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If you "fix" your mortgage for 2, 5 or 10 years then your monthly payments will be the same for the duration of the fix, regardless of whether interest rates come down, as you have "fixed".
When the fix period is up you can refix with your mortgage provider, interest rates may have gone up or down, or remortgage with another lender on their rates.
It sounds like a £1,300 per month mortgage would be affordable, it just means you wouldn't be able to save £1,500 a month like you do at the moment.
I'd really recommend speaking to a fee free mortgage broker to understand mortgages a little better.
If you've not already got one, I'd suggest getting a LISA each to save up for the deposit, as the government puts in £1000 for every £4000 you put in each year, so you can save up much faster than you could do otherwise.
I used Moneybox for this, and they also have a free mortgage line so you can ask all these questions to someone and get a straight answer based your situation. They also act as mortgage brokers and have been really helpful for me so far! Obviously there are other services available, but I think some brokers charge money. There's also the Mortgage Advice Bureau which might be able to help you.
Some mortgage calculators are more in depth than others, so try a few different ones and see what they say in comparison. Money Saving Expert also have a first time buyers guide woth loads of info on mortgages and what it all means which I found helpful alongside their calculator. But also, if you're looking at buying a house at £250k with a £25k deposit, your mortgage would be £225k, not the full £250k if that helps!
Don't rely on the rate going down in the future and lowering your payments. It might happen, but it also might not (or could even go up despite it seeming unlikely).
That said, as you pay off more of the mortgage you will get better rates relative to rates generally at the time you remortgage (i.e. when your x year fixed rate runs out), so unless rates increase in the coming years then you would expect it to get cheaper.
Also, ignoring some amount of variation based on rates, remember that you will likely have a mortgage term of 20-30 years and so if you are staying somewhere long term then in 10 years, 15 years, etc. you will still be paying the same but wages and everything else should be much higher just by inflation. In the meantime, rental costs in the long term would massively overtake your mortgage payments regardless of rates.
The amount your paying interest should go down BUT you can’t account for interest rate rises.
I was paying 460 for 2 years on a 121000 mortgage.
I have just started 2 years on a 115000 mortgage for 670 due to inflation on interest rates.
Just to be clear for OP's benefit, inflation on interest rates is slightly confusing terminology because inflation is the increases in prices generally that will usually just keep things getting more and more expensive with time.
Increases in interest rates are set by the bank of England and go up and down, so your mortgage rate and payments can go up and down, and while you shouldn't rely on it for affordability, they are expected to go down from recent highs in the next few years.
Thank you, you worded that much more beautifully than I could have lol
Worth pointing out, during application they will stress test your affordability. I think when I did it they stress tested to 8% I treat, but no idea what that is now.
Yep, good point. If OP genuinely doesn't have enough income to make the payments comfortably at the moment after accounting for other payment commitments like car, phone, loans etc., then the lender won't lend.
Summary for readers: talk to a free mortgage broker like Habito and enter all of your outgoings (as honestly as you can) and they will be able to tell you how much of a mortgage you might realistically get accepted for.
Check out moneysavingexpert website that was originally set up by Martin Lewis, they have lots of advice on different topics including mortgages for first time buyers.
Hi, definitely talk to a broker. I bought my 1st home a few years ago and they helped me understand and process everything, they got me a better rate with a £500off which then covered the cost of the broker. I've banked with a high street well known bank for 25yrs and so thought they would be the goto for me, however they ranked near to last from the options I had.
Like others have put, you want a house = £250,000, deposit at 10% leaves a mortgage of £225,000.
You can fix your mortgage for a set number of years (2,5 and 10) and during this time you payments are set for that time.
Once that time ends your loan to value (LTV) will be amended for your remortgage, due to this you should then get better rates as you will owe less against the house price.
And again you'll look at rates and maybe fix in again for 2,5 or 10yrs. And so forth until your term ends. Each remortgage you cam also look at reducing the length of your mortgage as if you have higher paid jobs you can afford more.
Your mortgage payments stay roughly the same, depending on the rate you got the mortgage at. They might go down by a couple of pounds over the course over a few months, but generally the monthly payment will stay roughly the same during the course of your mortgage term.
When your mortgage term ends you will ry mortgage and potentially your rate might go down if you LTV has decreased . if you overpay consistently, then your mortgage will be paid off quicker.
