Property ladder - how does it work? 5 February 2009 at 5:38PM edited 30 November -1 at 1:00AM in House Buying, Renting & Selling 17 replies 9.4K views

cranezoe

we bought our first house 4 years ago.
now have a child and Im only working part time but wage increases mean that we have the same amount of joint income we had 4 years ago.
we are moving by adding savings.
we have also paid off capital on the mortgage. (£115k-£100k)

So I guess there are a few things: equity, savings, additional earnings and lowering mortgage amount.

SiBlood_2

Finding this quite interesting as we are first time buyers.....in fact we got our keys today! Our first step onto the ladder has been quite interesting. We have managed to buy a repossession for £145k, when in fact the previous valuation 1 year earlier for the property is £205k! So in theory we have jumped a few rungs up the ladder? We aren't looking to sell for a long long time but I am thinking when we do, we could be in a good position.

Crapula_2

I think the principle in times of soaring HPI was that unless you got on the ladder your borrowing power was perpetually decreasing in relation to property prices, then your house would increase in value (while the next rung up went up even more) you'd pay off a bit of your mortgage, get a few pay rises and a promotion and be able to borrow more to bridge the gap to the next rung even though the gap will have increased in that time along with the fees.

No, I don't get it.

edit: wow some incredible brainfails in the first draft even considering i desired a good quantity of fail in the result.

stolt

bought my first house in 1997 or thereabouts for 45k (run down ed of terrace) sold for 91k.

second house 153k sold september 2007 for 291k (sold and then in rented until now)

third house 360k should exchange in a few weeks.

Wickedkitten

We rented a huge 2 bed flat for 2 years back in 2004, bought a 2 bed Victorian terrace in 2006 and then in December 2007 the OH got relocated down here so we got a below market price for our house that was still more than we paid for it and are buying a 3 bed semi down here after renting for year that is only 10k more than our old mortgage for a much nicer house.

Not only that but we got a letter last month saying they found a second buyer for our old house that is getting it at about 2/3 of what we paid for it so we are extremely lucky to have moved when we did.

TallGirl

I my story is this.

1994 bought new buildt which should have been 3 bed but we felt it was too small so only had 2 bedrooms buildt. Wages DH £20k me £0 cost £86k 95% mortgage. .

2005 extended on top on single storey garage to get 2 extra rooms cost £30k.

2008 put in new bathroom, ensuite & cloakroom £15k (for us not to add value or we would have spent less)

We now have a 4 bedroom house with a double drive and it is definetely worth £250k (smaller ones are selling for £240k around here). We are not looking to move and are so glad our house had the potential to extend.
Our mortgage is now £13k will be paid off 9 years early.

So moral of my story is the property ladder does not always mean you have to move to get a bigger house.

daveb975

tomstickland wrote: »

The ladder doesn't really exist. There's no magic process by which buying a property makes the next one more affordable or cheaper.

Exactly right. It is only in times of rampant house price inflation that it makes sense to be on the ladder as the valuve of the money you have invested in the property will be increasing faster than it would in any other investment type. Even then, the price increases are making the next upgrade less affordable.

There is quite an obsession with home ownership and the 'ladder' in the UK. Without massive prices increases, I cannot really understand why people would buy somewhere to live unless they have the expectation of living there at least 5 years. The costs of moving between 'owned' houses adds to the upheaval of moving.

Mind you, I hate the idea of moving more than once every 10 years anyway!