Are five percent mortgages still available?

[XJR40]

My question is as per the thread title really, can first-time buyers still get five percent mortgages these days? And perhaps more importantly, if such mortgages do exist, what sort of rates would you be paying?

I rent at the moment but the girlfriend has been making noises about buying, I don't really know what's out there though to be honest.

Thanks.

[scotal]

Do you mean 95% LTV mortgages? i.e a 5% deposit. Yes they are.

[XJR40]

Sorry, yes, that's what I mean, 95% loan to value.

What are the interest rates like on such deals, are they prohibitively pricey?

[scotal]

As long as everything else is ok (credit score , income etc, then no.) they are above 5%, and fixed for 3 years,(so tied in for 3 years) and only available on repayment, there is a pretty limited number of products.

[BigJonMcQuimm]

Why would you want to buy now...?

[XJR40]

scotal said:

As long as everything else is ok (credit score , income etc, then no.) they are above 5%, and fixed for 3 years,(so tied in for 3 years) and only available on repayment, there is a pretty limited number of products.

Thanks for the info.

BigJonMcQuimm said:

Why would you want to buy now...?

Are you pessimistic about properties prices? If so, what's your prediction on where they will head?

Purely as a short term investment maybe property isn't a great buy at the moment, but as a long term investment in a family home is it really so bad? I'm aware of the downward pressures on prices but as long as there's demand and inflation then there'll surely head up over the years.

[scotal]

XJR40 said:

scotal said:

As long as everything else is ok (credit score , income etc, then no.) they are above 5%, and fixed for 3 years,(so tied in for 3 years) and only available on repayment, there is a pretty limited number of products.

Thanks for the info.

No prob, let me know if you want to take it further.

[scotal]

XJR40 said:

BigJonMcQuimm said:

Why would you want to buy now...?

Are you pessimistic about properties prices? If so, what's your prediction on where they will head?

Purely as a short term investment maybe property isn't a great buy at the moment, but as a long term investment in a family home is it really so bad? I'm aware of the downward pressures on prices but as long as there's demand and inflation then there'll surely head up over the years.

How bad are you prepared for? With a 5% deposit you have very little cushion agianst negative equity, so you'd better be buying a home for the longhaul. (Or know that your earnings rising enough to be digging you out of a financial hole very quickly.

[XJR40]

scotal said:

XJR40 said:

BigJonMcQuimm said:

Why would you want to buy now...?

Are you pessimistic about properties prices? If so, what's your prediction on where they will head?

Purely as a short term investment maybe property isn't a great buy at the moment, but as a long term investment in a family home is it really so bad? I'm aware of the downward pressures on prices but as long as there's demand and inflation then there'll surely head up over the years.

How bad are you prepared for? With a 5% deposit you have very little cushion agianst negative equity, so you'd better be buying a home for the longhaul. (Or know that your earnings rising enough to be digging you out of a financial hole very quickly.

I'm not really prepared to be honest, I'm trying to get clued up. I thought I could be paying a mortgage rather than the rent, but there's always the danger of negative equity as you say. Do you think prices will resume their fall?

I live in the Bedfordshire/Hertfordshire area. I'm young, in my twenties, so I am expecting my wages to rise.

[V8NRG]

XJR40 said:

scotal said:

XJR40 said:

BigJonMcQuimm said:

Why would you want to buy now...?

Are you pessimistic about properties prices? If so, what's your prediction on where they will head?

Purely as a short term investment maybe property isn't a great buy at the moment, but as a long term investment in a family home is it really so bad? I'm aware of the downward pressures on prices but as long as there's demand and inflation then there'll surely head up over the years.

How bad are you prepared for? With a 5% deposit you have very little cushion agianst negative equity, so you'd better be buying a home for the longhaul. (Or know that your earnings rising enough to be digging you out of a financial hole very quickly.

I'm not really prepared to be honest, I'm trying to get clued up. I thought I could be paying a mortgage rather than the rent, but there's always the danger of negative equity as you say. Do you think prices will resume their fall?

I live in the Bedfordshire/Hertfordshire area. I'm young, in my twenties, so I am expecting my wages to rise.

But if your buying a home to live in and are tied to a three year mortgage, why would temporary negative equity be an issue ? (Assuming the house is back up to the same level by the time you need to re mortgage.)

[XJR40]

Yes, I'd hope after three years prices would have not fallen but you never know, we're living in uncertain times and I'm wary. I was responding to the previous posters concerns about negative equity. The risk is if I'm forced to sell for whatever reason, say I lose my job for example.

Edited by XJR40 on Wednesday 16th December 17:07

[spikeyhead]

XJR40 said:

Yes, I'd hope after three years prices would have not fallen but you never know, we're living in uncertain times and I'm wary. I was responding to the previous posters concerns about negative equity. The risk is if I'm forced to sell for whatever reason, say I lose my job for example.

Edited by XJR40 on Wednesday 16th December 17:07

What you should be really worried about is your gf plopping out a couple of sprogs and then kicking you out. You'll end up paying the mortgage for the next twenty years without seeing any benefit. [/cynical mode]

[-Pete-]

Without being pessimistic, I try to plan for the worst, so I can only be pleasantly surprised.

The relationship dilemma is a real problem, even without children. If you lost your job, for example, it wouldn't just affect your income, it might well affect your relationship as well.

It's a huge financial commitment and the 'system' is very much not into sex-equality. If the worst comes to the worst, you'll be finding somewhere else to live while she decides if she wants to sell the place. Although you'll still be expected to pay half the mortgage. Sorry, life stinks sometimes.

I doubt if there are many* who think prices are going to go up, certainly not faster than general inflation anyway. So I'd suggest you keep your GF happy in other ways but delay the purchase until the economic situation in the UK is clearer. (* mortgage advisors, estate agents and property developers?)

What do you think the average mortgage interest rate has been in the last 25 years? I'd guess it's around 6-7%, I'm sure someone will be along to tell me soon, so even if you can fix for 3-5 years you should factor this into your plans.

Personally, I think house prices are still too high. The average home needs to be 3.5-5 times average household income to be sustainable. I think that means they still need to fall 20-40%.

Edited by -Pete- on Wednesday 16th December 18:48