How far to stretch for First Home?
Discussion
m3jappa said:
It's all relative to age, lifestyle other commitments IMO.
My dad was a teacher, he earns I believe 20k a year in the 80's
The real issue here is why teachers ( and wages in general ) are not much higher , teachers get around 25k-28k around here, not much of an increase is it.My dad was a teacher, he earns I believe 20k a year in the 80's
RWD cossie wil said:
No more than 30% of your monthly basic IMHO, anything more & you will be living close to the point where any minor disasters (big car bill, boiler breakdown etc) would have you scrabbling for £££...
That said, money in bricks & mortar is never wasted (if you buy sensibly). Your home is NOT an investment, as you don't get paid to live there! It takes money out of your account every month, it is therefore a liability...
House prices will continue to rise for the foreseeable future, simple fact is that supply is miles behind demand, circa 600,000 homes at the last count! One thing I don't understand is why everyone is obsessed with living in London? Prices are sky high because every man & his dog want to live there, & the competition is high for property... if you can't afford it, then move somewhere else! I want an F40, but I can't afford one, moaning about it won't help!
Surely your home is an investment? If you push in your life to move to bigger and better homes, when you retire you'll have an asset worth a lot of money, you can downsize and enjoy that money. Compared to if you never moved during your life and pissed the money up the wall instead.That said, money in bricks & mortar is never wasted (if you buy sensibly). Your home is NOT an investment, as you don't get paid to live there! It takes money out of your account every month, it is therefore a liability...
House prices will continue to rise for the foreseeable future, simple fact is that supply is miles behind demand, circa 600,000 homes at the last count! One thing I don't understand is why everyone is obsessed with living in London? Prices are sky high because every man & his dog want to live there, & the competition is high for property... if you can't afford it, then move somewhere else! I want an F40, but I can't afford one, moaning about it won't help!
marcusgrant said:
RWD cossie wil said:
No more than 30% of your monthly basic IMHO, anything more & you will be living close to the point where any minor disasters (big car bill, boiler breakdown etc) would have you scrabbling for £££...
That said, money in bricks & mortar is never wasted (if you buy sensibly). Your home is NOT an investment, as you don't get paid to live there! It takes money out of your account every month, it is therefore a liability...
House prices will continue to rise for the foreseeable future, simple fact is that supply is miles behind demand, circa 600,000 homes at the last count! One thing I don't understand is why everyone is obsessed with living in London? Prices are sky high because every man & his dog want to live there, & the competition is high for property... if you can't afford it, then move somewhere else! I want an F40, but I can't afford one, moaning about it won't help!
Surely your home is an investment? If you push in your life to move to bigger and better homes, when you retire you'll have an asset worth a lot of money, you can downsize and enjoy that money. Compared to if you never moved during your life and pissed the money up the wall instead.That said, money in bricks & mortar is never wasted (if you buy sensibly). Your home is NOT an investment, as you don't get paid to live there! It takes money out of your account every month, it is therefore a liability...
House prices will continue to rise for the foreseeable future, simple fact is that supply is miles behind demand, circa 600,000 homes at the last count! One thing I don't understand is why everyone is obsessed with living in London? Prices are sky high because every man & his dog want to live there, & the competition is high for property... if you can't afford it, then move somewhere else! I want an F40, but I can't afford one, moaning about it won't help!
It is a liability but living on the streets is the only option which doesnt require payment so there isnt really an option. The only other choice is renting which still requires a monthly payment.
But I think he meant to say it shouldnt be treated as an appreciating asset. It is an investment though no two ways about it.
z4RRSchris said:
NickCQ said:
RWD cossie wil said:
Your home is NOT an investment, as you don't get paid to live there!
But you DO get paid. You get paid the rent that you'd otherwise be paying someone else!In say 20 years, the mortgage payments will stop, the rent never will.
Edited by p1stonhead on Tuesday 18th October 10:55
If this question had been asked in 2006, I'd probably have advised not buying a house at all on the basis that the market was hopelessly overvalued and could crash.
Ten years later, and with the exception of a little bit of a 'wobble', prices have shot up faster than ever. A lot of areas are probably three times the price they were in 2006, and salary levels are broadly similar.
Even against that background, I'd definitely advise anyone to buy now if they can.
There is a bubble fuelled by cheap debt, but what is going to stop that unless interest rates rise? I don't think anyone genuinely knows when that will happen, and most seem to agree that it will be a LONG way off.
House price rises have beaten the credit crunch, the Brexit vote and anything else I can think of. I doubt that we can continue to see the meteoric rises that we have done in the last 15 years, just because people won't be physically able to get mortgages big enough.
Then again, banks will probably find a way to lend more. I saw a video on the BBC yesterday about an estate agent who sold a house in Clapham for about £14k in 1975 and again £145k in 1986. He was convinced the market couldn't go any higher. The house is now worth £1.3m.
