House prices - the truth

IveSeenTheLight

Graham_Devon wrote: »

On saying that, if I'd paid £495k, I'd want to be able to live in it for 52 weeks of the year

Your not taking a two week holiday which the original poster factored in then?

phil_b_2

chucky wrote: »

excuse meeeeeeeee....

the White Horse is not a "bear" - he is the voice of reason...

Correction, WAS the voice of reason. This thread blew it .

andykn

The_White_Horse wrote: »

If i pushed myself to the extreme, i could just afford it, but i wouldn't.

who can properly afford this small cottage at half a million?

Answer's in the question.

Pete111

RenovationMan wrote: »

This is interesting. Our house was originally priced at £495k and we knocked them down to £450k. We had £150k equity from our house sale and started out with a £300k mortgage (plus fees). We've whittled that down to £270k over a couple of months and our monthly mortgage amount is only £575.50. Incidently, my income is £60k before tax.

You dont have to be a millionaire to own a £500k house, you just have to decide what you want out of life and go for it. We always wanted a lovely character home and decided that in order to get one we would do without fancy cars or foreign holidays. We live a simple life, but in a fabulous house.

Yep. We have a very similar sitiuation

House bought for just under 500k in 2007. We started out with a 390k mortgage and after 6 months spending our cash on doing up our new home and only making the interest payments (IO mortgage) we decided we would work to get the capital down asap.

Granted we are high earners, but our household income is not outrageous for the SE - it is about how your choose to spend your money.

We did/do still go on some nice holidays but certainly didn't splash £500+ a month on shiney cars we will never own (as our friends seem to do without even blinking on Hire Purchase) or on pointless designer gear.

The upshot is that after just over 2 years the mortgage is a far more sensible 220k and after re-mortgaging to a good fixed deal (thank you for the low base rate BoE!) our IO payments are £700 a month - down from £1700 in 07'.

Good work on your reductions Rennovation - most impressive. I suspect your 50% challenge will soon be a '25%' one!

MGCP

RenovationMan wrote: »

This is interesting. Our house was originally priced at £495k and we knocked them down to £450k. We had £150k equity from our house sale and started out with a £300k mortgage (plus fees). We've whittled that down to £270k over a couple of months and our monthly mortgage amount is only £575.50. Incidently, my income is £60k before tax.

You dont have to be a millionaire to own a £500k house, you just have to decide what you want out of life and go for it. We always wanted a lovely character home and decided that in order to get one we would do without fancy cars or foreign holidays. We live a simple life, but in a fabulous house.

You're still talking about a £300k mortgage on a £60k salary, or 5 times your earnings! I earn a similar amount but that seems a hell of a lot to borrow, which is unfortunate as I live in London where prices look more like telephone numbers!

At the moment my wife earns pretty much the same as me, but to be honest I wouldn't want to use that as a way for us to leverage an even larger debt. If she is going to stop working for a while and have a baby at some point I would want to feel confident that if it is just me earning I will be able to manage any mortgage on my own (with room to spare to allow for rates to rise).

London can be a depressing place in some respects. I have what most people in the country would consider a pretty reasonable salary, and yet by going by the prices in my area I've got a long way to go!

Brallaqueen

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E940&maxPrice=100000&minBedrooms=2&radius=10.0&includeSSTC=true&_includeSSTC=on&partBuyPartRent=false

133 2 bed properties up to £100k within 10 miles of Milton Keynes.

Although I chose no shared ownership I'm sure some have sneaked in (I hate that) so incl shared ownership would increase the number.

Good commuter links to London too, for those that can't afford to live there.

Looks reasonable to me for your '20k, 40k' people?

RenovationMan

mbga9pgf wrote: »

Rennovation,
How have you managed 30K overpayments in such a short time? Are these overpayments sustainable?

No, the OPs so far are not from salary. I have £70k left to juggle between overpayments and renovations. At the moment, the renovations seem to be winning. My aim is to 'borrow' from my £70k OP fund for the renovations and then pay them back from salary, before the 3 years is up on my challenge.

Renovations on the main building include stripping the roof and fitting this silver super-thin space age insulation (I saw it on Grand Designs) and breathable membrane to create whats called a Warm Roof (i.e. all of the insulation is in the roof), stripping out all the cement and repointing the entire house with lime mortar and sorting out the obsolete heating system by having a state of the art Heat Mass cylinder that will be heated initially via a condensing boiler and wood burning stove and will allow us to add a solar coil and ground sourced heat pump as and when funds allow.

Quite a juggle, but something I need to do before my three years is up as I want to remortgage onto a fixed rate. Our aim is to have an energy efficient, well insulated home that is cheap to run combined with more reasonable mortgage payments.

RenovationMan

MGCP wrote: »

You're still talking about a £300k mortgage on a £60k salary, or 5 times your earnings!

Yes, the original mortgage was calculated at 5x my earnings, but does not take my wifes income into consideration. The original mortgage was around £637 per month, which doesnt represent a huge chunk of our disposible income.

There is a lot of talk on here regarding salary multiples, but affordability really isnt about a multiple, its all about disposible income. We have no loans, no finance and we pay our credit card off in full each month. We have a frugal (but not stingey) life and the payback is that we have been able to make large OPs on our previous homes and will do the same on this one, at least until we get the mortgage down to a reasonable level. If we meet the 3 year challenge, we will have a home worth £450k and a mortgage of £225k and as cheap to run as a 3 bed semi.

MGCP

RenovationMan wrote: »

Yes, the original mortgage was calculated at 5x my earnings, but does not take my wifes income into consideration. The original mortgage was around £637 per month, which doesnt represent a huge chunk of our disposible income.

Sounds like you got a good deal. When I look at mortgage calculators it seems that for the amount I would look at borrowing (say £250k) the interest only would be over 1k a month (which is about the same as our current rent). That's without paying off capital, and with added exposure to maintenance, fees, lack of flexibility etc etc.

I'm glad you've made it work for yourself but at the moment the sums don't quite work out for me.

RenovationMan

MGCP wrote: »

Sounds like you got a good deal. When I look at mortgage calculators it seems that for the amount I would look at borrowing (say £250k) the interest only would be over 1k a month (which is about the same as our current rent). That's without paying off capital, and with added exposure to maintenance, fees, lack of flexibility etc etc.

I'm glad you've made it work for yourself but at the moment the sums don't quite work out for me.

We have an interest only BoE tracker from Santander that tracks at 2.05% above base rate. Its a 3 year deal (hence the length of our equity challenge) and cost £995 to arrange. We can only OP by 10% per year, and have already met this year's target (£30k). Next year, we'll be allowed to OP by £27k (270,000 * 10%) which we have available. After that, the OPs are dependant on how much we have left from the renovations.