Any point in not just taking out a large mortgage?
Discussion
trooperiziz said:
jonah35 said:
I think more do than you think.
http://www.ifs.org.uk/wheredoyoufitin/Earning over £100k puts you in the top 1% of the country, regardless of the people you know personally earning a combined income of £200k
However, if you do what is deemed 'well' in life eg work hard get good a levels go to a half decent uni and go after a good job then it is not extraordinary but you will have done well.
I look online at these payscales for financial directors, pilots, nurses, teachers etc and they all seem far lower than reality.
It must be a London/SE thing, as I bought my last place for £100,000 and sold it for £90,000 5 years later, having said that I was in a much better position than the people who had paid £140,000 for the other flats in my block, 6 months before I bought mine.
This wasn't in the "grim" north either, it was in the Midlands, less than an hour by train to London. The place I bought to replace it wasn't much of a stretch, but I'd rather have a bit of a buffer.
This wasn't in the "grim" north either, it was in the Midlands, less than an hour by train to London. The place I bought to replace it wasn't much of a stretch, but I'd rather have a bit of a buffer.
I just can't see house prices going up much more, what would be the catalyst? Interest rates aren't going to drop any further, affordability checks are becoming tougher, and wages are still barely growing.
When interest rates eventually start rising, affordability is inevitably going to be constrained. Plus in proportionate terms the jump from 0.5% ot 1% is massive compared to a jump form say 5% to 5.5%.
I think the desire of governments to prop up house prices will mean they won't fall, but I think they will stagnate for many years, probably losing money in real terms after taking inflation into account.
When interest rates eventually start rising, affordability is inevitably going to be constrained. Plus in proportionate terms the jump from 0.5% ot 1% is massive compared to a jump form say 5% to 5.5%.
I think the desire of governments to prop up house prices will mean they won't fall, but I think they will stagnate for many years, probably losing money in real terms after taking inflation into account.
CaptainSensib1e said:
When interest rates eventually start rising, affordability is inevitably going to be constrained. Plus in proportionate terms the jump from 0.5% ot 1% is massive compared to a jump form say 5% to 5.5%.
People generally aren't paying 0.5% though.Even if they've kept on top it, they could be coming towards the end of fixed rate deal at, say, 4%, so they're looking at the chance to get a considerable reduction.
If they're stuck at 3 or 4% then a 0.5% rise shouldn't be the end of the world.
The risk at present in taking out a large mortgage isn't the specific cost of finance, or the property value dropping significantly - its whether you can hang onto your job long enough to service the mortgage.
You think it won't happen to you (I did) but it can.
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago. Many of our mates earned what we did (over 100k between us) but have mortgages of 350-400k plus.
Because we sold our flat at the height of the madness last year, we've got our mortgage down to 125k, and we'll be making some big overpayments to it in the next couple of years. I suspect I might inherit some money around about then or in the next 5 years which would pay off the rest. I can sleep at night- the house (worth about 450k ish) will be ours free and clear and we'll be in our mid 30s.
I genuinely don't know how people have these super sized mortgages. All it takes is for one of you to get canned and you'll probably be 5 or 6 pay cheques away from a very uncomfortable chat with your lender.
You think it won't happen to you (I did) but it can.
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago. Many of our mates earned what we did (over 100k between us) but have mortgages of 350-400k plus.
Because we sold our flat at the height of the madness last year, we've got our mortgage down to 125k, and we'll be making some big overpayments to it in the next couple of years. I suspect I might inherit some money around about then or in the next 5 years which would pay off the rest. I can sleep at night- the house (worth about 450k ish) will be ours free and clear and we'll be in our mid 30s.
I genuinely don't know how people have these super sized mortgages. All it takes is for one of you to get canned and you'll probably be 5 or 6 pay cheques away from a very uncomfortable chat with your lender.
princeperch said:
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago.
That's interesting, because the OP specifically gave solicitor amongst examples of how loads of people are earning £100K+.She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago.
Lawyers can earn all sorts of money.
One girl I know has 5 years pqe and is a family lawyer and earns 32k.
I know others who are associates in silver circle firms on 70k
Other firms pay 100k to newly qualified lawyers.
In my experience 50-70k odd isn't unusual for a lawyer in their late 20s or early 30s.
But as I said above, plenty of lawyers have been canned in the past 2 or 3 years.
