The thought of being on a 95 or worse ltv is unnerving.
To be honest, I think it just kicks the can yet further down the road.
Budget 2021: Mortgage guarantee to help buyers with 5% deposit
- Thread starter dowie
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The thought of being on a 95 or worse ltv is unnerving.
To be honest, I think it just kicks the can yet further down the road.
If you can't get a 10 percent deposit you probably aren't in a position to over pay.
The issue I had when getting my house wasn't the ltv it was the affordability. More house prices go up the worse and worse your first home is going to be. But you'll still have a hefty mortgage.
If the former then you need to lower your budget regardless, or team up, or earn more.
Someone could have 5% deposit right now and this tips the balance in their favour to buy sooner. It just cuts time off. Time is money and all that. It took me ages to get my 10% because my rent and living aspirations outperformed my earning ability/ability to prioritize. This would have been handy.
Your second point is a much bigger problem but has always been the case. You need to balance getting on the ladder in a worse house versus saving up a lot more for your deposit balanced against how much you pay in rent. The latter tips the LTV in your favour on your next bigger house which is what affordability will be based against.
The banks feel the same hence why the government has had to back it to allow them to manage their risk. In terms of you as an individual it shouldn't tip the balance all that much unless you are planning on flipping it more quickly than the equity would grow at and you end up net worse off once you add fees and upkeep in.
The impression I get is that deposit is a blocker for many rather than income. <sweeping_generalisation>The youth of today is used to acquiring everything very early sometimes on the never-never</sweeping_generalisation> so they can have decent earnings, but prior to buying a house also lots of outgoings either one-off or ongoing payments to pay off their flash smartphones / 4k TV / Car / Nights out / overseas holidays / subscription services etc they all seem to have, which restricts their ability to build up a deposit. I expect there's a fair chunk of wannabe home owners that don't even have 5 figures in savings.
There is a lot of truth to this and I don't kid myself that's why it took me a while to save. The world moving to a subscription economy hasn't helped people and the lack of financial education in schools is a real disaster too.
So, it's a terrible idea then yes?
No, we have a much bigger deposit than 5%. I certainly would never entertain the idea of taking on a 95% LTV as a FTB.
Yes, indeed. How about;
- Much higher council tax for second, third etc. homes (perhaps additional taxes on second homes)
- Much higher taxes and disincentives on BTL
- End section 21 and improve tenant's rights across the board (e.g. lifetime leases, ability to decorate/refurbish)
- Land Value Tax
- Tax on property profit over a certain percentage e.g. if you make more than a 20% bump when selling your house than what you bought it for, the government takes a cut
- Abolish leasehold entirely
- Abolish council tax and bring in local tax related to the price of your property e.g. 0.5% (helps homeowners stop wishing for rising prices)
My thoughts are this is just another example of the government meddling to keep the market falsely buoyant. It's a nonsense. All the papers go in for it though; just read the language about house prices and half of them still speak of sales/high prices as a good thing. Anyone with half a brain can tell you that the reason houses are so unaffordable is because they're too damn expensive. There's no way around it. Increasing accessibility to credit just perpetuates the problem and is saddling younger buyers with obscene debt. Put it this way, the average FTB is 37yrs old now. If that slips up to 40yrs old then FTBs could struggle to get a 25-30yr mortgage term on their first house because they'll be hitting retirement age! Mental..
Aaaaand the fact that house prices are 7-8+ times earnings has nothing to do with it, compared to 3-4x earnings back in the day? Ok boomer
Why as a FTB wouldn't you do a 5% deposit?tldr
Honestly no idea where you FTBs are getting your financial advice from but it sounds so RATM yet you are doing nothing to help yourselves.
If you are buying a house you love on 95% LTV at the same rates as a 90% LTV which gets you on the ladder sooner and clearing the capital sooner then what is the problem???
Edit: or using that new buying power to get something that'll last you even longer.
I'd also never entertain idea of a 5 percent mortgage. Especially in very very uncertain times where prices are being propped up with temporary schemes.
If you've taken that long to save up that 5 percent deposit, you could easily see that vanish and become debt very quickly the way things could go
If you've taken that long to save up that 5 percent deposit, you could easily see that vanish and become debt very quickly the way things could go
Well personally, it's because I've got a bigger deposit than that. I haven't looked into it but why would they give you the same rate as a 90% LTV anyway? Surely it still follows that you'd get a better rate the higher deposit you put down.
Agreed. It comes down to this really. Also interest rates are rock-bottom and can only go one way. Another risk.
