We had an appointment with our bank yesterday and we were so excited even though we thought it'd just be good to find out what we're working towards and get an idea of how long it'll take us but she said that they'd be happy to offer us a mortgage now (if the credit checks turned out ok). We couldn't believe it! Not that we'd take the one she was offering us (25 years, 10% deposit and not great rate...)
She went through with us all the different types of mortgages and what difference it makes to have a 15% deposit instead of a 10% - a HUGE difference btw! Also we saw the difference of 20 years VS 25 years, that makes an even bigger difference. We want to have our mortgage paid of in under 10 years and seeing the repayment amounts showed us that we could definitely do it :)
The next challenge is getting them to agree to a shorter term, even 15 years maybe, that should bring our total repayment down a lot and give us a better interest rate while still giving us breathing room of 5 years minimum payments if we need it for some reason. We don't want to be 'strangled' by our mortgage!
The problem there is that the bank doesn't really take into account how good we are with money and how little we live on, everyone is tarred with the same brush with regards to what they think you need to have available for living expenses. The main thing they look at is the money coming in and for us it's about average atm.
So right now we'll keep building up more of a deposit and we'll be focusing on keeping our expenses down so that when we go back they can clearly see on our bank statements what we live on each month. We are so happy just doing what we're doing atm that in a way we're glad to be staying here in this house for a little longer preparing for our dream where we'll have this lifestyle again but it will be ours :)
I know lots of you have mortgages, some nearly paid off (well done Mr + Mrs SFT!), most of you trying to pay it of quickly, is there any advice you'd give to a young couple just getting into the whole mortgage thing? Any lessons you learnt the hard way that we could maybe avoid?
Well done, I absolutely applaud you for your choices. It is so easy to be blinded when someone tells you that you can have this much more money, without taking into consideration how much it will cost you in the long run. My advice really is just what you are doing anyway, save save save and get that deposit up as high as you can before you take on the mortgage. Any money you bring to the deal yourself is all money you don't have to pay someone else interest on. Be patient - the housing market is very unlikely to suddenly go much up in the near future so time is on your side and keep on with that idea of trying to clear a mortgage in 10 to 15 years rather than the usual 25 to 30 that banks offer, it will cost you much less in the long run and will bring you that much closer to your dream.
ReplyDeleteDan it's so nice to get that kind of encouragement :) I think your right about the market too, we're just glad we have a great place to live in in the mean time. Thanks for the advice, I really value your opinion because I so respect the choices you've made with your lifestyle and new home :)
DeleteThat's great news! Well done on being one step closer to your dream! We also paid a 15% deposit, it's going to make a big difference. I can't offer any advice though, as we're just starting ourselves! Just going to have to be thirfy and frugal I think!
ReplyDeleteAll the best!
Thanks Katie we really do feel a step closer - so exciting :) Its amazing the difference in interest rate from 10% to 15% hey? well done you guys, so its thrifty and frugal all the way for us!
DeleteWell done Astra, you seem to know what you want and you are going after it. Sorry i don't have any advice just encouragement, keep at it, you will eventually get there.
ReplyDeleteThank you New world, your encouragement means a lot :)
DeleteWell done Astra - I didn't get into the mortgage game till I was 54, and it was really hard to convince them that we could manage to pay it off in the 11 years before we retire. Santander were not helpful, but Halifax did take us on. It is very hard work - and I agree with New World's comment- no real advice, just encouragement.
ReplyDeleteI have days when I think 'what have I done?' but the Lord provides.
Oh, I do have one bit of advice for the pair of you- when it feels REALLY hard, and you are exhausted, and you feel desperately short of dosh, and longing to go and buy a frock/fancy meal/whatever, remember that you've both committed to this for the long haul- and kisses and cuddles are both wonderful and free!!!!
Lenten Blessings x
Hi Angela, thanks for the comment and words of encouragement. My dad just got a 11 year mortgage too, not sure who with... We are going to find a really modest home, that way we'll not be taking on too much financially and we can always extend later on. We'll always remember the kisses and cuddles too! Happy lent!
DeleteCan't help you there. We only paid $2500 for our property. We spent quite a bit on remodeling, bit no banks.
ReplyDeleteholy bananas, 2500 that is amazing! not likely around here but we'll be looking for a bargain thats for sure :)
DeleteThat's awesome! My main advice is to buy a house for less than what you're approved for, because banks approve people for more than they can afford.
ReplyDeleteYes, Michelle thats already what they told us - its funny telling a bank 'no thanks we don't want that much' but I can see why some people get caught up in the 'possibilities' but we're pretty firm on what we want :) Thanks for the advice
DeleteMy top tips for Mortgage Freedom:
ReplyDelete1. Frugal fun-Build lots of frugal fun into your weekends and holidays. Nights away if you can afford it. Then you have lots to look forward to alongside the hard saving. Buy treats for each other. Don't forget the romance (as if you would!)