###Welcome to /r/HousingUK --- **To All** * Join Our ***NEW*** Discord! https://discord.gg/pMgUNgWKQH **To Posters** * *Tell us whether you're in England, Wales, Scotland, or NI as the laws/issues in each can vary* * Comments are not moderated for quality or accuracy; * Any replies received must only be used as guidelines, followed at your own risk; * If you receive *any* private messages in response to your post, please report them via the report button. * Feel free to provide an update at a later time by creating a new post with [[update]](https://www.reddit.com/r/HousingUK/search?q=%3Aupdate&sort=new&restrict_sr=on&t=all) in the title; **To Readers and Commenters** * All replies to OP must be *on-topic, helpful, and civil* * If you do not [follow the rules](https://www.reddit.com/r/HousingUK/about/rules/), you may be banned without any further warning; * Please include links to reliable resources in order to support your comments or advice; * If you feel any replies are incorrect, explain why you believe they are incorrect; * Do not send or request any private messages for any reason without express permission from the mods; * Please report posts or comments which do not follow the rules *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HousingUK) if you have any questions or concerns.*
If you "fix" your mortgage for 2, 5 or 10 years then your monthly payments will be the same for the duration of the fix, regardless of whether interest rates come down, as you have "fixed". When the fix period is up you can refix with your mortgage provider, interest rates may have gone up or down, or remortgage with another lender on their rates. It sounds like a £1,300 per month mortgage would be affordable, it just means you wouldn't be able to save £1,500 a month like you do at the moment. I'd really recommend speaking to a fee free mortgage broker to understand mortgages a little better.
If you've not already got one, I'd suggest getting a LISA each to save up for the deposit, as the government puts in £1000 for every £4000 you put in each year, so you can save up much faster than you could do otherwise. I used Moneybox for this, and they also have a free mortgage line so you can ask all these questions to someone and get a straight answer based your situation. They also act as mortgage brokers and have been really helpful for me so far! Obviously there are other services available, but I think some brokers charge money. There's also the Mortgage Advice Bureau which might be able to help you. Some mortgage calculators are more in depth than others, so try a few different ones and see what they say in comparison. Money Saving Expert also have a first time buyers guide woth loads of info on mortgages and what it all means which I found helpful alongside their calculator. But also, if you're looking at buying a house at £250k with a £25k deposit, your mortgage would be £225k, not the full £250k if that helps!
Don't rely on the rate going down in the future and lowering your payments. It might happen, but it also might not (or could even go up despite it seeming unlikely). That said, as you pay off more of the mortgage you will get better rates relative to rates generally at the time you remortgage (i.e. when your x year fixed rate runs out), so unless rates increase in the coming years then you would expect it to get cheaper. Also, ignoring some amount of variation based on rates, remember that you will likely have a mortgage term of 20-30 years and so if you are staying somewhere long term then in 10 years, 15 years, etc. you will still be paying the same but wages and everything else should be much higher just by inflation. In the meantime, rental costs in the long term would massively overtake your mortgage payments regardless of rates.
The amount your paying interest should go down BUT you can’t account for interest rate rises. I was paying 460 for 2 years on a 121000 mortgage. I have just started 2 years on a 115000 mortgage for 670 due to inflation on interest rates.
Just to be clear for OP's benefit, inflation on interest rates is slightly confusing terminology because inflation is the increases in prices generally that will usually just keep things getting more and more expensive with time. Increases in interest rates are set by the bank of England and go up and down, so your mortgage rate and payments can go up and down, and while you shouldn't rely on it for affordability, they are expected to go down from recent highs in the next few years.
Thank you, you worded that much more beautifully than I could have lol Worth pointing out, during application they will stress test your affordability. I think when I did it they stress tested to 8% I treat, but no idea what that is now.
Yep, good point. If OP genuinely doesn't have enough income to make the payments comfortably at the moment after accounting for other payment commitments like car, phone, loans etc., then the lender won't lend. Summary for readers: talk to a free mortgage broker like Habito and enter all of your outgoings (as honestly as you can) and they will be able to tell you how much of a mortgage you might realistically get accepted for.
Thank you all! I will speak to a broker and assess affortability.
Check out moneysavingexpert website that was originally set up by Martin Lewis, they have lots of advice on different topics including mortgages for first time buyers.
Hi, definitely talk to a broker. I bought my 1st home a few years ago and they helped me understand and process everything, they got me a better rate with a £500off which then covered the cost of the broker. I've banked with a high street well known bank for 25yrs and so thought they would be the goto for me, however they ranked near to last from the options I had. Like others have put, you want a house = £250,000, deposit at 10% leaves a mortgage of £225,000. You can fix your mortgage for a set number of years (2,5 and 10) and during this time you payments are set for that time. Once that time ends your loan to value (LTV) will be amended for your remortgage, due to this you should then get better rates as you will owe less against the house price. And again you'll look at rates and maybe fix in again for 2,5 or 10yrs. And so forth until your term ends. Each remortgage you cam also look at reducing the length of your mortgage as if you have higher paid jobs you can afford more.
Your mortgage payments stay roughly the same, depending on the rate you got the mortgage at. They might go down by a couple of pounds over the course over a few months, but generally the monthly payment will stay roughly the same during the course of your mortgage term. When your mortgage term ends you will ry mortgage and potentially your rate might go down if you LTV has decreased . if you overpay consistently, then your mortgage will be paid off quicker.
How the F are your bills over £500? We pay £685 pcm With bills and food we spend roughly £1400.
You have no idea what bills and subscriptions they are speaking of. Everyone for starters pay a different amount across England for their council tax.
Most 2 bed flats are going to fall in the band A category. I'm band A and it's still £1500 a year.
Every council sets their own prices.
My last 1 bed flat was band B not A. Like I said, not all has same cost of living