Anyone here had financial responsibilities 16/9/92?

[fossyant]

We switched from endowment to repayment at some point early on in our mortgage years, but Halifax cocked up and put something like £50k on another endowment and £2k on repayment. I didn't notice on the first anniversary, but did at year two. Raised a complaint, and eventually they put us 'straight' as if we'd been on the repayment two years earlier - took a lot of work and Halifax treated us badly - never banked with them since - removed our savings.

I'm out of touch now as we finished our mortgage few years back.

So, someone on £250k mortgage is looking about £400 a month increase at present if not on a fixed..yikes. My sister and brother's are around the £400k - even more yikes, and he also has a business mortgage for his dental practice.

 

[T4tomo]

As @si_c said, it is to do with the house price to salary ratio. For example if a house used to cost 10 times an average salary and now one costs 100 times the salary then a rise in interest rates will be more keenly felt.

Indeed and back then you weren't allowed to borrow as big a multiple of salary so it was harder to get into trouble. Low interest rates & high house prices have led to some riskier high multiple lending.

 

[gbb]

As @si_c said, it is to do with the house price to salary ratio. For example if a house used to cost 10 times an average salary and now one costs 100 times the salary then a rise in interest rates will be more keenly felt.

Has it ever been 10x salary ?
Iirc, when we were buying ours (around early 2000s) I think the borrowing ratio was 3.5 times salary, somewhere around that mark
I see now its IRO 4 to 4.5 times salary.
If I extrapolate that from my salary which is fine for us but a bit below national average, I could borrow 130 to 150k. Its not enough with house prices what they are, my humble house on a very average council estate with no drive, no direct parking outside is around £200k.
BTL landlords are virtually the only people that buy these houses, how on earth young people even afford it I don't know! !et alone something a little nicer.

 

[si_c]

Has it ever been 10x salary ?
Iirc, when we were buying ours (around early 2000s) I think the borrowing ratio was 3.5 times salary, somewhere around that mark
I see now its IRO 4 to 4.5 times salary.
If I extrapolate that from my salary which is fine for us but a bit below national average, I could borrow 130 to 150k. Its not enough with house prices what they are, my humble house on a very average council estate with no drive, no direct parking outside is around £200k.
BTL landlords are virtually the only people that buy these houses, how on earth young people even afford it I don't know! !et alone something a little nicer.

We bought in the North which makes things considerably cheaper

That being said our Mortgage is roughly 3.9x my salary, so affordable for us even if the rate goes up significantly. The problem you have is when people have over extended themselves based on cheap rates being able to afford a 400k mortgage at 3% is a wildly different proposition from 400k at 6% or 8% - I saw on the BBC today that someone had had a mortgage offer at 9.4%, a year ago I wouldn't have considered an unsecured loan at that rate let alone a mortgage.

You can estimate the change in repayments at roughly £50 per month per 100k per 1% increase, for people with reduced spare income as a result of an increase to the cost of living it could get quite serious quite quickly. That being said I expect it will be the energy companies who are cut off first, I know I'd pay my mortgage before EDF if it came to that.

 

[Alex321]

Has it ever been 10x salary ?
Iirc, when we were buying ours (around early 2000s) I think the borrowing ratio was 3.5 times salary, somewhere around that mark
I see now its IRO 4 to 4.5 times salary.
If I extrapolate that from my salary which is fine for us but a bit below national average, I could borrow 130 to 150k. Its not enough with house prices what they are, my humble house on a very average council estate with no drive, no direct parking outside is around £200k.
BTL landlords are virtually the only people that buy these houses, how on earth young people even afford it I don't know! !et alone something a little nicer.

When we were first buying a house together, in 1982, the lenders would allow a maximum of 3 times the primary earners salary plus 1 times the secondary earner.

Nowadays it is 4-5 times the combined income, but house prices are more like 10 times a single income, for a decent house.

I'm glad we are out of that now, having paid of our mortgage on the last house several years before we moved, and moved to another house at the same cost as we sold for.

 

[iandg]

I must have had. Married and first house 1987. Both worked NHS, me a Biomedical Scientist and Mrs DG a Nurse. Four kids between 1988 and 1996. I remember struggling financially - but not specifics.

 

[kynikos]

Bought our first house in 1975 on a multiplier of 4 + 1 IIRC. Interest at 2.5% fixed for 30+ years which was very nice when rates went through the roof...

