Buying a house right now. How safe?

You're way out. Building societies started in the 1800s.

e.g. Nationwide building society says "Our dual origins lie in Northampton (1848) and within the co-operative movement in London (1883) respectively."

New builders used to wine and dine building society managers, so that their buyers got to the top of the pile when it came to allocating funds.

The Mortgage Indemnity Guarantee, which insure the societys top slice, enabled them to lend higher percentages, and many dont bother with it now.

So things have evolved to allow us to borrow more money, with less, or nothing, down.

IIRC, the Building Societies Act merely had a clause about "other acceptable security" - of which the MIG became one of them. Others were possible - bank guarantees, blocked deposits, even endowment policies (!).

It was common for a prospective borrower to have had to have been a regular monthly saver with the society for at least 12 months before he would get a loan. That also got over the deposit problem in many cases.

So I gather, but it seems bizarre that the length of time and regularity took such prominence. The amounts themselves were less important.

As a result, at the time, it was considered that one would maximise one's chances of getting a loan by spreading one's investment across several building societies. It was better to save £5 a month with four of them than £20 a month with just one.

FoFP

I don't think this is always the case. When I last remortgaged I reduced the term to pay off the loan quicker. I'm now about to move house and will probably extend the loan period to reduce payments. Whereas before I had sufficient excess income to reduce the term, I won't now (as I now have a young son and another baby due soon). Mind you ... I will probably reduce the term, or pay off part of the capital, or both next time I remortgage.

Thom

You don't think WHAT is always the case? That you would be well advised not to shift the end date into the future, or that you have the choice between paying more now and paying more later (or, to look at it from another angle, between paying less now and less later)?

You'd still be well advised not to do so. That you've ended up making a balanced decision taking into account all the factors, does not detract from the quality of the advice, which is "don't do it because it will cost you more in the long run". If you're happy with it costing you more in the long run, that's fine.

By the way, when you stretched it after shortening it, did it end up shorter or longer than the original term? In other words, did you lengthen the term by more or fewer months than you first shortened it by?

How soon do you think that will be?

Sorry ... I don't think that it is always the case that "you would be well advised" to keep the end date the same, or at least not to shift it further into the future. I do, however, think it is a good rule of thumb.

That assumes that financial cost is the only cost I'm interested in! It also doesn't necessarily follow - in that I'd rather not move again in two or three years (which is itself financially costly).

I haven't stretched it yet. I went from 25 to 20 years (though I was nearly 3 years in, I think). I'll probably go back to 25 (it depends on the mortgage and my projected budget).

Probably two to three years depending on the mortgage deal. At the moment I have an offset mortgage, but most of the advantages of that disappear if I can't make overpayments etc.

Thom

The financial cost *is* all that matters. Specifically it's a planning issue of how to carve up your income cake, which in a way you can think of as two-dimensional [wipe the grin off your face, Troy] in that it has both width (size of your annual salary) and length (number of years from now to when you retire), and you allocate slices of the cake to your mortgage payments, but their area changes with their shape.

You don't generally need to move house or even move lenders in order to adjust the length of your term.

Quite, especially as you're presumably paying a premium interest rate for the privilege of the offset capability.

I'd have to disagree.

That's true.

Yes, though the advantages of the off-set have outweighed the interest rate premium so far. My circumstances have changed and the premium has increased (the original rate was much more competitive).

Thom