Nice mortgage calculator

michaels

Bear with me on this one:
1) Interest rates are now about half what they were in 1999 so you could have a mortgage twice as large and still only face the same interest bill. (I would that any capital payments are just a form of saving so the amount of the capital you pay off each year is a personal decision rather than a direct factor in affordability)
2) Of course that has only explained a doubling of prices not a tripling so let us look at demand and supply:
The supply of flats in West London is fairly fixed but the population has risen so demand is likely to have outstripped supply. Generally people see housing as a need not an option and are thus likely to be willing to pay an increasingly large share of their income to have a decent place to live. Real incomes (excluding promotions and moving up the ladder) have increased by about 2% pa over the last 10 years so say 22% overall with compounding - note in real terms. Now suppose you want to have your same standard of living as 10 years ago on all items excluding housing - this will leave you with an extra 22% on top of your 1999 income to pay for housing compared to what you had then so if you were paying about 20% of take home pay on your housing then you could pay twice as much now and still have exactly the same standard of living in the rest of your life.

All other potential buyers in West London have seen something similar happen to their incomes, many of them will have parents or bonuses to help with deposits, they can afford to spend more on housing, the supply of housing is limited so prices get pushed up until the number who can afford equals the number of properties available.

No need for liar loans, lax lending or anything else, just affordability and peoples willingness to spend an increasing proportion of their rising incomes on housing rather than other things.

roseland69 wrote: »

Try living in London. The evening standard had some figures the other day. The average London earner (I think its about 35K) needs to find 10 x salary to afford somewhere to live.

We bought our flat in 1999 for 135K with a joint income then of about £45K and a £15K deposit (thereabouts). The flat is in West London. We in no way in hell on earth could afford anything LIKE where we live now had we been starting over again. Even taking into account wage rises, it doesn't compare to housing price increase. Its plain stupid.

I've just looked on rightmoves. There is precisely 1 property matching the 1999 criteria for our flat in the West London. That is 2 bed garden flat up to 130K. And given my search criteria matches the average salary of a Londoner that's just 1 property like that for them ALL in West London.

So, as first time buyer would now have to to earn over £100K a year to by the very same flat. And on top of that have a £100K deposit.

That is just plain WRONG in my book. Anyone who says otherwise is deluded and frankly a bit strange.

I am lucky we bought when we did. Because it allowed me to start a family and put down some roots.

Young couples will delay having families because they want to buy their own home first. Had 1999 been 2009 my son would never be born. That's a bloody sad indictment on the situation we are in now with house prices.

The point being the that house prices are patently failing to reflect the average person wishing to a property. If the "average person" earns over £100K a year then I'm a dutchman. And quit it with the "ahh, but its the average home buyer". Because I was an average home buyer once and I've not changed as a person in my status.

The whole thing stinks and the sooner the prices come down to sensible levels, the better.

Graham_Devon

Really2 wrote: »

??????

You could be a lottery winner and purchase a mansion and be a FTB.

So what is it.

Single person = one or two bed flat.

20-30 Couple = 2-3 bed terrace or semi

30-40 couple = 3-4 bed detached.

what is our definition of a FTB home for a single person?

It is very relevent to your OP.

No, I said "starter home". You questioned what a starter home is. You are trying to deflect by using the millionaire example.

You know what a starter home is, and I know you want to start the old adgae argument of a single person should be able to live in an understairs cupboard.

So I still have the same answer. A starter home for a FTB would be the same whether they are single or a couple. The clue is in the title....starter home.

System

I must say, buying a place on my own never occurred to me, when I was single my life involved !!!!ing as much money up the wall as possible

MrDT

Graham_Devon wrote: »

yer, thats 5x the house price.

It's not 5x the loan though, as you would have put 38k down.

Say I had 300kfor a house, but earning 30k.

If I buy a house for 400k, it does not mean they have given 13x my wage.

You've lost me completely.

