Deposit vrs. Salary

HAMISH_MCTAVISH

Graham_Devon wrote: »

I disagree.

You always do.

When on a lot of money a year (as you have stated a lot of times that you earn over 6 figures a year) .

Actually, I've never stated I earn over 6 figures. Our joint income is around 6 figures however.

Cleaver

tommy75 wrote: »

'Used' to get cheaper and cheaper. If you buy at the top now with the lowest interest rates in history with overtime and job cuts it's not going to get cheaper and cheaper is it? Maybe after 10-15 years things would get easier if you didn't lose your job over this time. It's hardly looking like the same senario as the past 30 years is it?

You can quote employment figures all you like, but most people stay employed during their life, even through recessions. An unfortunate minority will not and may lose their house, but it was ever thus.

Let's say you're a young person on £25k now. You'd expect, with some ambition, to be earning a lot more than that in 10 or 15 years time. With new jobs, promotions, inflation rises you'd be probably expecting to possibly earning double your money in real terms. If you stay in the same house, your mortgage payment won't go up that much. As an example, in 2003 when we bought we earned a combined income of £35,000 and our mortgage payment was £552 a month. We now earn around double that amount and our new mortgage is £606 a month. I imagine that may rise to £700 - £750 a month when rates dgo up, but it's still a lot less of our pay than it was back in 2003. By the way, our mortgage rate in 2003 was 4.7%, it's now 3.75%. Hardly that much difference really.

You say 'if you don't lose your job'. Well, most people won't, and they'll be fine.

tommy75 wrote: »

Young people are being ripped off and are having to take massive risks just to get on the ladder even if they have been gifted a deposit or saved up one over the last few years. House prises have risen yoy since the turn of the century more than people have earned.

Agreed, maybe aside from being 'ripped off'. Every generation has something that's expensive and other things that are cheap. I'm in my twenties and you should see the list of countries my friends and I have visited: we're the most travelled generation in history. Travel is cheap, but you're right, houses aren't.

Cleaver

mitchaa wrote: »

Of course but then quality of life comes into question.

Indeed. I just reckon that most families who want to buy a house could probably save £200 a month. Just cut down on certain things, get creative with entertainment. It's all about a balance I guess. You don't want to be eating bread and coal just to afford a 1 bed flat, but at the same time you might be willing to cut down on meals out, take your own food to work, get a cheaper car, holiday in the UK etc. etc. to save a house deposit.

Andy_L

HAMISH_MCTAVISH wrote: »

I would generally agree that people should have to show they can save up 10% before they are given a mortgage....

I was under the impression that the deposit wasn't to demonstrate your financal competance (like it was in the "olden days") but was to protect the lender from negative equity if they had to reposess, thus in an environment of high house price inflation they are happy with 100% mortgages as they will get there money back in a reposession

HAMISH_MCTAVISH

Cleaver wrote: »

You say 'if you don't lose your job'. Well, most people won't, and they'll be fine.
.

Which is the absolute key thing.

There are no guarantees in life, but 95% of people working before a recession stay working throughout it and afterwards.

You can either live your life in fear of the very remote possibility of unemployment, or just get on with things.

Most people just get on with it. Those that are too scared to, sit around moaning on websites about how terrible it's all going to be.....

wageslave

mitchaa wrote: »

Of course but then quality of life comes into question.

Then it becomes a choice. Do you want all the little extras that make life fun more than you want to own your own home?

System

Graham_Devon wrote: »

I think saving is a good idea, and would definately say that 10% is about right. What I will say however, is that house prices are way too high, making that 10% too much for many many people.

Even a 50% drop in prices would still leave you needing 8k, how much is a realistic amount to save do you think?

tommy75

Cleaver wrote: »

Agreed, maybe aside from being 'ripped off'. Every generation has something that's expensive and other things that are cheap. I'm in my twenties and you should see the list of countries my friends and I have visited: we're the most travelled generation in history. Travel is cheap, but you're right, houses aren't.

Every generation may have something expensive but you can hardly compare the cost of cars or anything else to a house that is expensive especially with 0% interest rates. I earn over the average wage, have had one holiday in the past ten years (paid for by parents). We go out about three or so times a year, otherwise save what we can and I believe that I should be entitled to something better than a run down council house saying I have a large deposit. So I continue to rent until there is some sort of value again.

People also forget that you have to pay back the interest on your house loan over the course of your mortgage as well meaning that if I was to buy an average home for 160k, I would be paying well over 300k back to the banks over the term. If I had bought prior to 2002 my total repayments over the term of the mortgage wouldn't of come near the purchase price of the average house at todays rates yet my wage has only increaced 8k or so.

A big reason with the system collapsed is because people could not service their debts after years of uncontrolled borrowing especially in the housing market. This will hardly change with 10% off peak.

Graham_Devon

Cleaver wrote: »

Very simply, if you decide you want a house then putting away £400 a month for three years would pretty much get you there deposit-wise, and that's for 10% of the average house. I reckon with a bit of hard work and discipline this would be possible for most couples. And after buying that house it tends to get cheaper and cheaper (relatively speaking) from that point forward.

Agree with the trainer stuff, people DO spend more than they need to, however, we live in a consumer driven economy, one where you are encouraged to spend, not save, and this is even encouraged by our very own government. Things are designed to get you to spend more. Just look at a Wii. You buy it, but you need to buy another 100 quid worth of stuff to be able to use it properly. I'm not that old, but I do remember the time when you could buy a console for instance and you would get everything you needed in the box! Everything seems to be designed to encourage people to spend more.

As for the £400 a month thing, this is where it becomes difficult and I have very real experience. I put back an amount each month, leaving myself with not much. This is when I was living with my parents but also paying rent. Trouble was, after 2 years of putting back this money I was actually worse off in percentage terms as HPI, like now, overtook anything I could save, and was increasing at a rate of more than my entire pay per month.

This is what it happening again now. As Hamish's sig shows, up15k in 9 months. People stand no chance of saving at the same pace as HPI. And this is why I wonder why people celebrate it.

mbga9pgf

Currently have 2X main breadwinner deposit saved. Will have 2.5X Main salary by next christmas, but hopefully intend to buy. If prices dip significantly, towards the back end of next year, I will be using "Seller Fear" to cash in I think. And a tiny mortgage.

Just need the double dip graph printed in the daily mail and ol granny will be trying to cash in her pension to pay her gas bill!


16K is achievable for most, it means no holidays, no going out on the lash and no presents at Christmas.