I just did a quick comparison out of interest at MSE. If you put down 5% on a 250k property you'd pay £356,816 over the total term (at the default 3.5% interest rate). If you put down 15% you'd end up paying £286,029 across the whole term assuming you'd get a better rate (I put in 2.5%). That's a 70k difference. Not to be sniffed at.
Because the government is backing the other 5% that is the behaviour I would expect.
Your maths example is very basic, misleading and highlights the poor education in this country for financial management. No one should be aspiring to get a 30 year mortgage regardless of LTV and no one should be planning on the outset to pay the minimum amount/stated monthlies. You should be factoring in over payments, pay rises, change in circumstances, desire to move on etc etc. Changing LTV across the time period also makes it totally misleading cost for comparison.
Playing into your basic example, the person paying 3.5% in your example may also currently be paying 100% to a landlord. So how much of that 70k is further offset.
Which in turn increases the size of the deposit you need, so back to square one!
You have no idea at all about my own personal situation; I will tell you.
I am saving as hard as I can and not spending a penny (beyond replacing my ancient 2012 PC, and that's pretty much it, barring bills and food and essentials). No 4k TV (it's a 2012 Samsung), no Netflix, Prime or the like. No eating out. No holidays (not one holiday for over a decade). No car rental (I have a 2003 plated small city car which I bought for £2k back in 2014).
I'm saving as hard as I an in preparation for leaving this dog-eat-dog country in the mid-term.
You're welcome to stay and fight each other to be in that top 50% that doesn't live hand-to-mouth. Welcome to continue looking down on the low-paid running the essential services that we all rely on. Welcome to continue to be condescending towards such people, and tell them they need to "pull up their bootstraps," to become doctors and engineers, if they don't want to be somebody else's bitch. Welcome to cheer on the BTL with their vast portfolios. Welcome to view residential property as a speculative asset to make money.
Meanwhile I hope to be off enjoying life in a more socialist country, that doesn't vote perpetually for a government that just serves the rich. Not now, not next year, but when I have enough to say, "Screw this country, I'm out of here."
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Soldato
All this does is help the top few percent of earners and doesn't actually help people at the bottom of the ladder.
You literally said in another thread you have Sky+ but whatever makes you feel better. You must be sat on a fortune.
Are we now at the point even FoxEyes parents have to start giving up their luxuries to fund his moving out?
Haven't had a Sky sub since about a year now. It was never for me in the first place, since I don't watch TV
Have Freesat from Sky currently, and will most likely not re-sub (if we do it won't be my decision nor for my benefit, although I would be the one paying for it if we did..)
No I'm not sitting on a fortune. I've always been on less than nat average wage and continue to earn significantly less than nat average wage, working in the public sector in Cornwall (you won't get rich down here). I can save a few £k a year, is all. There's still bills to pay you know, even with no luxury purchases at all.
Everyone must sacrifice except home owners and BTL landlordsAre we now at the point even FoxEyes parents have to start giving up their luxuries to fund his moving out?
Who, under this Tory govt, have the inalienable right to "earn" more than nat average wage by just watching house prices rise, year on year I assume you understand averages are made up of the low and the high. Even if the national average went up you would still have people at the bottom and the top. The way you move up the ladder is by taking more responsibility, learning a hot skill or changing employer. Stop playing like you are the victim of the system, you knew exactly what the rules were, you just stuck to your guns and didn't participate. Now your hoping the system corrects itself and pays service workers more than they are due (not disputing at all the pivotal role they play in the system but that's why they are typically so young and/or have means tested support for housing).Haven't had a Sky sub since about a year now. It was never for me in the first place, since I don't watch TV
Have Freesat from Sky currently, and will most likely not re-sub (if we do it won't be my decision nor for my benefit, although I would be the one paying for it if we did..)
No I'm not sitting on a fortune. I've always been on less than nat average wage and continue to earn significantly less than nat average wage, working in the public sector in Cornwall (you won't get rich down here). I can save a few £k a year, is all. There's still bills to pay you know, even with no luxury purchases at all.
Well more likely given his age he is waiting for the dad to snuff it so he can inherit what his dad worked hard for so he doesn't have to.Are we now at the point even FoxEyes parents have to start giving up their luxuries to fund his moving out?
I'm not hoping anything.
I could hope for the housing market to correct itself, but vested interests will ensure it doesn't.
I'm not hoping anything, and the action I will be taking (in the mid-term) is to leave a country where self-interest is the only game in town. I find it so depressing. People in this country have no social conscience at all. Not even a little.
Some people even think we pay a "lot of tax" and should have less taxation and more deprivation. Because everybody who has nothing has "only themselves to blame". Just pull yourselves up...
Yes of course I just bum around all day.
That's literally what all council workers do, isn't it?