Affordability is ridiculous if you earn enough to get a big mortgage. If you can borrow £1m at 1.5%, the interest payment is going to cost £1,250. It is still difficult to actually pay back a large mortgage, but I don't think a lot of people care much about that any more.
Ten years later, and with the exception of a little bit of a 'wobble', prices have shot up faster than ever. A lot of areas are probably three times the price they were in 2006, and salary levels are broadly similar.
Even against that background, I'd definitely advise anyone to buy now if they can.
There is a bubble fuelled by cheap debt, but what is going to stop that unless interest rates rise? I don't think anyone genuinely knows when that will happen, and most seem to agree that it will be a LONG way off.
House price rises have beaten the credit crunch, the Brexit vote and anything else I can think of. I doubt that we can continue to see the meteoric rises that we have done in the last 15 years, just because people won't be physically able to get mortgages big enough.
Then again, banks will probably find a way to lend more. I saw a video on the BBC yesterday about an estate agent who sold a house in Clapham for about £14k in 1975 and again £145k in 1986. He was convinced the market couldn't go any higher. The house is now worth £1.3m.
Affordability is ridiculous if you earn enough to get a big mortgage. If you can borrow £1m at 1.5%, the interest payment is going to cost £1,250. It is still difficult to actually pay back a large mortgage, but I don't think a lot of people care much about that any more.
RWD cossie wil said:
Your home is NOT an investment, as you don't get paid to live there!
It makes a lot of sense really - you lose the income from renting out a property but still make the capital gain in the end, and house price increases over the past 15 years would indicate that people have made a lot more from growth than the income they have gained along the way.
Interesting thread.
We've just purchased our third house. The first (two bed end of terrace) we purchased back in 2007 on a 35 year mortgage. We lost a couple of thousand when we sold it in Dec 2011.
Our second home was a four bed ex council that in effect needed gutting. Paid £185k for it in Dec 2011 and put around £45k into it, sold for £262k in March this year (within 24hrs of going on the market) and eventually completed in August.
This house is a massive step up in terms of location and value. We're back to a 30 year mortgage @ 4.25x my base salary.
My wife isn't currently working so it's all on my shoulders and will be for the foreseeable future. Mortgage payment is 33% of take home pay.
Family budget is currently 54% on essential costs (Mortgage, council tax, gas&electric, water, Life insurance, food), 30% on discretionary spend (sky, phone bills, going out etc) and 16% is saved.
Life is a compromise and our compromise for the next couple of years is not going on exotic holidays whilst we get the mortgage down to the next LTV threshold...
We've just purchased our third house. The first (two bed end of terrace) we purchased back in 2007 on a 35 year mortgage. We lost a couple of thousand when we sold it in Dec 2011.
Our second home was a four bed ex council that in effect needed gutting. Paid £185k for it in Dec 2011 and put around £45k into it, sold for £262k in March this year (within 24hrs of going on the market) and eventually completed in August.
This house is a massive step up in terms of location and value. We're back to a 30 year mortgage @ 4.25x my base salary.
My wife isn't currently working so it's all on my shoulders and will be for the foreseeable future. Mortgage payment is 33% of take home pay.
Family budget is currently 54% on essential costs (Mortgage, council tax, gas&electric, water, Life insurance, food), 30% on discretionary spend (sky, phone bills, going out etc) and 16% is saved.
Life is a compromise and our compromise for the next couple of years is not going on exotic holidays whilst we get the mortgage down to the next LTV threshold...
Some very very amusing comments here from some people that think house price appreciation can possibly continue as has been seen over the last circa 20yrs. It simply can't...
People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
p1stonhead said:
Yes but a tad extreme. Interest rates were at 0.5% for 8 years and then halved again
1-2% in the next ten years I reckon is realistic.
I think when getting a mortgage they stress test your finances to about 4% if I remember correctly.
We bought a house last year, our finances were stress tested to at least 8% I think.1-2% in the next ten years I reckon is realistic.
I think when getting a mortgage they stress test your finances to about 4% if I remember correctly.
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.
Jakey123 said:
Some very very amusing comments here from some people that think house price appreciation can possibly continue as has been seen over the last circa 20yrs. It simply can't...
People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
Of course it will correct at some point, but overall people buying are generally still going to be in the positive over the long term. The main issues would come if you buy just before a crash - it could then take a long term to recover the loss. However even if the market drops say 20% then in a lot of places that is just a couple of year's worth of rises. Then who is the idiot - the person saying it will crash and so didn't buy for the last 10 years, or the debt slave? The debt slave will likely be better off all things considered.People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
Also it's worth looking at the average wage in your area (or linking it to London if it's a good place for commuting). And generally a FTB will not be looking at a nice 2 bed place if they are being realistic.
