How our parents bought houses

Required Reading


How our parents bought houses

The problem arose because this proportion changed every year, as the amount of capital in the monthly payments grew; it would have meant the building societies changing the 'net' payment required from borrowers every year.

The majority of them refused to do so, and instead instituted the 'constant net repayment' mortgage, which, as its name implies, involves constant net payments throughout the term of the loan.

This has the advantage of lightening the administrative load of the building societies although it has not been such good news for those borrowers typically first-time buyers -who are committing themselves to every last penny in the first few years of a mortgage.

The constant net repayment version is significantly more expensive in the early years than the old-style repayment version, although over the mortgage term as a whole (usually 25 years) it works out cheaper-if you don't take inflation into account.

The MIRAS system at time of writing is only partially operative. Basic-rate taxpayers with loans of £125,000 or less will find that they are fully within the system. Higher-rate taxpayers will find that they are still collecting their higher-rate tax relief through their tax codings, as previously.

People who have mortgages of more than £225,000 may still be outside the system: although the limit for tax relief has been raised to £230,000, many lenders are not going to bring these borrowers into the system until April 2014. New borrowers, however, are likely to be brought in immediately.

The situation, therefore, is confusing. But whether you are, or are not, within the MIRAS system, the net result at the end of the day is the same. Either you pay more out each month -but have a correspondingly higher pay packet -or you pay out less, but will find that your net salary is equally diminished.

Looking for a offset mortgages

Exemption from capital gains tax

Again, this concession exemption from capital gains tax of the profits made from selling your main residence not apply to profits made on selling a second home or a holiday cottage.

Even if the concession were ever to be withdrawn (which seems unlikely), home-buyers now are not likely to be hit hard by the tax, as there are other provisions to exempt 'inflation only' gains.

Mortgage Interest Relief at Source

When Napoleon was Emperor of France, he decided to send out search parties to find if there was anyone in the whole of the country who wasn't aware of the fact.

Within three weeks, it is said, his soldiers came back with a woodcutter, living just outside Paris, who hadn't even . . .... see: Exemption from capital gains tax

Current Mortgage Offers

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