Remortgage woes

[fossyant]

How many families were single income only in 1990 vs now. I know my parents were very stressed because my dad was essentially the only one bringing in decent income.

Compared to our situation, we can 'comfortably' use 50%+ of my salary on the mortgage because my wife's income nearly matches mine, which means rate rises have far less impact.

We were single income for a while when the kids were young, and when my wife took time out to help care for her mum. I don't think families can do that now.

 

[Jameshow]

It’s their only tool to curb inflation, unfortunately if they go up any further it could end up taking us in to recession.

Next industry to suffer will be the motor trade, cheap lease deals are now a thing of the past and with rising mortgage costs, a fancy lease car on the drive is one of the first things to go

So inflation is 9pc then they put up interest rates, that's a double whammy on incomes it doesn't make sense tbh....

 

[Bonefish Blues]

So inflation is 9pc then they put up interest rates, that's a double whammy on incomes it doesn't make sense tbh....

It's all they (and therefore we)have.

Did you hear James Cleverly on R4 Today this am? If not, have a listen - slot from about 7.45-7.58. Amol Rajan dismantled him with the simplest of questions.

And before I am told I am being political, it just so happened that JC was in that seat first. Rachel Reeves did no better at 8.10 am. Interviewing baton was passed to Nick Robinson, result was the same.

 

[Alex321]

What I am not understanding is the money/News sites are showing all manner of tables indicating repayment mortgage payments per month at various annual interest rates.

What they don't show is the income level required to obtain these mortgages in the first place.

Has the income multiplier varied much from 3+1 since 2008? Genuine question as I have not had a mortgage for a long time.

As an example, from one site a £400k 35 year repayment mortgage at 6% interest will cost £2281pm up from £1325pm at 2%.

How is the higher rate of £2281pm not affordable for a person or couple who has obtained such a mortgage in the first place?

On a 3+1 that would be a walk in the park.

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

 

[markemark]

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

It is not based on a multiplier of income but affordability. They work out how much money you have left after outgoings and then if you can afford the mortgage payments. Meaning people who earn less can sometimes get a bigger mortgage if they spend less. The mortgage companies check history to (try to ) ensure the affordability data given is true but I dare say it is fairly easy to fudge.

 

[Regular.Cyclist]

It’s also pretty pointless when most people are on fixed rate mortgages which may not need renewing for years, so it has zero impact unless you are due to renew soon.
If you were lucky enough to get a 5 year fixed just before Truss was PM you should be well insulated from all this.

We were extremely fortunate, starting our mortgage renewal in August last year, completing in early September though it didn’t swap over until December. At the time we were being offered 2,3,5,7 & 10 year fixed deals.

The 10 year deal was particularly attractive as it offered the best rate available and was only a very small increase on our current payments. With 10.5 years left on the mortgage we went for that and have been extremely thankful since that we did.

I’m sure there is the possibility that we will be paying slightly more at some points during the 10 year period but it’s likely to be negligible and worth the comfort of knowing what we will be paying for the next decade.

 

[Gunk]

It is not based on a multiplier of income but affordability. They work out how much money you have left after outgoings and then if you can afford the mortgage payments. Meaning people who earn less can sometimes get a bigger mortgage if they spend less. The mortgage companies check history to (try to ) ensure the affordability data given is true but I dare say it is fairly easy to fudge.

You are right they do underwrite using evidence of affordability but I do wonder how much of a stress test they really do, once a mortgage offer is issued there is bother to stop the applicant then taking on additional debt such as car finance. I personally think that the rise in affordable leasing deals is part of the problem, cheap mortgages have given many families surplus income and that in some cases has been spent on very expensive cars.

 

[rogerzilla]

Leasing is cheaper than the option of buying a 3 year old car with a personal loan, due to high s/h prices.

 

[vickster]

Leasing is cheaper than the option of buying a 3 year old car with a personal loan, due to high s/h prices.

However, when you buy a car with a personal loan, even if the monthly payments are higher, you do at least own the car at the end of the 3 years. If you lease for 3 years, you hand the keys back at then end of the term and have no car
Unless you mean PCP or whatever it’s called?

 

[Gunk]

It doesn’t matter if people lease, or take a loan, the point is that a large section of society have been living the dream, well beyond their means on very cheap money, never thinking for a minute that it may all end. Now they are asking for government help!

We had all this back in 1989 and 2008 and no one seems to have learnt any lessons, my old business partners used to take the piss out of my humble Golf GTi when they were rocking around in top of the range E Class Mercs, two have them have now “downsized” for a better lifestyle

 

[Bonefish Blues]

It doesn’t matter if people lease, or take a loan, the point is that a large section of society have been living the dream, well beyond their means on very cheap money, never thinking for a minute that it may all end. Now they are asking for government help!

We had all this back in 1989 and 2008 and no one seems to have learnt any lessons, my old business partners used to take the piss out of my humble Golf GTi when they were rocking around in top of the range E Class Mercs, two have them have now “downsized” for a better lifestyle

TBF before 2007/8 no less a figure than a highly-regarded politician who may have had vision in one eye and a way with numbers declared the 'end of boom and bust'. In the current situation, interest rates have been super-low for what, nearly 20 years. it's no wonder the man and/or woman in the street gets caught out - because our 'elders and betters' do little better.

 

[Bonefish Blues]

And in that connection, can I just say car PCP. Is bubble, may burst.

 

[rogerzilla]

However, when you buy a car with a personal loan, even if the monthly payments are higher, you do at least own the car at the end of the 3 years. If you lease for 3 years, you hand the keys back at then end of the term and have no car
Unless you mean PCP or whatever it’s called?

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.

 

[rogerzilla]

And in that connection, can I just say car PCP. Is bubble, may burst.

It already has for some diesel cars (not SUVs). S/h values were less than the GFV in some cases. The owner is kind of protected but the finance provider takes a hit.

 

[vickster]

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.

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