How far to stretch for First Home?

[The Moose]

mike74 said:

Disastrous said:

Can't afford a house?

Not quite.

Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.

I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.

Only a 6 figure saving in the bank? Come back and talk to me when it's 8+...pauper

[marcusgrant]

mine and the misses mortgage is just over 2x our joint income. In hind site maybe we should have spent more as we're looking to move again in a couple of years. Good first house though and we will have some good equity as we've done a lot of it up.

[Disastrous]

mike74 said:

Disastrous said:

Can't afford a house?

Not quite.

Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.

I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.

My hero!

So essentially what you're saying is "I'm very rich so don't need a mortgage, you idiots! Look at you, doing what the banks want...just buy outright!"

Insightful. And yet remarkably down to earth of you. You're an example to us all.

I'm glad you've found something you enjoy though. I enjoy sports - diving, skiing, motorcycling etc - but laughing at people getting into debt would be much less physically demanding. A new hobby beckons!

[mike74]

Disastrous said:

My hero!

So essentially what you're saying is "I'm very rich so don't need a mortgage, you idiots! Look at you, doing what the banks want...just buy outright!"

Insightful. And yet remarkably down to earth of you. You're an example to us all.

I'm glad you've found something you enjoy though. I enjoy sports - diving, skiing, motorcycling etc - but laughing at people getting into debt would be much less physically demanding. A new hobby beckons!

Unfortunately you've not understood or not read properly the point I was making, although I admit I did make it in a rather roundabout and contentious way.

I have huge levels of sympathy for anyone having to buy a property right now, especially young FTBers, I think it's nothing short of criminal the way the property market has been manipulated and turned into a speculative bubble by the policies of the government/boe.

I personally would be more than happy to see the price of property (mine included) 20%, 30% even 50% lower than it is... it would be of huge benefit to the wider economy as a whole.

I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt, and sacrificing huge proportions of their income for probably the whole of their working lives, resulting in them having a far lower quality of life compared to just about any other generation... and yet they're boasting about it and high fiving all around as though they've just won the lottery.

They're either too thick, too deluded or too brainwashed to realise how they've been utterly shafted by the establishment, they ought to be angry (or at least embarrassed) at the position they've been forced into not celebrating and encouraging others to do likewise.

[brickwall]

mike74 said:

Disastrous said:

My hero!

So essentially what you're saying is "I'm very rich so don't need a mortgage, you idiots! Look at you, doing what the banks want...just buy outright!"

Insightful. And yet remarkably down to earth of you. You're an example to us all.

I'm glad you've found something you enjoy though. I enjoy sports - diving, skiing, motorcycling etc - but laughing at people getting into debt would be much less physically demanding. A new hobby beckons!

Unfortunately you've not understood or not read properly the point I was making, although I admit I did make it in a rather roundabout and contentious way.

I have huge levels of sympathy for anyone having to buy a property right now, especially young FTBers, I think it's nothing short of criminal the way the property market has been manipulated and turned into a speculative bubble by the policies of the government/boe.

I personally would be more than happy to see the price of property (mine included) 20%, 30% even 50% lower than it is... it would be of huge benefit to the wider economy as a whole.

I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt, and sacrificing huge proportions of their income for probably the whole of their working lives, resulting in them having a far lower quality of life compared to just about any other generation... and yet they're boasting about it and high fiving all around as though they've just won the lottery.

They're either too thick, too deluded or too brainwashed to realise how they've been utterly shafted by the establishment, they ought to be angry (or at least embarrassed) at the position they've been forced into not celebrating and encouraging others to do likewise.

As one of the "shafted" generation, don't get me wrong, I'm fking angry. In all likelihood I will be poorer than my parents. I work day and night to earn a good salary, and my "reward" is a 1970s 2-bed with a damp problem in Zone 3. I too would absolutely love house prices to fall.

I'm not too thick or brainwashed in realising I've been shafted by the establishment. I've been shafted by them, but also by the generation above me - all those who have occupied positions of power and influence for the last 25 years. All those who have blocked new housing developments on NIMBYist grounds. All those who buy the Daily Mail and natter about it when they run a sensationalist "house prices to fall" headline. I know exactly what has happened, and I know who to blame.

