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Understanding mortgages - Free Open University Course
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Understanding mortgages - Free Open University Course

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Posted 29th Oct
Free open university course - ideal for first time buyers but hopefully will help others too
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sweetpea1029/10/2019 12:02

being able to afford one would be good.



Should be step one of the course: Choose your affluent parents wisely.
Docman29/10/2019 12:55

In the current financial climate, I’m not sure that statement is entirely c …In the current financial climate, I’m not sure that statement is entirely correct...


Well it was I'm our case. 2 years ago (so fairly current) we bought, having saved a 10k deposit over 3 years. I was on 18k and my other half was part time on 10k. Not min wage but not far off.

Of course, if you are the entitled type, who just has to have that 4 bedroom 300k detached with a new car on the drive and a holiday abroad every year then no, its not going to happen.
SimonSpencer29/10/2019 12:22

I never understand this viewpoint when most mortgage monthlys are cheaper …I never understand this viewpoint when most mortgage monthlys are cheaper than rent on the equivelent house.


It's called a deposit
Well worth doing this if you've never had a mortgage, there's a lot we don't get taught in schools we really should
93 Comments
Nice find Op!

Also it mentions this course is produced in collaboration with MoneySavingExpert.com
Edited by: "chigger1" 29th Oct
Probably should have said only 2 hours long.
Thanks for sharing x
being able to afford one would be good.
sweetpea1029/10/2019 12:02

being able to afford one would be good.



Should be step one of the course: Choose your affluent parents wisely.
Well worth doing this if you've never had a mortgage, there's a lot we don't get taught in schools we really should
sweetpea1029/10/2019 12:02

being able to afford one would be good.


I never understand this viewpoint when most mortgage monthlys are cheaper than rent on the equivelent house.
thank you
SimonSpencer29/10/2019 12:22

I never understand this viewpoint when most mortgage monthlys are cheaper …I never understand this viewpoint when most mortgage monthlys are cheaper than rent on the equivelent house.


It's called a deposit
8ANNED29/10/2019 12:35

It's called a deposit


Which you save for. If you are serious, you get there, even on mimimum wage.
SimonSpencer29/10/2019 12:43

Which you save for. If you are serious, you get there, even on mimimum …Which you save for. If you are serious, you get there, even on mimimum wage.


In the current financial climate, I’m not sure that statement is entirely correct...
Docman29/10/2019 12:55

In the current financial climate, I’m not sure that statement is entirely c …In the current financial climate, I’m not sure that statement is entirely correct...


Well it was I'm our case. 2 years ago (so fairly current) we bought, having saved a 10k deposit over 3 years. I was on 18k and my other half was part time on 10k. Not min wage but not far off.

Of course, if you are the entitled type, who just has to have that 4 bedroom 300k detached with a new car on the drive and a holiday abroad every year then no, its not going to happen.
SimonSpencer29/10/2019 13:03

Well it was I'm our case. 2 years ago (so fairly current) we bought, …Well it was I'm our case. 2 years ago (so fairly current) we bought, having saved a 10k deposit over 3 years. I was on 18k and my other half was part time on 10k. Not min wage but not far off. Of course, if you are the entitled type, who just has to have that 4 bedroom 300k detached with a new car on the drive and a holiday abroad every year then no, its not going to happen.



I can appreciate in your case it worked out. But I’m not sure that everybody can “get there”.
Also depends where in the country you live, as well as your age when getting mortgage. Even life assurance policies are getting harder to get to cover mortgage.
Docman29/10/2019 13:07

I can appreciate in your case it worked out. But I’m not sure that e …I can appreciate in your case it worked out. But I’m not sure that everybody can “get there”.


Not everyone can - some people are not in work. However those who are prepared to make the sort of sacrifices their parents did certainly have a much better chance. Would you cycle for 45 minutes to work to save cash on fares, live in one room in a house that had mice, stay with parents, work abroad for a year, work 3 jobs - all things I know people did so a bit more than just giving up fancy phones and foreign holidays.
Docman29/10/2019 13:07

I can appreciate in your case it worked out. But I’m not sure that e …I can appreciate in your case it worked out. But I’m not sure that everybody can “get there”.


There is quite a bit of difference between your combined 28k and 15.7k (full time minimum wage a year). In fact I am willing to bet you never considered yourself this far off of minimum wage.
hemelskonijn29/10/2019 13:19

There is quite a bit of difference between your combined 28k and 15.7k …There is quite a bit of difference between your combined 28k and 15.7k (full time minimum wage a year). In fact I am willing to bet you never considered yourself this far off of minimum wage.


Think you’ve quoted the wrong person
Docman29/10/2019 13:21

Think you’ve quoted the wrong person


Yups, sorry... /*Humble bow*/
SimonSpencer29/10/2019 12:43

Which you save for. If you are serious, you get there, even on mimimum …Which you save for. If you are serious, you get there, even on mimimum wage.


