100% Mortgages

Psychological_2

Thanks Tara - no doubt it shows that I'm relatively new to all of this but renting in London I feel that I would likely be paying less per month for a mortgage and getting more from it too. Of course there are people in worse situations but I'm so keen to get property that the prospect of saving for another three years is daunting. Congratulations on your savings though, that gives me some hope!

tara747

matt.mcginty wrote: »

Thanks Tara - no doubt it shows that I'm relatively new to all of this but renting in London I feel that I would likely be paying less per month for a mortgage and getting more from it too. Of course there are people in worse situations but I'm so keen to get property that the prospect of saving for another three years is daunting. Congratulations on your savings though, that gives me some hope!

Well, why not do the sums? Chances are you would pay more on a mortgage than rent for the same type of property.

If you are serious about buying, you need to set yourself some challening saving goals, and look at every bit of expenditure in your life to see where it can be omitted/reduced.

Check out the rest of MSE and the forums, there is a wealth of info to help you on your way! Enjoy

Regshoe

weehev wrote: »

i don't agree. - generally flats/houses are costing £100,000 + for anything other that high rise, you are then saying that if you don't have £20,000 deposite, then you shouldn't buy - thats insane. most ftb and young couples in general jobs wouldn't stand a chance, take away dig money or rent, car, living costs etc and it would take years to save that kind of money.

its ok for people who bought their house years ago for say £35,000, and now its worth £135,000, but not for people starting out on the ladder.

I would have to agree with 20% being quite a lot to ask from a FTB.

For example lets look at some figures:

General rule seems to be 4 x Salary is max mortgage (or thereabouts).

So lets take Joe Bloggs on £30k pa (which btw is higher than the last median Salary figure I saw which was about £26k pa, mean was something like £22k)

£30k x 4 = £120k

Lets assume you borrow the max and go for a 20% Deposit

£120k / 0.8 = £150k

£150k - £120k = £30k deposit to save

A quick look on listentotaxman.com tells me £30kpa is £22.6k after tax and NI, or if we assume that Joe Bloggs is paying 5% into a pension scheme and is still paying off his student loan (FTB, £30k pa, lets assume he's a grad in his mid 20's) he has a net income of £20.1k

So he needs to save £30k on £20.1 - 22.6k

Thats 133% to 149% of a years net wages.

Now how much he afford to save is based on a large number of factors, in the South it could be nearly all of his £30k pa is being sucked up by high rent, if like me he is sharing a cheapish house in the midlands that £30k goes quite far.

If he can only afford to save 20% of his net wages (a still fairly significant proportion) then it could take up to 7.5 years to save a 20% deposit. If he has really low living costs then maybe he could save 40% and have it done in 3.75 years.

Certainly he could move back in with his parents for a few years and save 60% plus, but would many of us want to do this (and more importantly would our parents want this!). Of course the figures above assume that he wants/needs to borrow up to the maximum, though I haven't included the costs of Legal fees, arrangement fees, moving costs, Stamp duty (if he started saving now under current plans he would be paying this) etc etc.

I would say having to make a concerted effort to save for say 2-4 years is not unreasonable in order to buy a house, but having to put aside a not insignificant proportion of your net income (20%) for nearly 8 years does.

(Sorry for the figure overload - but then I am an accountant!)

weehev

Regshoe - this is what i was meaning, thanks for providing the figures, i wouldn't have known where to start!

lol

tara747

Is it so hard to save 20% of one's income? Especially as a FTB with no family commitments?

weehev

tara747 wrote: »

Is it so hard to save 20% of one's income? Especially as a FTB with no family commitments?

its not 20% of your income, its 20% of the value of the property you want to buy.

i.e, 20% of a £100,000 house (cheap house for these days) is £20,000
most people aren't on £100,000 salaries -in that case it would be easy

verytricky69

We live and have lived in a buy now pay later society. If saving was instilled into us at a younger age then perhaps more ftb's would have the deposits at a younger age. Starting your saving as soon as you have a job rather than when you are ready for your own place and living at home with your parents for a few years- is that so bad?

My husband and I are about to buy our 1st house- we are not ftbs but may as well be. (We bought our flat in 2006 and have just about broken even on th esale). We have managed to save 45k for our (15%) deposit- it was hard but it can be done (we are in our late 20s)

I'm certainly going to encourage my daughter to save rather than borrow

Brallaqueen

I feel sorry for single people who can't pool resource with their partner, or
those on less than the average wage i.e <£20k pa - they are going to get screwed left right and centre by the housing market unless the house prices drop like a stone, or 100% mortgages come back into fashion.

£60K in my area (Northamptonshire) will buy you somewhere in the worst areas, we're talking crime and drug-riddled estates. Is that all a shelf stacker from tesco is allowed to have? Not allowed a safe area, not allowed good schools because they don't earn "good money"?

Baileys_Babe

JayZed wrote: »

I'm surprised that so many people think that they won't come back. If there's one lesson that history teaches us, it's that some people never learn.

It is not that I think they won't come back just that they shouldn't.

verytricky69

Brallaqueen wrote: »

I feel sorry for single people who can't pool resource with their partner, or
those on less than the average wage i.e <£20k pa - they are going to get screwed left right and centre by the housing market unless the house prices drop like a stone, or 100% mortgages come back into fashion.

£60K in my area (Northamptonshire) will buy you somewhere in the worst areas, we're talking crime and drug-riddled estates. Is that all a shelf stacker from tesco is allowed to have? Not allowed a safe area, not allowed good schools because they don't earn "good money"?

Single people can pool together- we've got several friends who are buying together.

Why should EVERYONE own a house anyway?

You cant get a 1bed flat for less than £150k here