But short of rioting or running for Parliament, there's not a lot I can do to effect the change I want. I have to live with it, and make the best of it. Just like the rest of us. What do you suggest I do - pay 50% of my salary on rent instead? I'm sure that'd prop up the baby-boomer owned BTL market nicely.

It comes across that you only say "I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt...resulting in them having a far lower quality of life compared to just about any other generation" simply because you haven't had to. You had some other choice...we don't.

Making the comments you do reveals you to be either out of touch, stupid, and/or a .

[eliot]

brickwall said:

Depends on your situation.

If you're young and expecting significant increases in income over the next 5-10 years, then stretch yourself. A 4x income mortgage now will be 2-3x quite quickly.

If you're older and are expecting increased costs or decreased income (I dunno, say having kids soon), then you'd want to be a lot more conservative.

^This is the most relevant response.

I bought at the age of 19 at 6x salary (dad was guarantor, but didn't contribute). I had lots of overtime and my salary rose quickly over the next 10 years.

My 2nd house was a maximum of my salary multiple from memory, but i was over paying within 18 months - so i knew i didn't push enough.

My current house is a self build and I had to push very hard to fund, it's the forever house now - been in it 4 years and don't envisage over paying in the foreseeable future. So i guess that means i did push hard for it, and of course I have a family which makes a big difference.

I like to think I've saved time and money moving from a starter house to the big forever house in just three houses - but other people do it in different ways and achieve the same outcome.

So if you are relatively young, have no dependents and you know your salary is going to increase more than annual levels through promotion - then go for it - if thats what you desire.

[mike74]

brickwall said:

As one of the "shafted" generation, don't get me wrong, I'm fking angry. In all likelihood I will be poorer than my parents. I work day and night to earn a good salary, and my "reward" is a 1970s 2-bed with a damp problem in Zone 3. I too would absolutely love house prices to fall.

I'm not too thick or brainwashed in realising I've been shafted by the establishment. I've been shafted by them, but also by the generation above me - all those who have occupied positions of power and influence for the last 25 years. All those who have blocked new housing developments on NIMBYist grounds. All those who buy the Daily Mail and natter about it when they run a sensationalist "house prices to fall" headline. I know exactly what has happened, and I know who to blame.

But short of rioting or running for Parliament, there's not a lot I can do to effect the change I want. I have to live with it, and make the best of it. Just like the rest of us. What do you suggest I do - pay 50% of my salary on rent instead? I'm sure that'd prop up the baby-boomer owned BTL market nicely.

It comes across that you only say "I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt...resulting in them having a far lower quality of life compared to just about any other generation" simply because you haven't had to. You had some other choice...we don't.

Making the comments you do reveals you to be either out of touch, stupid, and/or a .

If you're going to quote me then at least use the full quote rather than picking one bit and using it out of context... I said I can't get my head around people being forced into unprecedented levels of mortgage debt etc.... then celebrating and high fiving like they've won the lottery.

You're obviously not the kind of person my comments were aimed at... you're aware that you've been well and truly shafted and you're rightly fking annoyed about it, but so many others in your position seem to be completely unaware of just how much they've been shat on, either that or maybe just their pride makes them unwilling to admit it.

And why can't people get out on the streets and protest about the situation? All these young SJW's in their liberal echo chambers seem all too willing to protest about a whole host of minor and irrelevant social and political issues and yet when it comes to the greatest cause of hardship and inequity that they're genetation face they seem to be too oblivious or ignorant to even try and do anything about it.

[KrazyIvan]

mike74 said:

If you're going to quote me then at least use the full quote rather than picking one bit and using it out of context... I said I can't get my head around people being forced into unprecedented levels of mortgage debt etc.... then celebrating and high fiving like they've won the lottery.

You're obviously not the kind of person my comments were aimed at... you're aware that you've been well and truly shafted and you're rightly fking annoyed about it, but so many others in your position seem to be completely unaware of just how much they've been shat on, either that or maybe just their pride makes them unwilling to admit it.

And why can't people get out on the streets and protest about the situation? All these young SJW's in their liberal echo chambers seem all too willing to protest about a whole host of minor and irrelevant social and political issues and yet when it comes to the greatest cause of hardship and inequity that they're genetation face they seem to be too oblivious or ignorant to even try and do anything about it.