Not in the village I live in, starting prices are ridiculous.
SimonSpencer29/10/2019 12:22

I never understand this viewpoint when most mortgage monthlys are cheaper …I never understand this viewpoint when most mortgage monthlys are cheaper than rent on the equivelent house.


Because you still need a deposit? And since houses are a lot more expensive than back in the day deposits on a starter home are upwards of £15k for a cheap terraced home. Also you answered your own question. Rent is a lot more expensive so your saving opportunities are greatly diminished.
hemelskonijn29/10/2019 13:19

There is quite a bit of difference between your combined 28k and 15.7k …There is quite a bit of difference between your combined 28k and 15.7k (full time minimum wage a year). In fact I am willing to bet you never considered yourself this far off of minimum wage.


Tbh, how many people buy a house alone? Unless they are already on good money. It's generally a thing you do as a couple.

The difference between 28k and 15.7k as much as you would think. It certainly isn't 12.3k. Add a student loan and 2 children in there and you have to pinch every penny. .

But everyone who can't do something usually has a thousand excuses why they can't.
buzzard29/10/2019 13:15

Not everyone can - some people are not in work. However those who are …Not everyone can - some people are not in work. However those who are prepared to make the sort of sacrifices their parents did certainly have a much better chance. Would you cycle for 45 minutes to work to save cash on fares, live in one room in a house that had mice, stay with parents, work abroad for a year, work 3 jobs - all things I know people did so a bit more than just giving up fancy phones and foreign holidays.


Nonsense house prices have gone up from 60k in 1995 to on average 200k in 2005 in the same time minimum wage has moved from 5.80 an hour to 6.70 an hour in the same period with inflation being close to 3 percent or higher year after year.

If anything "our" parents struggle should give you an indication of how desperate people must be now
SimonSpencer29/10/2019 13:30

Tbh, how many people buy a house alone? Unless they are already on good …Tbh, how many people buy a house alone? Unless they are already on good money. It's generally a thing you do as a couple.The difference between 28k and 15.7k as much as you would think. It certainly isn't 12.3k. Add a student loan and 2 children in there and you have to pinch every penny. . But everyone who can't do something usually has a thousand excuses why they can't.


So what you are saying is that your combined income does not stretch as far as minimum wage in a comparable situation? My hypothetical minimum wage and hypothetical two kids leaves me with a far larger disposable income even though there is a 12.3k discrepancy?

Maybe what you really mean to say is more akin to "I am impressively awesome and I don't care for anyone not in a stable relationship and for good measures those who make minimum wage either should not have kids or should not be considered when I spew my bile"?
Edited by: "hemelskonijn" 29th Oct
hemelskonijn29/10/2019 13:49

So what you are saying is that your combined income does not stretch as …So what you are saying is that your combined income does not stretch as far as minimum wage in a comparable situation? My hypothetical minimum wage and hypothetical two kids leaves me with a far larger disposable income even though there is a 12.3k discrepancy? Maybe what you really mean to say is more akin to "I am impressively awesome and I don't care for anyone not in a stable relationship and for good measures those who make minimum wage either should not have kids or should not be considered when I spew my bile"?


Lol. 1000 excuses.
SimonSpencer29/10/2019 13:51

Lol. 1000 excuses.


That or actual insight on to economics and history. That you made it happen is great and all but pretending that minimum wage gets you the same it used to or is actually enough is quite shortsighted. There are no thousand excuses there really is only one, wealth has been distributed unevenly and gravitates towards those who already have some. This means relatively quickly we went from all being able to buy a house and own a car for example to it becoming a luxury. Wage gaps are getting bigger rents and property prices rise far quicker then is healthy and the only way to keep up is by using taxes on income support and housing benefits.

True it can be done, is it healthy though?
hemelskonijn29/10/2019 13:43

Nonsense house prices have gone up from 60k in 1995 to on average 200k in …Nonsense house prices have gone up from 60k in 1995 to on average 200k in 2005 in the same time minimum wage has moved from 5.80 an hour to 6.70 an hour in the same period with inflation being close to 3 percent or higher year after year. If anything "our" parents struggle should give you an indication of how desperate people must be now



hemelskonijn29/10/2019 13:43

Nonsense house prices have gone up from 60k in 1995 to on average 200k in …Nonsense house prices have gone up from 60k in 1995 to on average 200k in 2005 in the same time minimum wage has moved from 5.80 an hour to 6.70 an hour in the same period with inflation being close to 3 percent or higher year after year. If anything "our" parents struggle should give you an indication of how desperate people must be now


when I bought a small flat in an unfashionable area with a long journey to work mortgage interest rates were high and shortly afterwards went over 15%. There was no minimum wage. Those who really want to buy still manage it and they dont all have rich parents. "There were 370,000 new first-time buyer mortgages completed in 2018, some 1.9 per cent more than in 2017. This is the highest number of first-time buyer mortgages since 2006, when this figure stood at 402,800. "
buzzard29/10/2019 14:47

when I bought a small flat in an unfashionable area with a long journey …when I bought a small flat in an unfashionable area with a long journey to work mortgage interest rates were high and shortly afterwards went over 15%. There was no minimum wage. Those who really want to buy still manage it and they dont all have rich parents. "There were 370,000 new first-time buyer mortgages completed in 2018, some 1.9 per cent more than in 2017. This is the highest number of first-time buyer mortgages since 2006, when this figure stood at 402,800. "


