Buying a house: can someone explain everything to me?
before you ask i am not buying a house or looking to buy one any time soon!
but for my interest, i would like to know everything about buying a house.
things such as what is a deposit for a house? i know what a deposit is in the broadest sense, but what % of the house price do you need to pay (and therefore what amount would you need for the average house?), is putting down a deposit mandatory, do you get to live in the house once you made the deposit etc?
then where does a mortgage come into it? do you need a deposit and a mortgage? i am confused!
but for my interest, i would like to know everything about buying a house. things such as what is a deposit for a house? i know what a deposit is in the broadest sense, but what % of the house price do you need to pay (and therefore what amount would you need for the average house?), is putting down a deposit mandatory, do you get to live in the house once you made the deposit etc?
then where does a mortgage come into it? do you need a deposit and a mortgage? i am confused!
A mortgage is a loan to cover the cost of a house. If your house costs £100k, then you need to either have £100k in your bank account or borrow it. If you borrow, it's called a mortgage. A mortgage is long term - typically about 20 years but it varies - and if you fail to keep up with the repayments you can lose your house.
A deposit is money that you have in your bank account. The more money you have, the better your options. You can get a "100% mortgage" which means you borrow 100% of the house value - ie £100k from my example. So you don't necessarily need a deposit, but it helps. Or you can get borrow other amounts if you have the money to use as a deposit. So for a 95% mortgage you'd need to borrow £95k (from the example) and thus would need £5k for the deposit.
Obviously as house prices vary the amount you'd need as a deposit varies too. And there are different lenders who have different criteria, so you will find that if you can put down a larger deposit you have more options.
Typically, you get a mortgage for 3 or 4 times your yearly salary. So if you earn £20k a year you'd get a mortgage for £80k max - so to buy that house you'd need a deposit of £20k.
A deposit is money that you have in your bank account. The more money you have, the better your options. You can get a "100% mortgage" which means you borrow 100% of the house value - ie £100k from my example. So you don't necessarily need a deposit, but it helps. Or you can get borrow other amounts if you have the money to use as a deposit. So for a 95% mortgage you'd need to borrow £95k (from the example) and thus would need £5k for the deposit.
Obviously as house prices vary the amount you'd need as a deposit varies too. And there are different lenders who have different criteria, so you will find that if you can put down a larger deposit you have more options.
Typically, you get a mortgage for 3 or 4 times your yearly salary. So if you earn £20k a year you'd get a mortgage for £80k max - so to buy that house you'd need a deposit of £20k.
Original post by Movember
things such as what is a deposit for a house? i know what a deposit is in the broadest sense, but what % of the house price do you need to pay (and therefore what amount would you need for the average house?), is putting down a deposit mandatory, do you get to live in the house once you made the deposit etc?
then where does a mortgage come into it? do you need a deposit and a mortgage? i am confused!
things such as what is a deposit for a house? i know what a deposit is in the broadest sense, but what % of the house price do you need to pay (and therefore what amount would you need for the average house?), is putting down a deposit mandatory, do you get to live in the house once you made the deposit etc?
then where does a mortgage come into it? do you need a deposit and a mortgage? i am confused!
The deposit is the amount of money that you have upfront to pay for the house with & your mortgage is the loan someone (bank, building society etc.) is giving you to make this up to the total price that you have agreed to buy the house for.
If you can afford to buy the house with your own money then you would not need a mortgage.
The amount that the deposit is varies on your circumstances & the mortgage you wish to get... it used to be that people could get 10% deposit mortgages (so the mortgage made up 90% of the cost of the house) - but obviously this was a bigger gamble for the people lending the money if the house price fell... so a more realistic typical deposit is probably somewhere around the 25% mark.
As the deposit % gets higher often the mortgage interest rate gets better.
The house is yours once you 'complete' - after the contracts are exchanged, all the money is transferred & you get the keys. The logistics of paying the deposit is that usually you transfer to solicitor & they hold to transfer to vendor's solicitor in addition to mortgage company money on the day of completion.
I currently have a 90% mortgage, which, at the time I was getting it, was the lowest percentage deposit you could get.
You used to be able to get 100% or even 100+% mortgage, which is where banks got into issues, letting people get mortgages that they couldn't affors and defaulting on the mortgage.
You used to be able to get 100% or even 100+% mortgage, which is where banks got into issues, letting people get mortgages that they couldn't affors and defaulting on the mortgage.
thanks for replies! i understand it better now.
your profile says you are 21. how did you get the money to buy a house at a young age? also what % mortgage can one expect to get, on average?
