Debt Advice?

[TeePee]

Take the advice on debt management at least, that will give you a chance to clear your debt and start saving. Hopefully in the time it takes for you to do that, the housing market will start to show more of a trend.

[tiggerai]

The thing is me and my partner want to move out of our house. My mum is doing our nut in which adds to the problems. Makaing the choice to buy a house is a hard one and lots of people will tell you that its a bad idea and loads will tell you its a good idea.

I assure you that I am listening to all your fantastic advice and will be sitting down with my partner this weekend to see what we can do.

The thing I am trying to get my head around is when is the best time to buy. We could leave it three years for example and then have to pay way more or way less. It's a bit of a gamble.

I think the best advice is to get on the property ladder when you can afford it.

That's what I'm doing. Got a fixed rate mortgage for 5 years so I know what i'm paying at least until then. Interest rates may also go mad, or they may get better. You just don't know.

Famished, good luck with everything.

[javv5]

Have a read here... might help:

http://www.moneysavingexpert.com/

[badass]

The thing is me and my partner want to move out of our house. My mum is doing our nut in which adds to the problems. Makaing the choice to buy a house is a hard one and lots of people will tell you that its a bad idea and loads will tell you its a good idea.

I assure you that I am listening to all your fantastic advice and will be sitting down with my partner this weekend to see what we can do.

The thing I am trying to get my head around is when is the best time to buy. We could leave it three years for example and then have to pay way more or way less. It's a bit of a gamble.

You never know the best time to buy untill its happened, however you can look at the evidence and see when there is a better or worse time to buy. If I would have been in a position to do so, I would have bought a couple of years ago with the intention of selling just before any sort of crash. I believe it will be at least a couple of years - more like 4 before any crash will happen. As a rough guide, mortgages break even over renting after about 2 years.
I have thought about buying a "reasnobly priced" place now and selling just before a crash happens (you always get a warning) and renting for a year or so, then buying at the bottom of the trough.
However thats still risky.

[Mike Fishcake]

Rave - that's a brilliant site. cheers for the link.

[TiG]

When the right time to buy is when you can afford to.

That means if you are getting a mortgage at 5% now fixed for 2 or 5 years. When you come out of it, IF the interest rates had hit 8 or 10% could you afford the repayments.

During the last big rise of interest rates (13% a peak) on a 100K mortgage this took the payments from ~£600 a month @ 5%. to.....£1,127.83

its facts like that are important to take into account. £527 extra a MONTH is not something i would want to even consider.

As everyone has said already, no-one can predict the future. BUT if the worst did happen, and say a nuke went off by accident somewhere in america, this could cripple the worlds economy, sending the whole world into recession, huge job losses and IF you did manage to hang on to your job Could you cope with £527 a month charge JUST on the interest.

Yes buying is all well and good - its much better getting out from peoples feet, BUT renting does the same thing, it limits your exposure and allows you to get your other debts paid off so you can save up a deposit.

The less money you have to take out on a mortgage the better, the quicker you can pay off the mortgage the less interest you pay.

After Amt. Owed Int. Paid
5 Years £88,580 £23,656
10 Years £73,924 £44,075
15 Years £55,116 £60,342
20 Years £30,978 £71,279
25 Years £0 £75,377

An interesting figure for you..... £100K mortgage after 10 years, You have paid only a fraction (12% of the equatity) of the mortgage off, paying nearly two times that amount in interest.

Paying £75,377 for your mortgage over the term.

If you managed to rent for a couple of years and save yourself £10000.

look at the difference £90000 over 23 years....

After Amt. Owed Int. Paid
5 Years £78,142 £21,104
10 Years £62,923 £38,848
15 Years £43,393 £52,279
20 Years £18,328 £60,177
23 Years £0 £61,626

So what does that mean for you.....

£10000 deposit + £61,626 in interest is over 4K less than buying now?.

BUT you've been renting for 2 years?.

Still think its wasted money?

TiG

[5lab]

During the last big rise of interest rates (13% a peak) on a 100K mortgage this took the payments from ~£600 a month @ 5%. to.....£1,127.83

think your maths is wrong. that'd be true on an interest-only mortgauge (the amount you pay is a direct ratio to the boe base rate) but if you're paying some of the cash back as well, the difference would surely be smaller? £100k over 25 years means paying off ~£350 per month of actual money owed for that period - the rest of the amount is interest - ie £250 on your ~£600 example. if that went up from 5% to 13% you'd be paying back £1000 total per month. i think? so £400 increase. i could stomach that - esp in 3 years when i've had a payrise or 2...

[chicken]

Getting a new credit-card to transfer your existing cards to at a lower (preferrably 0%) rate for a while would be the best step, as creditors will see this as a fairly normal and sensible activity. Getting a loan, right before a mortgage will probably be seen as a bad thing and they may refuse your mortgage.

When you apply for any kind of credit, the credit-check they perform is marked against your name, along with the details of whether it was successful or not. When you go for your mortgage, the bank may not be able to see what you got credit for, but if you can explain it was a credit-card to save on interest repayments they will be a lot happier than if you tell them it was a £10k loan or refuse to explain it at all.

Also only go for one method of solving this, getting three cards because one won't hold enough of the debt will result in 3 credit-checks against your name and lower your rating.

Your rating is based mainly on your repayment history, but also on the number of credit applications you have made recently (in case you are applying for numerous loans with the intention of running away) and how successful they are (if somebody rejected you then it's likely there's a reason).