29

Welcome to Money.SE. You know, questions like this can help point out good/bad for a given choice, but there isn't likely to be a 'right' answer. I can offer a well reasoned answer, only to find another respected member offers the exact opposite. Given the way you frame the question, I'd prefer the 'worse' house in the 'better' area. As you suggest, its ...


20

Yes they can. If you review your agreement with the bank thus far, you will almost certainly see clauses to that effect (if you have no mortgage approval/agreement yet, then of course they can ask for whatever they want). The issue isn't exactly the 20% you're providing for the purchase, it's the 80% the bank is providing. The loan is backed by the house as ...


15

Leading up to the last big housing dip, many people borrowed near their limit planning on increased home values to provide them with equity, many of them were stuck in a bad spot when home values dropped. I don't know UK bank policy, but in the US a standard mortgage can be issued that makes your total monthly debt payment up to 45% of your gross income. In ...


11

This depends on your mortgage agreement. The rate is generally a published index plus a margin. Exactly which index is used and what the margin is will vary based on lender, or even between loans from the same lender. The only way to know how the rate is determined for your mortgage is to read your mortgage agreement. In addition to the index and margin, ...


8

The Money Saving Expert page on LISAs confirms that you must take out a mortgage: If you're lucky enough to be buying your first property with cash, you'll pay the withdrawal charge to access your LISA savings (unless you're over 60) as you need to be buying with a mortgage to use the LISA and bonus. It also clarifies that the LISA terms do not stipulate a ...


6

Assume you could do this. Where would you get the money to pay off the remaining loan? And if you want some liquid cash out of this operation, where does that cash come from? The answer is that you would take a new real estate loan. And that would involve credit scores, a mountain of paperwork, appraisals, inspectors, and whole load of other BS, and in the ...


5

Consult a professional to see if there are alternatives to paying the tax. For example in Canada if you leave the country you could transfer the balance to a different pension account and avoid paying tax on it. You would have to pay tax on it eventually, but in the meantime it would accrue tax free interest. I don't know if such a thing is possible in ...


5

The amount you are putting as a down-payment is between you and your lender. The seller would only be concerned if the decision to lower the amount of the down-payment would impact your ability to get the loan, and closing could be delayed or canceled. At the beginning of the negotiation for the house you did offer to pay a deposit, which was to show you ...


5

Of course they can. You are overpaying for this house by about 10% of the purchase price. By paying 10% over market value, you are turning your 20% down payment into a 10% one. Is there a reason you are overpaying for this house? Is there a reason you are not attempting to renegotiate? There may be very good reasons, it just has to be very deliberate and ...


4

Live in it and don't sell it. What exactly is the risk to you if the value drops? The (sale) value really only matters when you sell. If you try to sell the house, you may not sell for enough to pay off your mortgage, and will have to come up with additional funds to complete the sale. If you sell the house for less than you paid, you will "lose money", in ...


4

The correct answer to this is nobody knows. The reasons for this are simple: You are assuming that the "worse area" will never become a "better area". There are some places in the UK which historically have been seen as poor areas and then received investment and become "re-generated" such that house prices have risen ...


4

The real estate market will have its ups and downs and there's no guarantee property prices will go up but buying a good house in a bad area (that's showing no signs of improvement) is always a losing bet. Buying a "lesser" house in a good area will, at least, give you a fighting chance. Choose the best area you can afford, even if the house ...


4

From the purely monetary viewpoint in which you are asking the question, I agree with Vicky that you should consider what "can afford" really means - calculate what you will be comfortable paying at the moment, what you can pay if Covid lasts another 2 years and the housing market tumbles into chaos or if a vaccine is available tomorrow & the ...


4

I think there are two factors to balance out here: Buy the most house you can afford Be realistic about what "afford" means In general, it is a good idea to buy as much house as you can afford - effectively taking a step-and-a-half on the housing ladder rather than just a step. However, in working out what you can afford, don't just take the bank'...


3

Generally, the amount of paperwork required for a refinance is less than the amount of paperwork required for a purchase. There are a lot of variables including COVID-19 relaxations in appraisal requirements and various appaisal waiver opportunities that your broker or lender may be able to help you qualify for. If you're trying to take money out of the ...


2

If you plan on selling or paying off your mortgage in 5-7 years then the ARM makes sense. You'll have a lower interest rate than with the 30-year fixed.


2

Re-frame the question in your mind. You made an offer in good faith to purchase the home. Then you paid a professional to appraise the value of the home. In most if not every case it is you not the bank who paid the appraiser. If even the bank gave them the money, it is your money they gave the appraiser. The appraisal came in lower then expected. ...


2

Octavian mentioned it already but - whyever - got downvoted. I only want to emphasize that the location matters most. I would even say it is clear obvious. Consider you own 10 squaremeters at the NY Times Square or 10 squaremeters somewhere in the outback. Even when you build only a dog house in NY and the most impressive mansion in the outback, the location ...


2

I am not sure buying is a good idea at all in your situation. You say you want to buy it as a 'stepping stone', that you intend to keep it for 5-15 years. This suggest to me: You expect the house price to go up in the next 5-15 years, i.e. you see buying a house as a better investment than a diversified market portfolio You probably see renting as 'throwing ...


1

You need to ask the mortgage company. They are offering you this mortgage as owner occupied. They will have to be willing to accept that this property you are selecting will qualify. The owner occupied mortgages don't lock you in forever, they do allow you to rent the property at some point in the future. The language in the contract should specify how long ...


1

Some good points were added here, but in the end its about opportunity costs of money. Let's say you could fully finance, partially finance or pay in cash. The money percentage you put down influences the interest rate (the more you put down the cheaper interest you get) you should consider the opportunity cost. This means if you recieve a higher interest on ...


1

If you get a mortgage for your new property you will need to have proof of casualty insurance (fire, ice, slip'n'fall, all that) at the time of the closing, of course. This proof of insurance is sometimes called a "binder." Yes, definitely, ask the insurance companies you already deal with about casualty insurance for your new place. I've had a package ...


1

The thing to consider most is cost and coverage. It is very difficult to compare policies because you want to make sure that you are comparing like coverages and companies have different minimum and maximums for different coverage areas. The nature of your question suggests that this is your first home purchase. As such, I would recommend doing what ...


1

First of all home insurance is not the same as title insurance. Sometimes you will see home insurance called fire insurance, even though it covers much more than just fire damage. Title insurance comes in two types, both deal with mistakes in the title. One covers the lender and you must purchase. The other covers you if there is a problem with the title, ...


1

A long time ago we had a 7/23 mortgage. The rate only adjusted once at the 7 year mark. That gave us a target for moving up from a townhouse to a single family house. For those first 7 years the rate was fixed at a rate lower than the 30 year mortgages that our neighbors were getting. It worked out great. I also have had experience with a mortgage that ...


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