unexpected stuff. You should be able to save at least 10 % of your income each month. Will you need a car (because a car is expensive)? If the answer is yes, you need to save an additional 10 % each month, because cars don't last forever and one day, you'll need to buy a new one. "Oh, but I can get a car loan too", I hear you coming. Sure, but know that the more you buy on credit or with loans, the higher the probability you'll end up miserable for the rest of your life before your 30th birthday.

    What's left of your salary after all that, you can spend on paying rent/paying back a mortgage.
    Last edited by Andres; 11-24-2011 at 09:47.
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  4. #4
    Dragonslayer Emeritus Senior Member Sigurd's Avatar
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    Default Re: I'm getting a mortgage

    I would say... Congratulations!!

    Yes, owning is better than renting. Even though renting can be cheaper, it is money down the drain. Paying on a mortgage is paying money to your investment.
    At least this is true here in Norway. With the interests being low these days, you can pay more of the actual mortgage reducing future interest peaks.

    I did the brave thing of actually building my house at a time it cost 10 times my annual income. It cost 3000k to build but is worth 5000k on today's market.
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  5. #5

    Default Re: I'm getting a mortgage

    Quote Originally Posted by Sigurd View Post
    Yes, owning is better than renting. Even though renting can be cheaper, it is money down the drain. Paying on a mortgage is paying money to your investment.
    At least this is true here in Norway. With the interests being low these days, you can pay more of the actual mortgage reducing future interest peaks.
    That is assuming that house prices will not decrease. May be true in Norway, but we have seen housing bubbles burst all over the world. You run the risk of being trapped in negative equity if you bought on a high market and the bubble bursts. Because then you are paying money down the drain, and you can't get out.

    There are some forecasts out there that suggest house prices could decrease in the UK in the foreseeable future. Of course it won't be an even development. I would suggest to OP he does some research to assess the risks associated with getting a mortgage, especially for the consequences if the housing market does not develop nicely.

  6. #6
    Liar and Trickster Senior Member Andres's Avatar
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    Default Re: I'm getting a mortgage

    Buying a house now, at this moment, as a short term investment (i.e. you plan to sell it with profit within less than 5 to 10 years) is indeed not the brightest idea.

    As a long term investment (think 15 to 20 years), I don't think you'll lose. If you don't have to sell, then your loss caused by a housing market going down will only be virtual. It's always best to be in a relatively stable and secure financial position before you make such a big investment, but now even more so. Right now, you need to avoid being in a position that has the risk that you may have to sell in the near future.

    Rhyfelwyr, you probably won't like this, but I think you should listen to your parents. If I were you, I'd wait a bit longer before buying. Save as much as you can, perhaps get a better job or a significant raise and then buy. Buying real estate while you just started to work and are on minimum wage seems too risky to me, certainly in the current economic climate.

    In 2008/2009, I've seen plenty of young people who were forced to sell their houses during that period. I still remember a young couple, they had gotten a mortgage at 125 % of the prize of the house they bought (personally, I think it's scandalous that banks gave/still give people more money than the house costs; it should be capped at 80 % of the prize; the rest should be paid with your own money; 125 % is a perfect recipe for putting people in deep misery). He lost his job and his welfare + her salary weren't even enough to pay the monthly amount to the bank. Their house was sold (forced) at half the prize they bought it. They'll be in poverty for many years to come, with no house and a gigantic debt to the bank.
    Last edited by Andres; 11-24-2011 at 13:11.
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  7. #7

    Default Re: I'm getting a mortgage

    Well good luck buying your own property with £50K. Did a quick search and it turns out you can actually buy apartments over here for that kind of money: €49K for 90m², in the middle of nowhere (Paterswolde)...
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  8. #8
    Member Member atheotes's Avatar
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    Default Re: I'm getting a mortgage

    Congrats on securing the loan and good luck.

    Quote Originally Posted by Andres View Post
    I have no idea what the prizes are in the UK, but you won't find anything decent for 50k.

    Also, allthough the law here says banks cannot give you more money than you can pay back with 1/3 of your income, banks here still give people way too big loans which they then have big difficulties with paying back.

    Ignore the advice and the offers of your bank, make your own calculations. What's your salary. How much will you spend on basic costs: heating, electricity, food, taxes, clothes, water etc. You'll also want to live a bit, so make sure you have a budget for free time too. And of course, you need to be able to save something each month if you're going to stand on your own feet; to deal with unexpected stuff. You should be able to save at least 10 % of your income each month. Will you need a car (because a car is expensive)? If the answer is yes, you need to save an additional 10 % each month, because cars don't last forever and one day, you'll need to buy a new one. "Oh, but I can get a car loan too", I hear you coming. Sure, but know that the more you buy on credit or with loans, the higher the probability you'll end up miserable for the rest of your life before your 30th birthday.

    What's left of your salary after all that, you can spend on paying rent/paying back a mortgage.
    Sound advice.

  9. #9

    Default Re: I'm getting a mortgage

    Quote Originally Posted by Crazed Rabbit View Post
    I don't think there's anything wrong with renting for a while. Cheaper than a mortgage, and it lets you find out what you like.
    Not over here... renting here is actually very expensive compared to a mortgage, but just how expensive does depend heavily on the north/south divide. Rhy* is in Scotland if I recall correctly (?), so house prices and rents are generally much lower there than in e.g. the south east of England. I'm not sure what you'll get for fifty grand though...
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