One girl I know has 5 years pqe and is a family lawyer and earns 32k.
I know others who are associates in silver circle firms on 70k
Other firms pay 100k to newly qualified lawyers.
In my experience 50-70k odd isn't unusual for a lawyer in their late 20s or early 30s.
But as I said above, plenty of lawyers have been canned in the past 2 or 3 years.
jonah35 said:
I think more do than you think.
Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
You know a gas man who is clearing £5k a month???? I think he's over-egging the pudding when talking to his mates Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
Rosscow said:
jonah35 said:
I think more do than you think.
Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
You know a gas man who is clearing £5k a month???? I think he's over-egging the pudding when talking to his mates Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
CoolHands said:
not many couples earn 200k so I hardly think your examples are typical.
Absolutely loads of people would earn this in the SE. You get £80k plus bonus for a crappy job as a BA back office in a bank. You don't even need to be in a particularly high powered job. You could be a jobbing accountant and easily get £400 a day as a contractor.jonah35 said:
Yeah it's almost as if southern people have a different mentality to debt.
America is worse. A friend of mine has built a fantastic house in America, few million but it's so much bigger than a UK house. His and hers range rovers etc. ok, good incomes but the expenditure is so high it could go pop at any minute,
They're being proven right so far contrary to the crashists whilst living in a nice home/area.
This is the motivation in the US:America is worse. A friend of mine has built a fantastic house in America, few million but it's so much bigger than a UK house. His and hers range rovers etc. ok, good incomes but the expenditure is so high it could go pop at any minute,
They're being proven right so far contrary to the crashists whilst living in a nice home/area.
http://en.wikipedia.org/wiki/Home_mortgage_interes...
Timmy40 said:
CoolHands said:
not many couples earn 200k so I hardly think your examples are typical.
Absolutely loads of people would earn this in the SE... As above: http://www.ifs.org.uk/wheredoyoufitin/
TA14 said:
Timmy40 said:
CoolHands said:
not many couples earn 200k so I hardly think your examples are typical.
Absolutely loads of people would earn this in the SE... As above: http://www.ifs.org.uk/wheredoyoufitin/
It’s a multi-threaded argument. House prices are not only linked to interest rates. There is always someone with a GSCE economics talking about the upcoming double digit interest rates and affordability; next crash blah-de-blah. He seems to have 1) missed the lesson in supply & demand 2) Not looked at the macro-economic background
To create house price inflation, you just need to lower supply vs demand.
Just because money is cheap, is not a go buy indicator (and if you think about macro rate policy / QE you might be cannon fodder for the theorists). Politicians might bang on about solving the housing crisis; but unless the homes are built where there is demand its a sound bite and FA else.
Developer land bank in this country is colossal and forcing development is going to end in years of litigation that probably has greater downside (globally); than any potential upside. In fact you don’t even need local demand anymore to develop; just sell it offshore.
Increasing the borrowing costs, may have some settling effect where demand / supply are in closer balance (and negative effect where supply outweighs demand); buts its unclear what would be driving those increasing finance costs – inflation (the Govt and Euro-zone wishes, Grexit, ECB got in first); or tinkering with the banks making product more expensive (and ergo passed on to the end user).
It looks more like the government no longer knows HOW to prop up / manage house prices.
Anyway, back on thread - anyone making serious equity / fiscal gains out of the current property market is either lucky or NOT just taking advice from the front pages of The Express, Daily Mail and Homes Under The Hammer etc. If you are treating the house as you’re home and are confident you can service the debt in the long term; why not take a large mortgage. It only really becomes a problem if you can no longer afford to service the debt/need to sell in a tanking market (comes back to where you buy).
To create house price inflation, you just need to lower supply vs demand.
Just because money is cheap, is not a go buy indicator (and if you think about macro rate policy / QE you might be cannon fodder for the theorists). Politicians might bang on about solving the housing crisis; but unless the homes are built where there is demand its a sound bite and FA else.
Developer land bank in this country is colossal and forcing development is going to end in years of litigation that probably has greater downside (globally); than any potential upside. In fact you don’t even need local demand anymore to develop; just sell it offshore.
Increasing the borrowing costs, may have some settling effect where demand / supply are in closer balance (and negative effect where supply outweighs demand); buts its unclear what would be driving those increasing finance costs – inflation (the Govt and Euro-zone wishes, Grexit, ECB got in first); or tinkering with the banks making product more expensive (and ergo passed on to the end user).