The prices dropped by 2.4 percent during that period which is always a great incentive for people to buy explaining the 1.9 percent growth in property sales. I do not know when you bought your property and how much it was bought for against what income, the market has changed and I for one can imagine paying close to 15 percent interest on a 60k property with a down payment of 5 percent being favorable over paying let's say 5 percent intrest over a 200k mortgage with the same 5 percent down payment.
Etymology
From Anglo-Norman morgage, Middle French mortgage, from Old French mort gage (“death pledge”), after a translation of judicial Medieval Latin mortuum vadium or mortuum wadium, from mortuum + vadium or wadium, of Germanic (Frankish) origin, from a root *waddi, wadja. Compare gage and also wage. So called because the deal dies either when the debt is paid or when payment fails.

en.wiktionary.org/wik…age
“When banks extend loans to their customers, they create money by crediting their customers’ accounts.”
Sir Mervyn King, Governor of the Bank of England 2003-2013

positivemoney.org/how…ney
I really don't get why it's so hard for people to understand why it's harder. Property prices have increased more than wages by a sizeable margin. In turn this has made rent higher as well. It used to be a reasonable wage (even single) would still allow you to save up a £5-£6k in a few years and thus get a small starter home. These days rents are higher, costs of living are higher, travel costs are higher etc. So what used to quite achievable for many is now either out of reach or takes many years longer unless family help. It's no surprise that first time buyers average age has steadily risen in conjunction with rising housing prices.
This conversation always turns into us vs them; whichever side of the argument you are on. Some people make it work, some don't. Some people have to save a 10k deposit, some 100k. Some one beds cost £350k, some £35k. It's all horses for courses - what works for one, may not for another.

Giving advice or an opinion can be helpful, condescension is not...
hemelskonijn29/10/2019 14:59

The prices dropped by 2.4 percent during that period which is always a …The prices dropped by 2.4 percent during that period which is always a great incentive for people to buy explaining the 1.9 percent growth in property sales. I do not know when you bought your property and how much it was bought for against what income, the market has changed and I for one can imagine paying close to 15 percent interest on a 60k property with a down payment of 5 percent being favorable over paying let's say 5 percent intrest over a 200k mortgage with the same 5 percent down payment.


Still missing the point - buying a property has never been easy or within the reach of everybody. My partner and I had to save a 10% deposit because we had no family help and insufficient income to buy anything with a 5% deposit. We didnt complain we couldnt do it, we worked out what we needed to do and did it - and without the sort of government help available now. And if you were looking at paying 5% interest on a modern first time buyers mortgage you need a better broker.
Thanks for sharing. Looks interesting
JacksonRushton29/10/2019 15:54

This conversation always turns into us vs them; whichever side of the …This conversation always turns into us vs them; whichever side of the argument you are on. Some people make it work, some don't. Some people have to save a 10k deposit, some 100k. Some one beds cost £350k, some £35k. It's all horses for courses - what works for one, may not for another.Giving advice or an opinion can be helpful, condescension is not...


🙌
LeoMike29/10/2019 15:25

I really don't get why it's so hard for people to understand why it's …I really don't get why it's so hard for people to understand why it's harder. Property prices have increased more than wages by a sizeable margin. In turn this has made rent higher as well. It used to be a reasonable wage (even single) would still allow you to save up a £5-£6k in a few years and thus get a small starter home. These days rents are higher, costs of living are higher, travel costs are higher etc. So what used to quite achievable for many is now either out of reach or takes many years longer unless family help. It's no surprise that first time buyers average age has steadily risen in conjunction with rising housing prices.


Amen to that. Back in the day when I graduated, I scrimped and saved for 4-5 years to get enough deposit to buy a little terraced house in a cheap part of town. My son is currently in the same position, has got a better job than the one I got on graduation, but no way would he be able to raise enough himself to buy a house.
buzzard29/10/2019 13:15

However those who are prepared to make the sort of sacrifices their …However those who are prepared to make the sort of sacrifices their parents did certainly have a much better chance.


Let's stop pretending boomers had it hard.
I may have missed the important question though... Does this give you access to an OU email address so you can get a student card?
SimonSpencer29/10/2019 12:22

I never understand this viewpoint when most mortgage monthlys are cheaper …I never understand this viewpoint when most mortgage monthlys are cheaper than rent on the equivelent house.


But I get to decide if I can afford £1500 a month rent.
The bank decides if I can borrow £350k (£1500 per month). Which I can tell you now they won't. I would need to earn £75k for that and don't even earn half that.
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