Original post by flown_muse
I currently have a 90% mortgage, which, at the time I was getting it, was the lowest percentage deposit you could get.
You used to be able to get 100% or even 100+% mortgage, which is where banks got into issues, letting people get mortgages that they couldn't affors and defaulting on the mortgage.
You used to be able to get 100% or even 100+% mortgage, which is where banks got into issues, letting people get mortgages that they couldn't affors and defaulting on the mortgage.
your profile says you are 21. how did you get the money to buy a house at a young age? also what % mortgage can one expect to get, on average?
Original post by Movember
thanks for replies! i understand it better now.
your profile says you are 21. how did you get the money to buy a house at a young age? also what % mortgage can one expect to get, on average?
your profile says you are 21. how did you get the money to buy a house at a young age? also what % mortgage can one expect to get, on average?
It was my fiance's mother's flat we were living in, and she wanted to sell it, so either we bought it or we moved out. Mortgage was cheaper than rent, and she covered the deposit to make it as fast as possible for her, and not have to go through extra costs of advertising, estate agents etc saved her a bundle.
I think it is 6.2% or something like that, the two year fixed term ends October (I was 19 when I got it
) so it should be going doing to base rate plus a percent I think, woohoo!
If you decide to buy a house with a mortgage, just make damned sure that you are always going to be able to afford the repayments.
Take it from someone who has been there. We had to sell up because we couldn't afford the repayments any longer. It was a case of sell the house, or get repossessed.
Luckily there was enough money left over after we repayed the mortgages, that we were able to then buy a cheaper house outright. God knows what we would have done if we had had a greater mortgage. We'd have been up **** creek without a paddle.
Don't ever borrow more than you can afford to repay. It sounds like common sense, but in this economy, it's easy to think that you're secure in your job etc. and that you will always be able to pay it back, but just be careful.
Take it from someone who has been there. We had to sell up because we couldn't afford the repayments any longer. It was a case of sell the house, or get repossessed.
Luckily there was enough money left over after we repayed the mortgages, that we were able to then buy a cheaper house outright. God knows what we would have done if we had had a greater mortgage. We'd have been up **** creek without a paddle.
Don't ever borrow more than you can afford to repay. It sounds like common sense, but in this economy, it's easy to think that you're secure in your job etc. and that you will always be able to pay it back, but just be careful.
Original post by flown_muse
It was my fiance's mother's flat we were living in, and she wanted to sell it, so either we bought it or we moved out. Mortgage was cheaper than rent, and she covered the deposit to make it as fast as possible for her, and not have to go through extra costs of advertising, estate agents etc saved her a bundle.
I think it is 6.2% or something like that, the two year fixed term ends October (I was 19 when I got it) so it should be going doing to base rate plus a percent I think, woohoo!
I think it is 6.2% or something like that, the two year fixed term ends October (I was 19 when I got it
) so it should be going doing to base rate plus a percent I think, woohoo!i see. is that base rate plus one percent for your house? i was asking in general, what % should a house buyer expect on average?
Original post by PinkMobilePhone
If you decide to buy a house with a mortgage, just make damned sure that you are always going to be able to afford the repayments.
Take it from someone who has been there. We had to sell up because we couldn't afford the repayments any longer. It was a case of sell the house, or get repossessed.
Luckily there was enough money left over after we repayed the mortgages, that we were able to then buy a cheaper house outright. God knows what we would have done if we had had a greater mortgage. We'd have been up **** creek without a paddle.
Don't ever borrow more than you can afford to repay. It sounds like common sense, but in this economy, it's easy to think that you're secure in your job etc. and that you will always be able to pay it back, but just be careful.
Take it from someone who has been there. We had to sell up because we couldn't afford the repayments any longer. It was a case of sell the house, or get repossessed.
Luckily there was enough money left over after we repayed the mortgages, that we were able to then buy a cheaper house outright. God knows what we would have done if we had had a greater mortgage. We'd have been up **** creek without a paddle.
Don't ever borrow more than you can afford to repay. It sounds like common sense, but in this economy, it's easy to think that you're secure in your job etc. and that you will always be able to pay it back, but just be careful.
i am sorry to hear that!
may i ask why you couldnt afford the repayments any longer? was it because you lost your jobs or you bought beyond your means in the first place or a different reason?
