The 70% club

Dithering_Dad

dervish wrote: »

not necessarily.

If average salary is around 20k then the sum is as follows.

3.5 x 20 = 70k + 10% deposit (7k) = 77k.

Not a huge deal difference between 70/77 k.

The 10% deposit should be against the value of the property, not against the size of the mortgage. If the property costs £77k, as you alude to in your example, then the deposit would be £7700, not £7000.

I'd be interested in knowing where one could get a reasonable property these days for £77k. I realise that FTBers need to set their expectations at a reasonable level, but you probably couldn't get a car park space for £77k in or around London. In my village (in the Pennines) you could get a broken down back-to-back terrace whose door opens straight onto the street.

I think a more reasonal FTB purchase, certainly around here, would be at the £100k mark, so a £10k (10%) deposit and a £90k mortgage. If the average salary is indeed around the £20k mark, then you'd be looking at a 4xsalary multiplier, which is not OTT for a 25 yr purchase (IMHO).

chucky

dervish wrote: »

not necessarily.

If average salary is around 20k then the sum is as follows.

3.5 x 20 = 70k + 10% deposit (7k) = 77k.

Not a huge deal difference between 70/77 k.

conveniently you've only taken a single person buying a home. also average wage is 29k for the country.

how about a joint purchase - still using your 20k average salary figures though

3.5 x 40k (20k x2) = 140k + 10% deposit x2 (18k - on price of property) = 168k

that's not too far off what the average house price is now isn't it?

IveSeenTheLight

dervish wrote: »

not necessarily.

If average salary is around 20k then the sum is as follows.

3.5 x 20 = 70k + 10% deposit (7k) = 77k.

Not a huge deal difference between 70/77 k.

But the average salary is not £20k

A full time male is £631.10 per week (£32,994 per year)
A full time fe-mail is £485.50 per week (25,381 per year)
http://www.statistics.gov.uk/downloa...08/tab7_1a.xls

Therefore, jointly and average male and female in full time employment have a family income of £58,375 per year

3.5 x £58,375 = £204,312.5 + 10% = £224,743

Even taking the full time male only salary
3.5 x £32,994 = £115,479 + 10% = £127,026

Are we suggesting that house prices should be affordable to those in part time work?

Also interestingly, the average mortgage multiplier is near 4 x the income and even now, quick checks on mortgages are showing a 4.2 x multiplier joint availability

ukcarper

therefore, jointly and average male and female in full time employment have a family income of £58,375 per year

3.5 x £58,375 = £204,312.5 + 10% = £224,743

Even taking the full time male only salary
3.5 x £32,994 = £115,479 + 10% = £127,026

Even in the distant past 1x wife's income was taken into account

So the figure would be £127,026 + £25,381= £152,407 without taking into account slightly larger deposit

StevieJ

Dithering_Dad wrote: »

The 10% deposit should be against the value of the property, not against the size of the mortgage. If the property costs £77k, as you alude to in your example, then the deposit would be £7700, not £7000.

I'd be interested in knowing where one could get a reasonable property these days for £77k. I realise that FTBers need to set their expectations at a reasonable level, but you probably couldn't get a car park space for £77k in or around London. In my village (in the Pennines) you could get a broken down back-to-back terrace whose door opens straight onto the street.

I think a more reasonal FTB purchase, certainly around here, would be at the £100k mark, so a £10k (10%) deposit and a £90k mortgage. If the average salary is indeed around the £20k mark, then you'd be looking at a 4xsalary multiplier, which is not OTT for a 25 yr purchase (IMHO).

I was looking at properties in Uppermill a while back, seemed quite expensive, but then again it is a lovely place.

Dithering_Dad

StevieJ wrote: »

I was looking at properties in Uppermill a while back, seemed quite expensive, but then again it is a lovely place.

Uppermill is lovely, plus you have all the brass bands in the summer. Hmnn, a negative point there actually

ad9898_3

IveSeenTheLight wrote: »

Therefore, jointly and average male and female in full time employment have a family income of £58,375 per year

Does this include London ??, that figure is quite large, I would estimate that their are huge swathes of the country who are nowhere near these salaries.

IveSeenTheLight

ukcarper wrote: »

therefore, jointly and average male and female in full time employment have a family income of £58,375 per year

3.5 x £58,375 = £204,312.5 + 10% = £224,743

Even taking the full time male only salary
3.5 x £32,994 = £115,479 + 10% = £127,026

Even in the distant past 1x wife's income was taken into account

So the figure would be £127,026 + £25,381= £152,407 without taking into account slightly larger deposit

check out the mortgage calculator with Abbey
http://www.abbey.com/csgs/Satellite?appID=abbey.internet.Abbeycom&c=GSInformacion&canal=CABBEYCOM&cid=1210618119200&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FGSInformacion%2FWC_ACOM_MortgageAffordCalc

Stuck in a joint application figures on pre tax earnings and it calculated out a joint income we may be able to borrow equated to 4.2 times the earnings (Entered earnings of £40k and £35k)

I do notice lower earners (£20k and £15k) only get 3.5 joint while average earners (£32k and £27k) get 3.8 times joint

mitchaa

Lloyds TSB (C&G) were offering 5x joint income when i checked it about a month ago.

IveSeenTheLight

ad9898 wrote: »

Does this include London ??, that figure is quite large, I would estimate that their are huge swathes of the country who are nowhere near these salaries.

Ah but if we are comparing averages of houses in the UK, then we need to also include wages.

but to answer your question. the figure is taken from the whole of the UK
Just look at the link
http://www.statistics.gov.uk/downloads/theme_labour/ASHE_2008/tab7_1a.xls