Wow, for someone so "intelligent", you don't half come across as a moron. Good luck with the rest of the thread, with your social skills, I feel your going to need it.

[kiethton]

mike74 said:

Unfortunately you've not understood or not read properly the point I was making, although I admit I did make it in a rather roundabout and contentious way.

I have huge levels of sympathy for anyone having to buy a property right now, especially young FTBers, I think it's nothing short of criminal the way the property market has been manipulated and turned into a speculative bubble by the policies of the government/boe.

I personally would be more than happy to see the price of property (mine included) 20%, 30% even 50% lower than it is... it would be of huge benefit to the wider economy as a whole.

I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt, and sacrificing huge proportions of their income for probably the whole of their working lives, resulting in them having a far lower quality of life compared to just about any other generation... and yet they're boasting about it and high fiving all around as though they've just won the lottery.

They're either too thick, too deluded or too brainwashed to realise how they've been utterly shafted by the establishment, they ought to be angry (or at least embarrassed) at the position they've been forced into not celebrating and encouraging others to do likewise.

But you miss the point

If we dont have this huge debt 20-30% of take home what is the alternative - renting at 40-50% of take home...which is preferable?

[anonymous-user]

mike74 said:

Not quite.

Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.

I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.

You say "now" mortgage free. So you have had one.

For benchmarking purposes: When you bought your first house, what percentage of the purchase price was paid by the mortgage loan, and what multiple of your earnings was your mortgage?

[Disastrous]

mike74 said:

Unfortunately you've not understood or not read properly the point I was making, although I admit I did make it in a rather roundabout and contentious way.

I have huge levels of sympathy for anyone having to buy a property right now, especially young FTBers, I think it's nothing short of criminal the way the property market has been manipulated and turned into a speculative bubble by the policies of the government/boe.

I personally would be more than happy to see the price of property (mine included) 20%, 30% even 50% lower than it is... it would be of huge benefit to the wider economy as a whole.

I just can't get my head around these people who are taking on massive, unprecedented levels of mortgage debt, and sacrificing huge proportions of their income for probably the whole of their working lives, resulting in them having a far lower quality of life compared to just about any other generation... and yet they're boasting about it and high fiving all around as though they've just won the lottery.

They're either too thick, too deluded or too brainwashed to realise how they've been utterly shafted by the establishment, they ought to be angry (or at least embarrassed) at the position they've been forced into not celebrating and encouraging others to do likewise.

Whilst you've made your point far less offensively on this one, it's unfortunately still rather moot.

The state of play is what it is, and much as I'm sure most are annoyed by it, and are aware of it, the options are limited so they do the best they can.

Very easy to sit and comment having come out of it all some time ago but would be interested in what you would suggest FTBers and so on do now, today, in this economy...

[anonymous-user]

Pay as much as it takes so you don't live near any sts would be my advice. Being one of the few owner occupiers I've had to tell a couple of rent living inconsiderate undesirables in the surrounding flats to keep their music down after midnight - an annoyance I don't deal with well. I can't wait till I move out in a couple of months!

[Nickyboy]

Buy what you can afford, why stretch yourself if you don't actually need something bigger/nicer?

You can always make what you buy your own for relatively small outlay in the scheme of things.

You have to think about what might happen in the future and if you can afford it, always leave yourself a little bit of breathing room.

[FredClogs]

RaymondVanDerDon said:

Pay as much as it takes so you don't live near any sts would be my advice. Being one of the few owner occupiers I've had to tell a couple of rent living inconsiderate undesirables in the surrounding flats to keep their music down after midnight - an annoyance I don't deal with well. I can't wait till I move out in a couple of months!

My feelings exactly, the vast majority (especially first time buyers) when talking about stretching themselves aren't talking about stone lions, electric gates, a four car garage and s marbled entrance hall, they're talking about a 2 or 3 bed in a nice area or a 2 or 3 bed in st area, that's real quality of life stuff.

[BoRED S2upid]

The Moose said:

Assuming a relatively young age, as far as possible IMHO.