It's so good that your asking these questions - I moved into my flat 6/7 months ago and I spent so much time on forums and other websites trying to understand everything!
On reflection it was actually quite a straightforward process, not something to rush into though. I know you said you're not looking to buy any time soon but have you got any ideas in the back of your mind that your secretly looking to explore? (I get excited by this sort of stuff lol).
On reflection it was actually quite a straightforward process, not something to rush into though. I know you said you're not looking to buy any time soon but have you got any ideas in the back of your mind that your secretly looking to explore? (I get excited by this sort of stuff lol).
Original post by Movember
i see. is that base rate plus one percent for your house? i was asking in general, what % should a house buyer expect on average?
It completely depends on the mortgage you sign up for. Base Rate (Bank of England rate) is less than a percent right now if I remember rightly.
You can have a tracker mortgage that follows base rate plus a few percent, or a fixed rate that charges you the same guaranteed amount for a period, 2, 3 or 5 years typically. You can have an offset mortgage where the rate is lowered dependent on the amount you have in savings etc.
Right now interest rates are low, but who know what will happen to them!
Original post by Juno
A mortgage is a loan to cover the cost of a house. If your house costs £100k, then you need to either have £100k in your bank account or borrow it. If you borrow, it's called a mortgage. A mortgage is long term - typically about 20 years but it varies - and if you fail to keep up with the repayments you can lose your house.
A deposit is money that you have in your bank account. The more money you have, the better your options. You can get a "100% mortgage" which means you borrow 100% of the house value - ie £100k from my example. So you don't necessarily need a deposit, but it helps. Or you can get borrow other amounts if you have the money to use as a deposit. So for a 95% mortgage you'd need to borrow £95k (from the example) and thus would need £5k for the deposit.
Obviously as house prices vary the amount you'd need as a deposit varies too. And there are different lenders who have different criteria, so you will find that if you can put down a larger deposit you have more options.
Typically, you get a mortgage for 3 or 4 times your yearly salary. So if you earn £20k a year you'd get a mortgage for £80k max - so to buy that house you'd need a deposit of £20k.
A deposit is money that you have in your bank account. The more money you have, the better your options. You can get a "100% mortgage" which means you borrow 100% of the house value - ie £100k from my example. So you don't necessarily need a deposit, but it helps. Or you can get borrow other amounts if you have the money to use as a deposit. So for a 95% mortgage you'd need to borrow £95k (from the example) and thus would need £5k for the deposit.
Obviously as house prices vary the amount you'd need as a deposit varies too. And there are different lenders who have different criteria, so you will find that if you can put down a larger deposit you have more options.
Typically, you get a mortgage for 3 or 4 times your yearly salary. So if you earn £20k a year you'd get a mortgage for £80k max - so to buy that house you'd need a deposit of £20k.
Though I should probably add, that it will be very difficult to get a 100% mortgage for a first time buyer, without having had time to build up any kind of credit history. Unless of course, you are borrowing only maybe twice your annual income, and the mortgage is secured against other high value assets (parents house). For most first time buyers, it seems you need to put down at least a 10% deposit to get any decent interest rates, preferable 25%+ (though this can be hard to save up of course)
For many 1st time buyers, you might want to look at an "interest only mortgage" many of them can be up to 95% of the value of the home and it is a good way to get onto the property ladder.
Typically if you buy in a correct location and you are good with your finances you could be in a position where you could profit quite well from it.
Another thing, don't ever miss any repayments or be late on any bills when you have a mortgage, the moment you are late on a mortgage payment the effects to it can be catastrophic as you'd be surprised the kind of info banks and lenders as a whole keep with regard to your payment habits, if you're late even by a few days even once on a repayment it effectively puts you in a position where you won't be able to get any further good deals.
Typically if you buy in a correct location and you are good with your finances you could be in a position where you could profit quite well from it.
Another thing, don't ever miss any repayments or be late on any bills when you have a mortgage, the moment you are late on a mortgage payment the effects to it can be catastrophic as you'd be surprised the kind of info banks and lenders as a whole keep with regard to your payment habits, if you're late even by a few days even once on a repayment it effectively puts you in a position where you won't be able to get any further good deals.
Original post by Movember
i am sorry to hear that! may i ask why you couldnt afford the repayments any longer? was it because you lost your jobs or you bought beyond your means in the first place or a different reason?
may i ask why you couldnt afford the repayments any longer? was it because you lost your jobs or you bought beyond your means in the first place or a different reason?Our business went under
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