morgages...how do they work?
02-06-2008, 12:45 PM
#1
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morgages...how do they work?
...if i borrowed 170k over 10 years paying 2k a month...in 5 years time would my statement say i owed 85k so i could either remorgage or pay up??????
02-06-2008, 12:51 PM
#6
Because of the interest.
The balance depreciates on a curve, not a straight line.
Lets just assume its on 7% APR, thats about .5% a month ish
In the first month, that .5% is 850 quid so your 2K only pays off 1150
In the last month, that .5% is about a tenner, so your 2K pays of 1990
NOT exact numbers thats just ballpark figures from the top of my head.
The balance depreciates on a curve, not a straight line.
Lets just assume its on 7% APR, thats about .5% a month ish
In the first month, that .5% is 850 quid so your 2K only pays off 1150
In the last month, that .5% is about a tenner, so your 2K pays of 1990
NOT exact numbers thats just ballpark figures from the top of my head.
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02-06-2008, 01:09 PM
#10
In lending terms, they are pretty much the best value borrowing going.
Car finance is typically FAR worse, the only thing that makes mortgages seem bad is that they are over a long period of time, so compound interest has more time to take an effect.
Try working out the "total repaid" on a 40 year mortgage even at 7% and it gets fucking terrifying, lol, but you have to remember that at the end you are paying money thats now worth fuck all in todays terms.
Car finance is typically FAR worse, the only thing that makes mortgages seem bad is that they are over a long period of time, so compound interest has more time to take an effect.
Try working out the "total repaid" on a 40 year mortgage even at 7% and it gets fucking terrifying, lol, but you have to remember that at the end you are paying money thats now worth fuck all in todays terms.
02-06-2008, 06:11 PM
#13
the paperwork i've got states that for every £1 i borrow i will be paying back £1.91 at the lowest starter fixed rate and then this will go up to £2.11 for the duration of the mortgage
at which point i will switch and go and get another one
it may cost me a granda a time for someone to do all the paperwork etc but the last time the young lady saved me £350 a month with a deal she cuold get and i couldn't so after 3 months i was saving money again
at which point i will switch and go and get another one
it may cost me a granda a time for someone to do all the paperwork etc but the last time the young lady saved me £350 a month with a deal she cuold get and i couldn't so after 3 months i was saving money again
02-06-2008, 06:11 PM
#14
Happily retired
Used correctly Mortgages are a great thing.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
02-06-2008, 06:12 PM
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I know someone who pays 900 pcm out, has been paying for 18 months and has only paid off £1.60 off the actual mortgage.
Joke or what, purely paying interest off.
Joke or what, purely paying interest off.
02-06-2008, 06:14 PM
#16
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With any luck tho all these people the jumped onto the "buy to let" bandwagon will start struggling soon and have to offload property cheap to cut there losses , thats why they have said today that bradford and bingly are up shit creak today
02-06-2008, 06:19 PM
#17
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Used correctly Mortgages are a great thing.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
Our intentions exactly when we retire Rod
Buy something cheaper and live off the money from the sale. Dont have a pension...........
02-06-2008, 06:20 PM
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Bradford and Bingley are the Largest UK Buy To Let lender in the UK, they arent in a good way, but no were near as bad as the rock was.
The Bank of England will be forced to drop the interest rate again, very shortly.
The Bank of England will be forced to drop the interest rate again, very shortly.
02-06-2008, 06:48 PM
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Used correctly Mortgages are a great thing.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
Bought my present house on a 22k mortgage 25 years ago probably paid twice that back but house now over 400k. During the previous 10 years had moved up the chain every 2years as my wages increased. Thinking of selling & buying a 300k ( 3bed detached) house & putting 100k in the bank within the next 2 years as house is now too big. So that Mortgage was not a debt but an investment.
02-06-2008, 06:52 PM
#22
Professional Waffler
02-06-2008, 07:02 PM
#24
02-06-2008, 07:29 PM
#26
Testing the future
even at rod's age, the young ho's would be all over him 
02-06-2008, 09:00 PM
#30
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I currently owe £80k on the dot, but I'm now on an interest only for 3 years as I couldn't afford the monthly payments on a repayment deal.
and the buy to let owners wont be suffering, all I keep seeing is rent prices increasing massively while people hold off buying incase the market drops some more, so if anything they're raking it in!
and the buy to let owners wont be suffering, all I keep seeing is rent prices increasing massively while people hold off buying incase the market drops some more, so if anything they're raking it in!
02-06-2008, 09:02 PM
#31
Happily retired
every little helps.
02-06-2008, 09:12 PM
#33
Professional Waffler
Id have no worries about downgrading when older. Something comfortable and enjoy ther money
03-06-2008, 09:40 AM
#36
PassionFord Post Troll
03-06-2008, 09:44 AM
#37
Testing the future
look at them in the long term and they don't seem so bad. and anyway, if you hadn't had a mortgage, you'd have paid £40k in rent to somebody else 
03-06-2008, 09:49 AM
#38
Ive been paying 600 a month for 3 years on a property I have buy to let, on my last statement I owed 3 quid more than I borrowed originally.
The tenant pays the mortgage with the rent, the place ive made money is the house is worth 50-60K more now than when I bought it.
Mortgages are fine in a rising market, the time it gets to be a bad investment, is if the price of houses doesnt go up, but given that inflation in this country has NEVER been negative for any significant period of time, and doesnt look likely to be, in the long run house prices WILL go up, so it suits me just fine.
The tenant pays the mortgage with the rent, the place ive made money is the house is worth 50-60K more now than when I bought it.
Mortgages are fine in a rising market, the time it gets to be a bad investment, is if the price of houses doesnt go up, but given that inflation in this country has NEVER been negative for any significant period of time, and doesnt look likely to be, in the long run house prices WILL go up, so it suits me just fine.
03-06-2008, 09:55 AM
#39
Testing the future
at this time you have potentially made it, but as you say it all depends on the market and in the end you could end up losing on it (although not likely in the long term)
03-06-2008, 10:03 AM
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Mortgages aren't bad value.....
You're effectively renting the money at 5 to 7%. Very good value in fact!
Maybe they're on "interest-only"..??
That's effectively renting the money to buy the house, rather than renting the house itself. Not good in a falling market (unless already owned for many years).
The extra £100 rent per month doesn't cover the £1,000 a month loss in value of the property!!
If B-T-L landlords had any sense, all their properties would have been on the market early 2007. Leave the last 10% to someone else.....
It now takes approx. twice as long to sell a house than a year ago.
You're effectively renting the money at 5 to 7%. Very good value in fact!
Maybe they're on "interest-only"..??
That's effectively renting the money to buy the house, rather than renting the house itself. Not good in a falling market (unless already owned for many years).
If B-T-L landlords had any sense, all their properties would have been on the market early 2007. Leave the last 10% to someone else.....
It now takes approx. twice as long to sell a house than a year ago.