I agree especially with interest rates so low. Get a long fixed rate and pay great chunks off while they are so low. Forget about BTL for now.

[lukefreeman]

A piece of advice I was given was to avoid tying yourself down to more than 1/3rd of your outgoings a month going on a mortgage.

Good piece of advice if I'm honest, every pay rise sees a little increase on my overpayment, and I never feel stretched.

[chow pan toon]

My wife and I stretched ourselves slightly to buy a 3 bed semi in a decent area, thinking that a 2 bed (which was all our original budget would stretch to) probably wouldn't cut it long-term. At the time we were told that we could have borrowed a great deal more money and if we had really stretched it would have been enough for a 3-4 bed detached in a similar area. Unfortunately it was 2007 and I got made redundant so our house became a bigger stretch than I was expecting. If we had borrowed everything we could there would have been no way that we could have serviced the debt on one income and would have probably had to sell in negative equity.

We remortgaged recently, and again there was a lot more cash on offer and moving was tempting but we don't really need the extra space, we like the area and with pay rises, promotions etc have been lucky enough to be in the position to shorten the term as well as taking advantage of low interest rates to fix our payments at less than rent would cost for the equivalent house. We should be mortgage free in 10 years.

The point of this rambling is that there is a definite balance to be found, for everyone who borrowed 5x earnings and made a mint there is always the chance of something coming along to mess up your lives. Although I wouldn't agree with a lot of what Mike was saying you do need to think about who benefits from you labouring under the burden of big debts. It is a decision that we made from experience of the potential insecurity of work and the desire to have freedom from our largest outgoing by our mid forties.

Edited by chow pan toon on Sunday 16th October 11:36

[XMT]

towser44 said:

Different strokes for different folks isn't it, but we definitely didn't stretch for our first home and I've no intention of hiking our debts to move either. For me personally, being easily able to afford our mortgage and all other outgoings with a minimum wage job should the worst happen makes me more comfortable than overstretching. I'm a captain cautious and even though we could afford it, I would worry myself to death if I had a £1,000+ a month mortgage, like most people I know have.

I am the exact same!
Even just the idea of having so much debt gives me sleepless nights. I am about to buy my first home having managed to save up 50% deposit with many sacrafices and even then getting a mortgage 2x my income is giving me little sweaty palms.

I know it doesn't bother some people at all to have large debts but it does to me as I have seen what its done to people who thought "it will be fine" and been up sts valley few years down the line or even 10 years down the line.

Personally its just not worth the stress, the idea of having something then falling back down for (in my eyes) being greedy and juming the gun is silly.
I would be heart broken to let me family down in such a way.

[brickwall]

XMT said:

towser44 said:

Different strokes for different folks isn't it, but we definitely didn't stretch for our first home and I've no intention of hiking our debts to move either. For me personally, being easily able to afford our mortgage and all other outgoings with a minimum wage job should the worst happen makes me more comfortable than overstretching. I'm a captain cautious and even though we could afford it, I would worry myself to death if I had a £1,000+ a month mortgage, like most people I know have.

I am the exact same!
Even just the idea of having so much debt gives me sleepless nights. I am about to buy my first home having managed to save up 50% deposit with many sacrafices and even then getting a mortgage 2x my income is giving me little sweaty palms.

I know it doesn't bother some people at all to have large debts but it does to me as I have seen what its done to people who thought "it will be fine" and been up sts valley few years down the line or even 10 years down the line.

Personally its just not worth the stress, the idea of having something then falling back down for (in my eyes) being greedy and juming the gun is silly.
I would be heart broken to let me family down in such a way.

It absolutely depends on your situation. If I had kids, dependents, committed outgoings etc. then I'd find a big mortgage very stressful.

On the other hand, a mortgage at >4x income may well be fine if you're expecting pay rises that'll quickly bring it down, and you have no dependents. In my case, if the worst were to happen I'd just sell up. Worst case scenario the equity and savings left over would last me a few years before I ran out. If I'm unemployed for more than a year then I've got bigger issues!

[IanCormac]

Op don't be daft with this idea of a 'forever' house. That's a females term. Buy a house you like now, you may move in a few years , you may not. Enjoy the house you have is my advice. Get somewhere decent as long as you can see your earnings increasing.