Owning your own home

Except the variable rate is...variable. So how do they calculate the cost? Some kind of average case scenario?

Cheers, how do you get stuck on an SVR? Isn’t it fairly easy to switch at the end of each term?

Changes in market/circumstances/affordability/interest-rates meaning you fail the affordability tests in order to switch.

how do you get stuck on an SVR?

Banks refuse to offer you a new deal because of circumstances, i.e. you've gone bankrupt, become a criminal, achieved negative equity, lost your job etc.

Assume they take today’s? Not sure whether they adjust for the forward curve or not.

Except the variable rate is...variable. So how do they calculate the cost? Some kind of average case scenario?

Usually using the rates as they are now.

Most common one is that one partner stops working when kids arrive, so household income goes down and doesn’t support the required borrowing for a new application.

Usually using the rates as they are now.

Which loops you back to the whole it's pretty much meaningless thing.

And is it correct that brokers have access to mortgage deals that I don’t?

Normally, yes, but not necessarily better rates. I use a broker because they take care of most of the admin and chase me up. I have a great one I can recommend. There are some bad ones out there: the broker attached to Foxtons, I forget their name, was very poor.

Thanks @Sharkstar who do you use? Is there benefit to paying off more early on (if you can afford to) because of how interest is calculated?

I’ll PM you their details. They’ll talk you through your options and provide some illustrations of how your choices affect what you owe over the term. We started on a 20 year mortgage fixed for 2 years, then, because the rate had come down, switched providers and reduced the 18 years left to a 15 year mortgage fixed for 3. I’ve just remortgaged with the same provider a five year fixed on the remaining 12. Our payments haven’t changed much at all.

Not sure whether they adjust for the forward curve or not.

Only insofar as the variable rate includes a risk premium above the risk free rate, of which volatility in the interest rate curve is a factor.

It's the fixed rate that is most dependent on forward rates.

It doesn't really make sense to measure lifetime payments based on anything other the current variable rate - otherwise you're looking at a level of sophistication beyond most people's needs, with reval curves, discount curves and the like.

Which loops you back to the whole it's pretty much meaningless thing.

Borrowing £*00,000s on variable rates is a crapshoot. You want that rate fixed and predictable.

I’ll PM you the deets

Appreciated, thanks dude

Habito too. I got my first mortgage through them and despite being a bit sceptical a real person phoned back and did the legwork
http://ssqt.co/mvcqPEl

^ we'd each get £100 if you use the referral

Realised I didn’t actually answer your question. The biggest difference you can make here is to reduce the amount you borrow against the value of the property. An 80pc mortgage will be way cheaper in terms of the rate you get vs a 95pc one. In a world where house prices go up, if you remortgage after a few years you will get a better rate as the percentage borrowed will reduce vs the increased value of the house. But of course price increases are not guaranteed in this world.

Sure, but the svr when you take out the deal probably isn't going to be the svr you end up on at the end of your promo period (although lately it probably has been)

Interest compounds so the earlier you pay the less you pay. That said, rates are currently so low you might earn more in a high rate savings account or in investments so paying off the mortgage might not be the best use of your cash. Don't underestimate how much cash you might want to keep on hand for incidentals, building work, unexpected things etc.
Mortgages are one of the cheapest loans out there so just focus on getting the best deal you can and then if you find you can afford to overpay and it makes sense, do it.
Note that afaik there is no difference between taking out a shorter term vs taking the longest term you can and overpaying to match the payments you would've made on the shorter term loan except with the longer term one you have a lower minimum payment giving you a bit of a buffer if you need it.
Circumstances can and do change.

With rates where they are it’s unlikely to go down, so you could look at it as a lower bound.

I’m not sure that’s the right way to look at it. SVR has a 1 month fix period so any volatility in rates is passed onto the customer.

The SVR spread is only minimally driven by risk premium (prime resi mtge cost of risk is <50 bps), it’s really an elasticity charge (ie benefit from cost plus hassle to refi).

Really what they should do is say “SVR = gilts + 430 bps” or whatever it is and then strip the curve to get the implied 1 month spot rate for each payment period after the fix ends. That’s what I was alluding to in my comment.

Of course they won’t put in writing that SVR is linked to rates otherwise they open themselves up to litigation based on the high SVRs of the last 10 years.

Really useful information folks, thanks! The fog of uncertainty is lifting, I definitely feel less apprehensive about signing up to this. Just need to find a suitable pad now...

Anyone any idea of the rough cost of stripping the front of a typical, painted, Victorian terrace back to brick?

I assume there's the possibility of the cost significantly increasing if a lot of the bricks and mortar are damaged. Would you generally repoint as part of the work? Is scaffolding normally required?

Ours is paint on shit render, and back to brick I think is about ~£5k, depending on whatever. Still on our list, will probably never get to it.

So was removing tiles from our kitchen floor and the thinly laid concrete floor cracked. I’ve taken off the loose bits and it’s all dirt under.

What’s the cheapest way to remedy this as we have no more money. Could we remove the rest of the floor and get a new layer poured on?

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