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How does mortgage work? Watch

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    Ok say you want to buy a house, u have to pay mortgage. Does the mortgage come out of your job money? Do you have to pay rent on top of the mortgages payment and council tax?
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    (Original post by Candy55)
    Ok say you want to buy a house, u have to pay mortgage. Does the mortgage come out of your job money? Do you have to pay rent on top of the mortgages payment and council tax?
    A mortgage is a type of loan which is used to buy a property, since you then "own" it,there is no rent but otherwise you pay every other bill like you would when renting.
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    (Original post by claireestelle)
    A mortgage is a type of loan which is used to buy a property, since you then "own" it,there is no rent but otherwise you pay every other bill like you would when renting.
    Thank you, so say u have pay £450 monthly mortgage, does that come out of ur paycheck? What i don't understand is like the word "borrowing" and "loan" - would i actually be borrowin money or?

    can someone who earns £15,300+ be able to handle that? Like buy a £90,000/ £70,000 house on mortage? Plus paying councl, tax, gas & electric?? Man, it seems soo expensiv (( I want a house so bad, i wanna flee the nest asap, everything so expensive
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    It's pay cheque: we're not American.

    It IS expensive, but unfortunately, life is. There's very few houses for sale as an outright owner at £70,000, unless you really want to live in a dump!

    Basically, you have to come up with a deposit for the house, which is 5% or more of the purchase price. You do this by having to save, or borrow from the bank of mum and dad. Some government schemes exist for those with small deposits. You then borrow the rest of the purchase price from the bank who advances the money as a loan (the mortgage loan) and takes the house as 'security' - this means if you don't pay the mortgage back when it is due then can take your house away from you.

    It is unlikely that you would be able to borrow enough to buy a house outright on a salary of £15,300. The maximum amount you could borrow on that salary would be about £60,000 which is not enough to buy a house with - you would also need a deposit as I said earlier. You could, possibly buy a share of a house - this is where you don't own the whole thing outright, but a part of it.

    Does this help?
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    (Original post by Candy55)
    Thank you, so say u have pay £450 monthly mortgage, does that come out of ur paycheck? What i don't understand is like the word "borrowing" and "loan" - would i actually be borrowin money or?

    can someone who earns £15,300+ be able to handle that? Like buy a £90,000/ £70,000 house on mortage? Plus paying councl, tax, gas & electric?? Man, it seems soo expensiv (( I want a house so sad, i wanna flee the nest asap, everything so expensive
    It doesn't automatically come out of your pay check if that's what you mean?
    But yes if your source of income is a job then that's how you pay it.yes you are borrowing money say 70k,the bank then gives the person you are buying rhe house from that,you then pay that 70k back monthly over at least 20-25 years normally.
    If you re desperate to leave home,you probably want to share a rental as you won't be able to get a 70k mortgage on your income by yourself straight away unless you ve got a few thousand for a deposit and a good credit rating.
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    (Original post by Reality Check)
    It's pay cheque: we're not American.

    It IS expensive, but unfortunately, life is. There's very few houses for sale as an outright owner at £70,000, unless you really want to live in a dump!

    Basically, you have to come up with a deposit for the house, which is 5% or more of the purchase price. You do this by having to save, or borrow from the bank of mum and dad. Some government schemes exist for those with small deposits. You then borrow the rest of the purchase price from the bank who advances the money as a loan (the mortgage loan) and takes the house as 'security' - this means if you don't pay the mortgage back when it is due then can take your house away from you.

    It is unlikely that you would be able to borrow enough to buy a house outright on a salary of £15,300. The maximum amount you could borrow on that salary would be about £60,000 which is not enough to buy a house with - you would also need a deposit as I said earlier. You could, possibly buy a share of a house - this is where you don't own the whole thing outright, but a part of it.