 

[SpokeyDokey]

Bought our first house in 1975 on a multiplier of 4 + 1 IIRC. Interest at 2.5% fixed for 30+ years which was very nice when rates went through the roof...

Was that in the UK?

 

[spen666]

...but I have spent most of my adult life 'preparing' for something after watching my parents shot/scream at each other all night long when repossession of our home became a real possibility back than.

...

Hopefully the shots missed everyone

 

[byegad]

1975 Lord Byegad and the first Mrs Byegad bought their first house. Mortgage broker said; 'The option mortgage is for you!' We resisted, had a virtual row over it and took a repayment mortgage.
THEN...
The interest rate kept going up, we kept paying the extra. Then they came down and we didn't reduce our payments. Result, a 25 year mortgage would be paid off in just a little more than 13 yrs., we moved at 12 yrs.
1991, now divorced from the treacherous b***h first Mrs Byegad, I took out a mortgage on a house. Broker; 'The option mortgage is for you!' No thanks say I. A week later broker rings up to say the Building Society will give you your mortgage, but it has to be an option mortgage. I ring Building Society, and ask why I can't have a repayment mortgage. They say I can have a repayment mortgage and they duly arrange it. I reported the broker to the society and they promised to investigate the fibbing blister.

Option mortgages were a scam, they were always risky and for everyone whose matured product paid off the debt there were many that didn't. A classic Ponzi scheme in fact.

 

[kynikos]

Was that in the UK?

Yes - via employer at the time. Paid off several years ago but I still have a £100k+ revolving credit facility, secured on the house, with a rate of 1% over base; again very handy in recent years.

 

[Alex321]

1975 Lord Byegad and the first Mrs Byegad bought their first house. Mortgage broker said; 'The option mortgage is for you!' We resisted, had a virtual row over it and took a repayment mortgage.
THEN...
The interest rate kept going up, we kept paying the extra. Then they came down and we didn't reduce our payments. Result, a 25 year mortgage would be paid off in just a little more than 13 yrs., we moved at 12 yrs.
1991, now divorced from the treacherous b***h first Mrs Byegad, I took out a mortgage on a house. Broker; 'The option mortgage is for you!' No thanks say I. A week later broker rings up to say the Building Society will give you your mortgage, but it has to be an option mortgage. I ring Building Society, and ask why I can't have a repayment mortgage. They say I can have a repayment mortgage and they duly arrange it. I reported the broker to the society and they promised to investigate the fibbing blister.

Option mortgages were a scam, they were always risky and for everyone whose matured product paid off the debt there were many that didn't. A classic Ponzi scheme in fact.

When you say "Option mortgage", do you mean what were normally called endowment mortgages?

There were certainly a lot of those mis-sold.

 

[Bromptonaut]

Endowment mortgages were being pushed long after they made any economic sense.

My Father, who was financially pretty clued up, took one out c1960. The advantage then was that you could claim tax relief on the premiums. Basic rate in the sixties/seventies was as high as 35% and he was earning enough to pay higher rate, 45-50%, on the top tranche of his pay/commission. There were also periods of high investment returns. I think it paid out around £6000 on an original sum of £3000. The excess would have been the price of a very nice house in 1960. Eaten by inflation it was enough to facilitate his running a top of the range Honda Accord rather than a 'cooking' model.

Once tax relief went (1984?) they made much less sense. Promises were based on past performance which was not achieved on investments in the nineties. Buying houses in 1986 and again in 1990 I was scorned by sharp suited 'mortgage advisers' at selling agents when insisting on a repayment mortgage. Advice of Dad, and reputable financial journalists at the time, was to get the best repayment deal and invest any surplus cash in either paying down the capital or investments like what we now call ISAs that have a tax free wrapper. Tax efficient and you had some choice of how it was invested.

One of the aforementioned 'advisers' swore blind the there was no connection between endowments and market investments...

All worked for me. Latterly we had a tracker rate which, post 2008, reduced the mortgage to a few hundred/month.

Now cleared.

 

[Moon bunny]

I’ve never had a mortgage.

 

[spen666]

It's Wednesday today, still in September, the IMF has essentially called our Conservative Chancellor out of control.....what can go wrong .

....

Ahh yes, the IMF - aren't they the people who backtrack on their erroneous predictions?