I took a quick look at the summary and the thing it is missing out is now a lot of Baby Boomers are taking money out of their own houses to give deposits for people now. Between that and the foreign money that comes in then it's actually potentially quite sustainable when compared to wage rises. It will mean the difference between the haves and the have-nots will grow, but I think it's a lot of the reason we are seeing a seperation between wages and the house price increases.
It's not great, but it's what happens in a free market, particularly with government policies pushing people this way.
Jakey123 said:
It simply can't......
You assume people in the UK are making the purchases , i work with people from China and India , them and their families have hovered up loads of property here ( they are loaded and happy to move millions ) , theres a whole bunch of people outside the UK with plenty of £/$/€ waiting to snap stuff up , the whole world wants to live here.Oh , the £ has dropped a bit too -
http://www.independent.co.uk/news/business/news/lo...
Crash?
Have some Wail -
http://www.dailymail.co.uk/news/article-2790403/ho...
Edited by superkartracer on Tuesday 18th October 15:05
superkartracer said:
You assume people in the UK are making the purchases , i work with people from China and India , them and their families have hovered up loads of property here ( they are loaded and happy to move millions ) , theres a whole bunch of people outside the UK with plenty of £/$/€ waiting to snap stuff up , the whole world wants to live here.
Oh , the £ has dropped a bit too -
http://www.independent.co.uk/news/business/news/lo...
Crash?
Funny, top end luxury apartments struggling to sell and sale numbers through the floor.Oh , the £ has dropped a bit too -
http://www.independent.co.uk/news/business/news/lo...
Crash?
Then along come a load of news reports claiming a flood of overseas buyers (all the sources for the articles such as you have linked are word of mouth from estate agents, no vested interest from them of course?)
But if we ignore the above, and believe the reports - foreign investors alone will not prop up our property market.
The type of buyer you refer to are not buying the 'average' house, millionaires don't want average houses in a Luton housing estate.... so largely irrelevant to any kind of crash. They are just speculative investors.
Also this weak £ making properties more appealing, the rents are also in £...
Yields will be the same!
Plenty of over priced luxury stuff they can hoover up and watch it dropping I guess
Edited by Jakey123 on Tuesday 18th October 15:19
Jakey123 said:
The sooner it collapses the better it is for everyone...
Unfortunately, it isn't ideal for the banks or the government and they are the ones that are controlling it for the most part.I definitely agree that it should be impossible for prices to go up again like they have done in the past 20 years (a 1 bed flat in my area was £60k back in 1996, and is £375k now so would be almost £2.5m in 2036 if it went up that percentage again!).
What I wouldn't underestimate is the ability of the banks/government and the section of the population that this benefits to at least try to keep inflating it. There is still a lot of money earning virtually nothing in wealthy people's savings accounts that could be transferred in, Bank of Mum & Dad is getting richer all of the time, and foreign investment can't be harmed too much by the weaker pound.
I do agree that it is wrong by any historical standard and it doesn't help the economy as a whole, but most people are out for themselves.
Edited by kingston12 on Tuesday 18th October 15:24
Edited by kingston12 on Tuesday 18th October 15:25
Jakey123 said:
The type of buyer you refer to are not buying the 'average' house, millionaires don't want average houses in a Luton housing estate
https://www.theguardian.com/cities/2016/sep/29/inside-china-passion-foreign-property-investment-ukLike i said , i work with Chinese and Indians , they are snapping up normal and expensive property for their families and investment , the one chap managed to walk though customs with 80k in gold ( without question ) he was using as a deposit , the indians love gold.
Jakey123 said:
Some very very amusing comments here from some people that think house price appreciation can possibly continue as has been seen over the last circa 20yrs. It simply can't...
People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
Thing is you're looking at it all the wrong way.People that have purchased back in the previous 90s saying how it's always been this hard etc. Are just flat out wrong.
The market will crash, but as more and more idiots keep taking the debt it'll keep going a bit longer.
The government does everything in its power to keep prices up, to the point of buying houses that now aren't selling at the stupid prices.
I'm located south east, a nice 2 bed in an okay area is £250k plus. That's at leat 8 times average wage
Without BOMAD or a very well paying job first time buyers aren't really joining this artificial rigged market..
An interesting article here explains a lot - https://www.google.co.uk/url?sa=t&source=web&a...
The sooner it collapses the better it is for everyone...
Look at who is buying these houses as firt time buyers, it will generally be a couple...the 8x is in fact only 4x then...perfectly normal - iThis change is all in part due to the changing social structure of the country, where before only one person worked (in a married couple) both often do nowerdays. With this gives increased affordability (averages) and hence house price growth.
Beyond this plot a graph of mortgage repayments as a % of annual take-home, it hasn't changed that much.
Also plot house prices in constant currency terms from any point in the previous cycle, in foreign currency terms our houses are now cheap, especially with further devaluation. Whilst it won't affect Grimsby it is a very real support for Central London.
Edited by kiethton on Tuesday 18th October 16:55
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