    Does this help?
    Oh man, yeah this really help , thanks If i think of another question i might ask again
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    (Original post by claireestelle)
    It doesn't automatically come out of your pay check if that's what you mean?
    But yes if your source of income is a job then that's how you pay it.yes you are borrowing money say 70k,the bank then gives the person you are buying rhe house from that,you then pay that 70k back monthly over at least 20-25 years normally.
    If you re desperate to leave home,you probably want to share a rental as you won't be able to get a 70k mortgage on your income by yourself straight away unless you ve got a few thousand for a deposit and a good credit rating.
    Ahh it makes soo much sense now, thanks for the help
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    Its a loan to buy a property. The bank or building society work out how much they are prepared to lend you and you have to pay something back every month, typically for 25 years, and they make a ton of money out to fhe interest they charge you. If you don t pay for any reason they have the legal right to take the property back and sell it to try to recoup the loan. These days you probably need a stonking deposit to pay youself to reduce their risk and they've become a lot more canny about to whom and how much they will lend. The best bet is to do a bit of research and then go and talk to Halifax - they're the best in my experience
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    (Original post by Candy55)
    Oh man, yeah this really help , thanks If i think of another question i might ask again
    Do - I'll be happy to answer
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    (Original post by Candy55)
    Ok say you want to buy a house, u have to pay mortgage. Does the mortgage come out of your job money? Do you have to pay rent on top of the mortgages payment and council tax?
    You borrow the total amount from the bank, say £150'000, and then pay this off over a 25 year period, £126000 interest, if you got a full loan for this amount! total repayable £276000, you may be able to get better interest rates than this however?
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    (Original post by Reality Check)
    Do - I'll be happy to answer

    So do you reckon I can buy a £70,000 house with a salary of £15,055 ( over 25+ mortgage years)? I'll earn about £1200 or so a month and the monthly mortgage is only £338. Is it possible? Oh and i'll pay the deposit before hand, i think i can def manage that.
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    (Original post by Candy55)
    So do you reckon I can buy a £70,000 house with a salary of £15,055 ( over 25+ mortgage years)? I'll earn about £1200 or so a month and the monthly mortgage is only £338. Is it possible? Oh and i'll pay the deposit before hand, i think i can def manage that.
    My wife earns about 18k p a, and she can only get a mortgage for 66k, so i think you will be lucky to get one on those terms. Also you need deposit of 10-20%. There is an online mortgage brokers called habito you might want to google??
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    (Original post by Candy55)
    So do you reckon I can buy a £70,000 house with a salary of £15,055 ( over 25+ mortgage years)? I'll earn about £1200 or so a month and the monthly mortgage is only £338. Is it possible? Oh and i'll pay the deposit before hand, i think i can def manage that.
    It's not about what you think you can manage, it's about what the bank think is a low-risk enough amount to lend you. Often the amount they are willing to lend you is a lot less than what you think should be reasonable.
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    (Original post by john2054)
    My wife earns about 18k p a, and she can only get a mortgage for 66k, so i think you will be lucky to get one on those terms. Also you need deposit of 10-20%. There is an online mortgage brokers called habito you might want to google??
    Ahh, that's really helpful thanks john
    Lol i wonder if begging them like "plssssss" will sway them.
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    (Original post by Dusky Mauve)
    It's not about what you think you can manage, it's about what the bank think is a low-risk enough amount to lend you. Often the amount they are willing to lend you is a lot less than what you think should be reasonable.
    Ahh i'm learning so much about this, thanks for the help I wonder if begging them would do any good lol :P
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    I have a question. If you take a £250,000 mortgage, after a couple years the house price rises to £300,000, can you return the house to the bank (pay related fees) and pocket the gain?
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    (Original post by hamzaahmad786)
    I have a question. If you take a £250,000 mortgage, after a couple years the house price rises to £300,000, can you return the house to the bank (pay related fees) and pocket the gain?
    No, but you can sell the house, and pay off the loan with the proceeds, and pocket this difference (less taxes and costs).
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    (Original post by Candy55)
    Ahh i'm learning so much about this, thanks for the help I wonder if begging them would do any good lol :P
    Begging them wouldn't do any good at all. Read up on how many people think the 2008 economic collapse happened - it was because US banks lent more on mortgages than people could afford to repay and their mortgages were worth. Ultimately, if you can't make your mortgage payments, the bank takes your house. But if the house is worth less than they lent you, the bank bears the loss.

    So Banks are very much tougher on mortgage lending nowadays, both because they want to be, and new laws make them.
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    This is what caused the 2008 financial crash. Banks lending to people with low incomes who cant keep up payments. Once people couldnt pay their monthly mortgages. Banks started ceasing houses and the supply of houses went up. Next thing you know the house you paid £500k for is now only worth £250k.
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    (Original post by threeportdrift)
    Begging them wouldn't do any good at all. Read up on how many people think the 2008 economic collapse happened - it was because US banks lent more on mortgages than people could afford to repay and their mortgages were worth. Ultimately, if you can't make your mortgage payments, the bank takes your house. But if the house is worth less than they lent you, the bank bears the loss.

    So Banks are very much tougher on mortgage lending nowadays, both because they want to be, and new laws make them.

    Wow dude you totally read my mind !!
 
 
 
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