It looks more like the government no longer knows HOW to prop up / manage house prices.
Anyway, back on thread - anyone making serious equity / fiscal gains out of the current property market is either lucky or NOT just taking advice from the front pages of The Express, Daily Mail and Homes Under The Hammer etc. If you are treating the house as you’re home and are confident you can service the debt in the long term; why not take a large mortgage. It only really becomes a problem if you can no longer afford to service the debt/need to sell in a tanking market (comes back to where you buy).
princeperch said:
The risk at present in taking out a large mortgage isn't the specific cost of finance, or the property value dropping significantly - its whether you can hang onto your job long enough to service the mortgage.
You think it won't happen to you (I did) but it can.
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago. Many of our mates earned what we did (over 100k between us) but have mortgages of 350-400k plus.
Because we sold our flat at the height of the madness last year, we've got our mortgage down to 125k, and we'll be making some big overpayments to it in the next couple of years. I suspect I might inherit some money around about then or in the next 5 years which would pay off the rest. I can sleep at night- the house (worth about 450k ish) will be ours free and clear and we'll be in our mid 30s.
I genuinely don't know how people have these super sized mortgages. All it takes is for one of you to get canned and you'll probably be 5 or 6 pay cheques away from a very uncomfortable chat with your lender.
If you lost your job wouldn't you just sell up and downsize?You think it won't happen to you (I did) but it can.
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago. Many of our mates earned what we did (over 100k between us) but have mortgages of 350-400k plus.
Because we sold our flat at the height of the madness last year, we've got our mortgage down to 125k, and we'll be making some big overpayments to it in the next couple of years. I suspect I might inherit some money around about then or in the next 5 years which would pay off the rest. I can sleep at night- the house (worth about 450k ish) will be ours free and clear and we'll be in our mid 30s.
I genuinely don't know how people have these super sized mortgages. All it takes is for one of you to get canned and you'll probably be 5 or 6 pay cheques away from a very uncomfortable chat with your lender.
Sheepshanks said:
princeperch said:
My missus and I are both solicitors. Well she isn't anymore because she got made redundant 2 years ago. Now that was an unpleasant thing to have to go through but I had actually planned for something like this happening along the way - so we didn't have an enormous mortgage, loads of crap on finance etc. we could pay the mortgage on my salary and all the other outgoings.
She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago.
That's interesting, because the OP specifically gave solicitor amongst examples of how loads of people are earning £100K+.She's now changed career and is training to be a teacher because the legal market is on its arse, but we are still down 25k odd on the household income from 2 years ago.
She presumably doesn't work in a magic circle firm in the centre of London where newly qualifiers can be on £80-100k.
Rosscow said:
jonah35 said:
I think more do than you think.
Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
You know a gas man who is clearing £5k a month???? I think he's over-egging the pudding when talking to his mates Just some examples off the top of my head:
Mate works in Dubai as a pilot, not particularly clever but I know he gets about £10k per month after tax. Not a big airline etc.
Another mate is a gas man/boiler fitter and he prob takes home £5k per month after tax so nearly £100kpa.
Solicitors if you just go to uni and do what you're told are on over £100k at 30
Dentists the same with private practice income
Oil and gas contractors
IT contractors etc
Anyway, that wasn't my point.
My point was that all these well educated people just do not even consider the possibility that property could ever fall or that rates could go up significantly, I genuinely mean this. They think it is a one way street.
To be fair,right to buy, help to buy, help to buy ISA, low rates, im beginning to think they're right!!
princeperch said:
She's now changed career and is training to be a teacher because the legal market is on its arse
She doesn't know what she's letting herself in for!! Teaching is tough at the moment. My wife is only part time now, does 2 days a week.But she does work probably 4 evenings a week, and forever seems to be having assessments/moderations/Ofsted etc. and she seems permanently stressed.
Don't say I didn't warn you!!!
Rosscow said:
princeperch said:
She's now changed career and is training to be a teacher because the legal market is on its arse
She doesn't know what she's letting herself in for!! Teaching is tough at the moment. My wife is only part time now, does 2 days a week.But she does work probably 4 evenings a week, and forever seems to be having assessments/moderations/Ofsted etc. and she seems permanently stressed.
Don't say I didn't warn you!!!
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