House price rises

arthur_dent_2

When I work it is to help my husband with the business, which I believe is our future and as the income is both a self employed income and a small income (Tax credits do not count towards a mortgage) nobody is going to lend us £60,000.

It may well have been a little peculiar to believe that once on the property ladder prices would rise at a steady rate but that wasn't the case. I thought perhaps the £10,000 gap would become a £20,000 gap over a few years, but within weeks almost the gap had risen to thousands more and within a year it had become too wide for us to ever have made it an attainable goal.

If I were to do as you suggest and move to an area which has higher wages such as, but not exclusive to london, then the £60,000 gap would be more like £120,000 so what good would that do me

I really am not unhappy I am satisfied with the cards I have been dealt, but should the opportunity ever arise, I would like a bigger house, it is just not possible at the moment.

I heartily believe that what I am doing is for my children. One day my business will allow me the luxury of a bigger home and hopefully of buying another which will help my children out when they are older.

roswell

I get the impression that UKBONDRAIDER can read but cant understand what he is reading.

The outline above clearly shows that if your sister and her BF were to get to 10 % interest rates they would have a massive problem regardless of how prudent they are they WOUNLDT have enough available income. They would allso have an assset that has a larger liability attached to it than its own value.

Now if your sister gets pregnant it also shows that they cant afford to live on one income. Lets hope her and BF dont split up and that neither of them ever suffer ill health.

ukbondraider

roswell wrote:

I get the impression that UKBONDRAIDER can read but cant understand what he is reading.

The outline above clearly shows that if your sister and her BF were to get to 10 % interest rates they would have a massive problem regardless of how prudent they are they WOUNLDT have enough available income. They would allso have an assset that has a larger liability attached to it than its own value.

Now if your sister gets pregnant it also shows that they cant afford to live on one income. Lets hope her and BF dont split up and that neither of them ever suffer ill health.

You are the one who cant understand what they have read. They are on a 5 yr fixed. On their current salary they will likely pay off the whole mortgage in 10 yrs. However factor in the expected salary increases during the next few yrs and they are confidently expecting to clear the whole £300K in the 5 yr fixed. i.e they are not exposed to any rate rises. They also have a backup plan if this doesnt work out after yr 5, this being myself. Had they not had this backup they would have taken out a 10 yr fix and still be unaffected. So in summary they WILL have enough available income as they know their costs whether interest rates get to 10% or 1000000000%.

cwcw

arthur_dent wrote:

When I work it is to help my husband with the business, which I believe is our future and as the income is both a self employed income and a small income (Tax credits do not count towards a mortgage) nobody is going to lend us £60,000.

It may well have been a little peculiar to believe that once on the property ladder prices would rise at a steady rate but that wasn't the case. I thought perhaps the £10,000 gap would become a £20,000 gap over a few years, but within weeks almost the gap had risen to thousands more and within a year it had become too wide for us to ever have made it an attainable goal.

If I were to do as you suggest and move to an area which has higher wages such as, but not exclusive to london, then the £60,000 gap would be more like £120,000 so what good would that do me

I really am not unhappy I am satisfied with the cards I have been dealt, but should the opportunity ever arise, I would like a bigger house, it is just not possible at the moment.

I heartily believe that what I am doing is for my children. One day my business will allow me the luxury of a bigger home and hopefully of buying another which will help my children out when they are older.

If you think you're doing the right thing by your children then that's all that matters. But you can't blame your situation on other parents, whose children have more than your own do. You can't blame it on larger houses rising proportionately in price to smaller ones (this is normal), and you can't blame it on buying at the wrong time (you bought at the start of a massive boom - the perfect time). You and your husband have full responsibility for choosing to put your energy into trying to grow a business, and not concentrating on a steady income/ accommodation for your children. It may or may not pay off, but either way, from the face of it, it IS a choice.

tomstickland

Your acquaintances are not typical with regard to their incomes.

Bear in mind that their plan is based on a number of assumptions. Reasonable assumptions, but still assumptions.

ukbondraider

As for Arthur Dent I wish you luck in your business and I respect that you have chosen trying to be an entreprenaur but £100 per week immediately indicates that you should not even be considering a house purchase.

How you can come on and blame house prices for your situation of not being able to buy is exactly the problem I believe that is present in this country.

ukbondraider

tomstickland wrote:

Because most people are on 2 year fixes or variable rates so an interest rate rise will affect them.

Thats their choice and the risk they take. If they cant afford a 1% increase and lose their house then I would say they have been careless and I would hazard a guess that there are plenty of people waiting on the wings to lap up their repossessed home for a 10 or 20% discount.

tomstickland

You were asking how an interest rate rise would affect people, and that's the answer to your question.

If prices were to start falling then would-be buyers would be scared to buy, because their property might be worth less by next week. It's the reverse of the "you must buy or else you'll never be able to afford to". Some BTL's would start panic selling and the whole lot would have to bottom out before people started buying again. Something like that happens in a crash, otherwise there would be no crashes.

You seem to inhabit a very much simplified world.

arthur_dent_2

cwcw wrote:

you can't blame your situation on other parents, whose children have more than your own do. You can't blame it on larger houses rising proportionately in price to smaller ones (this is normal), and you can't blame it on buying at the wrong time (you bought at the start of a massive boom - the perfect time). You and your husband have full responsibility for choosing to put your energy into trying to grow a business, and not concentrating on a steady income/ accommodation for your children. It may or may not pay off, but either way, from the face of it, it IS a choice.

Yes we are responsible and I am not laying blame on anyone other than perhaps ourselves.

I am very very very grateful that we bought our house when we did.

I do blame our inability to afford a bigger house on house prices rising much, much quicker than expected but that's life we made a decision which although right could have been better.

Thankyou UKbondraiser fo the well wishes.

ukbondraider

Tom my point is that the problem with this country is that everyone EXPECTS to be able to buy a house. Those that should be buying (which are lots of people) and are on a 2yr fixed will be able to afford a 1% increase. Those that are maxing themselves out who cant even spare £100 a month are foolish and shouldnt have bought. Had they not had the British mentality that "I deserve everything I want regardless" then they wouldnt have bought. For alot of other countries renting is the norm. Us brits need to start adopting more of this attitude. We basically spend too much because we think we deserve it. The number of £100-£180K houses with brand new BMW/Merc in the driveway is an example. Its no wonder why the world wants to overcharge for everything in this country because they know people will spend and often carelessly.