MSE News: Home ownership dream dwindles for young renters

paul01932

iwannabeonthebeach wrote: »

I get cross with statistics like this. Me and my partner bought our first house 18 months ago, I was 23, just, and he was 25. We saved our !!!!!! off for years. We made a conscious decision not to drink/go out excessively/buy the latest gadgets etc and that is how we managed it. People want it all and then moan when they can't have it.

Have to say I agree with this. What it basically comes down to is a lifestyle choice. If you want the lastest gadgets and go out partying, then you're not going to be able to save a deposit. However you also have to look at where and what you want to buy. I moved away from London a few years ago because we could not afford the type of house we wanted. The move also involved changing jobs, changing the kid's schools etc etc. So it came down to a lifestyle choice, did I want the London life, but a small house, or the country life with a larger house.

And as for those people who say "but I wont get a job outside London", yes you will, there's a whole lot of country beyond the M25!

Froggitt

littlemrs29 wrote: »

I have just read every post on this thread with great interest - and here's why -

I am 29, a single mother of 2, take home pay is £1300 a month and after what can only be described as the most horrendous advice ever I am paying a £810 a month mortgage - and have been for the last 4 years! I ask myself every single day (with no word of exaggeration) whether or not I should just take the hit and sell. I have a 3 bed mid terrace property with a garden, only worth £120,000 in the middle of a council estate although every home bar one in my street is owned. My fear is if I 'get off the ladder' how on earth will I get back on? No one I know pays more for their accommodation than I do but at least half of them have nicer homes/areas!

It does however make me feel better that I am on the ladder.

:T:T:T I am sure when you eventually pop your clogs that your kids will be grateful for the leg up the housing ladder that your house will give them.

Also when you retire, you will own your house and not have to pay rent to someone else.

tara747

littlemrs29 wrote: »

I have just read every post on this thread with great interest - and here's why -

I am 29, a single mother of 2, take home pay is £1300 a month and after what can only be described as the most horrendous advice ever I am paying a £810 a month mortgage - and have been for the last 4 years! I ask myself every single day (with no word of exaggeration) whether or not I should just take the hit and sell. I have a 3 bed mid terrace property with a garden, only worth £120,000 in the middle of a council estate although every home bar one in my street is owned. My fear is if I 'get off the ladder' how on earth will I get back on? No one I know pays more for their accommodation than I do but at least half of them have nicer homes/areas!

It does however make me feel better that I am on the ladder - I was never brought up to 'expect a council house'. The comment about personal choice and life style is of interest to me because as much as I hate the fact I have no money to spend on fancy holidays, clothes, nice food etc I have seen more of my own country (Scotland) than ANYONE I know due to camping trips - a fact I am very proud of, I do not waste therefore do not feel guilty that others are starving and do not have anything hanging in my wardrobe I have never worn (although sometimes that might be nice)

I look forward to next year when my 5 year fixed rate of 6.99% ends with Northern Rock and I can get a cheaper living cost and finally stop asking myself everyday if I should just 'give up and bail'.

Thanks for sharing your story, it is refreshing to see the other side of home ownership. I have friends who are in similar situations, in massive negative equity and stuck in houses that are too small/areas that they don't like. All for the sake of 'getting on the ladder'. They bought anything they could as they panicked and felt that the 'market' was slipping out of reach; they thought that they could sell on in a few years and trade up, but the music stopped and they are now trapped.

So how the heck do you manage????? How can your mortgage be that much? Are you in negative equity?

You have only got a year left of your fixed rate, so if you can get through that, then you should be ok. If you're happy and safe where you are and want to stay, then a few spare £££s every month should make life easier. Have you done a mortgage calculator on a lower rate to see how much less you would be paying? Obviously nobody knows what IRs will be like in a year's time but it may give you some hope.

jamesd - that's a big statement, can you say *when* prices will increase again? No, probably not. We none of us have a crystal ball.

jamesd

Already happening in some places, not in others. I expect it'll be many years for many parts of the country, particularly if the desire is a rise greater than inflation rahter than just the same number, lower after the effect of inflation.

tara747

jamesd wrote: »

Already happening in some places, not in others. I expect it'll be many years for many parts of the country, particularly if the desire is a rise greater than inflation rahter than just the same number, lower after the effect of inflation.

What??? I didn't understand any of that.

Yes, I agree that it is happening in some places, but tbh you're talking about the very upper end i.e. Central London - and the people who buy there don't tend to need mortgages! But even they don't like overpaying...

littlemrs29

Thanx for everyones replies

How do I manage? I don't know I just do- but it can't go on forever. I figure if I have managed this long I can manage 1 more year and then make decisions. The get out penalty is £5000 - couple that with solicitors fee's and it's a no brainer really (or so far).

What I personally think is needed is better education on financial matters - then maybe everyone would have a better understanding and it wouldn't be possible to get in situations like mine (although obviously to some extent it is my own doing)

Uncle_Rico

Froggitt wrote: »

:T:T:T I am sure when you eventually pop your clogs that your kids will be grateful for the leg up the housing ladder that your house will give them.

Also when you retire, you will own your house and not have to pay rent to someone else.

And then dementia sets in. You are unable to care for yourself. You are forced to sell your house to fund the nursing home.

Your kids get zero inheritance.

scoobyfamily

We are selling my Husbands car to free up £200 a month. We intend to get family to loan us or borrow the £10,000 we need and repay about £400 a month back. The car must be sold before we move though, obviously.

I don't think it's worth waiting for house prices to rise while we save a deposit.

The house we want to buy has a home report value of 15,000 more than the asking price.

It's difficult to choose but waiting another 2 - 3 years could be worse than making the move now.

jamesd

Jim, you're a nice candidate for interest only deals that change to full repayment over a few years as pay rises with inflation. Not that there are any of them around. Shared equity via a housing association may be a way to go.

J_i_m wrote: »

My current situation is that I'm paying £650 a month rent, which on a basic month (i.e no overtime / extras) is actually over 50% of my take home pay. In addition I'm paying £114 a month council tax (I pay this, not the LL), then there's the contents insurance: £16.50, phoneline & internet: £27, Gas & electric: £56, Water: £25, then there's the stuff that's not strictly related, i.e loan repayments, car insurance, car tax, fuel, trade-union membership etc. ... Yet on my basic pre tax income I can expect a mortgage of £55'000?

thequant wrote: »

Jim you need to face a few facts, the reason you cant afford a home is not because prices are too high or the banks wont lend you the money, it's because you have a !!!!!! job paying a pittance.

That amount of pay is only a little below the pay that the average tax payer gets. In 2007-8 that was £18,500 before tax, £16,100 after. That's £1,341 a month take home pay. At 3.5 times income multiple the gross pay given is 85% of that.

jamesd

tara747 wrote: »

What??? I didn't understand any of that.

Inflation reduces the real value of money over time. What happens in housing crashes is that people tend to try to hold out for the same money price, thinking that a place that cost £150,000 and sells five years later is still worth the same £150,000 that they paid for it.

It's not. If inflation was running at three percent a year for those five years the real value of the £150,000 selling price is just 86% of the buying price, worth £129,400 in Pounds with the same buying power as those at the start of the five years.

But many owners will still think that they didn't suffer a drop in value, just because the numeric value of the price is the same.