I think it's the heat. Man it's hot today.

Really2

Graham_Devon wrote: »

So I still have the same answer. A starter home for a FTB would be the same whether they are single or a couple. The clue is in the title....starter home.

So you agree then that the average house is purchased by a couple both in full time work.

I am not saying that is ideal but it is TRUE .

You are under the impression the average 3 bed house price should be attainable by the average single wage (hello why do you think we have HPI problems in this country).

But such a comparison is like saying the average new car should be affordable to the average single earner with a mortgage .

The two averages wages and average house prices are not linked directly as to many variables stop this happening.

Really2

Joeskeppi wrote: »

I must say, buying a place on my own never occurred to me, when I was single my life involved !!!!ing as much money up the wall as possible

Indeed who the hell buys a 2-3 bed house when you are single, what happens if your future spouse already lives miles away or already has a family.

Graham_Devon

Really2 wrote: »

You are under the impression the average 3 bed house price should be attainable by the average single wage (hello why do you think we have HPI problems in this country).

But such a comparison is like saying the average new car should be affordable to the average single earner with a mortgage .

The two averages wages and average house prices are not linked directly as to many variables stop this happening.

WHERE have I said this?

I have not said this. You talk about starter homes then go direct to average home, and tell me I'm under the impression yadda yadda.

This thread has got completely pathetic.

I'm out, cus I cannot be bothered to be told what I'm saying all the time when I haven't even suggested it.

Really2 wrote: »

Indeed who the hell buys a house when you are single, what hapens if your future spouse already lives miles away or already has a family.

Can you not possibly get your head around the fact that you do not have to be single in the sense of not having a partner to have your own home?

You can just be buying individually but still have a partner! Or do you simply not comprehend. THOUSANDS in London are doing it, I did it, my next door neighbour is exactly the same. My mate did it.

You don't have to be "partnerless" to be buying singally.

Pobby

roseland69 wrote: »

See, I'm still getting that sense of self-righteousness from some posters about what you need to EARN. "You don't earn enough" as a kind of put down to them, as a person. No, that's not the problem really. The problem really is that prices are TOO HIGH. And I'm talking as someone who has benefited as we just sold our place and retained a heafty chunk of equity.

Because I'm not worried about ME. I'm worried about my kids and what the hell they are going to do when they get to an age they want to buy somewhere. If these "house prices must go up" bozo's have their way, you'll have to be a millionaire before you can afford to buy a shoebox. I don't want that for my kids. I want for them to be able to afford an average semi to bring up a family and focus on their lives rather on their status/earnings.

Some people are so selfish they don't see it. I pity them.

Hi there roseland69, and welcome to this board. I am seriously looking forward to more of your sensible posts. I agree totally.

Really2

Graham_Devon wrote: »

WHERE have I said this?

I have not said this. You talk about starter homes then go direct to average home, and tell me I'm under the impression yadda yadda.

This thread has got completely pathetic.

I'm out, cus I cannot be bothered to be told what I'm saying all the time when I haven't even suggested it.



Can you not possibly get your head around the fact that you do not have to be single in the sense of not having a partner to have your own home?

You can just be buying individually but still have a partner! Or do you simply not comprehend. THOUSANDS in London are doing it, I did it, my next door neighbour is exactly the same.

Don't go off on one. i just wanted for you to clarify what home you think you would buy as a single person.

I would say the average single male wage where I live could buy you a 2 bed flat in a nice area or a 3 bed semi in a not so good area.

It was a simple question you did not want to answer.

Graham_Devon

MrDT wrote: »

You've lost me completely.

I think it's the heat. Man it's hot today.

Ok, you buy house at £150k.

You have put down £40k as a deposit.

Your loan therefore is £110k.

Your wage is £30k.

Your loan is roughly 3.8x your wages. Not 5x.

That's the way I have been reading it, as when I bought my house, the mortgage was always based on the cost of the house, then the deposit was taken off the total loan.