2. Keep your eyes on the prize! If times get tough focus on your main goals.
3. Get a graph to show you your progress.
4. Make an inspiration board-what you want to achieve. Make a memory board-of special times you have shared. These help focus too.
5. Make saving fun! Be creative.
6. Seek support. Maybe your friends are not in the same boat so seek like minded support from others who blog about mortgage freedom.
7. Grow your own food!
8. Live well within your means. Pay off as much of your mortgage without incurring a penalty. Go for short mortgage deals. When one ends you can pay off more of your mortgage without a penalty before you start your next deal.
Sft x
that is awesome advice and we definitely agree!
Delete1 - we already do and will keep up for sure, even a night away camping - cheap and fun.
2 - will do!
3 - good idea, will do
4 - inspiration board sound great and we have photos of our special memories all over the house :)
5 - I agree you gotta have fun with it!
6 - Great advice and Ive already found such inspiration and support in fellow bloggers, we dont have many people we can chat too about these things atm so it's been brilliant to have all you cyber friends :)
7 - We're doing it already and will so it on a full blown scale as soon as we have the space lol
8 - That is also great advice we didn't know that, we were thinking to go fixed rate for 2 years then get onto a flexible one where you don't incur penalties.
Thanks so much for all those tips, and I know they work because your nearly mortgage free!!! :) and very happily married and having fun too! (even more important!)
Congratulations! My only advice would be to either get a 10-15 year mortgage, or, if that is not possible, pay an extra mortgage payment each year (pay your mortgage amount 13 times instead of 12). Your extra payment will go toward your principle, which will help you pay it down faster. Also, don't get a second mortgage. They're higher in interest and will wind up biting you in the butt. We were able to get out of ours by re-financing our entire mortgage at a lower interest rate, but it could have been bad. Good luck and keep your eye on the prize! SO EXCITING!!!
ReplyDeleteThanks bee girl :) we are so excited, haven't stopped talking about it since it happened! I don't think we'd get a second mortgage, one is enough debt for us... Glad you were able to sort out a workable plan for you guys though. Now comes the fun 'window shopping' stage lol!
DeleteOne of these days, when kids come along and you find yourself forking out for all sorts of things - can you manage to live (at least for a while) on one income? Don't tie yourself to a mortgage where you HAVE to go back to work asap even if you don't want to.
ReplyDeletePaying the very last installment of a mortgage is an incredible feeling, especially if you have worked hard to pay it off early : )
Jo thank you so much for that advice, it really got us talking and we do want to make sure, if we feel the need, I wont have to work again straight away when we start our family. We've decided to definitely keep the monthly payments (and bills) down to one wage manageable even if it means a slightly longer mortgage - brilliant advice :)
DeleteGood for you guys! I'm not sure I have much in the way of advice, except to encourage you to be persistent, which I'm certain you already are :) Best of luck!
ReplyDelete-Jaime
Thanks Jamie for the encouragement and you can never have to much luck either :)
DeleteHiya, I've recently come across your blog and love what you're trying to do.
ReplyDeleteYou don't necessarily have to get a 15 or 20 year mortgage to pay it off in that. If you get a 25 year mortgage and then opt that any overpayments reduce the term of the mortgage rather than just reducing your following months payments by a tiny amount.
We worked out that on our mortgage if we paid the maximum overpayment of £500 every month we would pay it off in 10 years instead of 25 - saving thousands of pounds interest. That way you have the option of paying it off early but if you are ever short one month and can't afford the overpayment you just pay your regular monthly payment. Hope that makes sense! Good luck
Sal
Hi Sal, thanks very much for commenting and I'm glad you enjoy my blog :) I didnt know that the extra payments dont automatically just come off the term, thats definitely what we'd want to do, we have been talking lots about it and also because of what Jo pointed out I think we may stick to the 20 year option to give us any breathing room we may need. It really is crazy how much interest you pay on a house hey? Off to have a nosey around your blog now :)
DeleteCongratulations! All you need is patience in getting a shorter term with your mortgage to be approved. Short term loans generally demand larger monthly payments, but you're clearly paying a lot less interest. All your hard work will soon pay off.
ReplyDeleteArmandina Skerl
Thank you so much for your encouragement :) we seem to have so much going on right now we're not in a big rush to buy and we know it'll be better saving for a bit longer too :)
DeleteThis definitely calls for a celebration! :D I know that getting your mortgage approved is no easy feat because you really don’t know how the bank’s going to decide. Some will say yes and some will say no, so you really have to play your cards right. I want to congratulate you, Astra. This is only the beginning of a wonderful phase in your life!
ReplyDeleteLora Holmes
I admire your conviction to save up for your dream home, Astra. It would be wise to talk to your financial advisor for your first mortgage loan, so you can understand more about your options. There are good financial services firms that can make the process a lot easier for you. I wish you and your husband all the luck in the world!
ReplyDeleteNannie Toller