Stuck in their starter homes

Brian_Bullocks

'We bought at the top of the market, and now we’re paying for that. What's worse, we could be paying for many years to come'

http://www.dailymail.co.uk/femail/article-2065481/Thanks-recession-more-couples-stuck-starter-homes.html

Graham_Devon

Sorry, this is such a stupid story!!

They put a £30,000 deposit down, but apparently, the property being worth £2000 less than they paid for it = they can't move out because of other moving costs. Did they expect NOT to have moving costs when they moved house?!

Sounds like they are also on an interest only mortgage.

To be honest I just read it as someone having not a clue about finances and whinging it's just not fair.

paulmapp8306

Me too. If it wasnt interest only - they would have paid some equity off - and while they would have effedtively lost £2k of their deposit they'd still have £28k.

My sister did something similar in 89. 2 up 2 down. 15 years later thay had 3 kids and hadnt been able to move. They were in negative equity pretty much teh whole way - and had interest only mortgage, as they already had an endowment policy large enough to cover the home (or so they thought).

Those 3 kids were 2 boys, 15 and 13 sharing a small bedroom, and a 10 year old girl sharing her parents room. A small front room they couldnt all get in at once, and a kitchen.

She go out into a decent house for several reasons.

1. The endowment policy paid up (it was started before the mortgage).
2. She came into some inheritance money.
3. They got a heads up on a repo house at a great price.

These things made it possible to move - but there were a lot of "cramped" years.

andybenw

Seems to me that they seem to think they have a right to pop out sprogs willy nilly and then expect to be able to afford the appropriate sized house.

If they were 'stretching'(their own words) to pay the mortgage of their two bed, then how did they ever expect to be able to pay the mortgage of a 3 bed with an extra child to support.

They seem financially irresponsible to me.

paulmapp8306

One word - expectation.

for a generation it has been the "expectation" that they will have a house, and get a bigger one when they need it. A lot of that generation stretched to achieve that expectation (god forbid rental or social housing) and get fed up when they cant go up the ladder.

MacMickster

Now I would have thought that they would be delighted that prices have fallen slightly. It should mean that the price of the house that they wanted to trade up to would have fallen a bit more, making the move more affordable.

Also, if they really intended to trade up after a couple of years of ownership then this would mean taking out a larger mortgage with higher payments, and at some stage repaying the capital. Surely they planned on how to achieve this. How does this fit with them "stretching" to be able to afford the interest payments only on their current mortgage?

Cruel to stop them from having more children due to their inability to afford a bigger house? More like a blessing if it prevents more children being brought up reading the Daily Mail.

reweird

Aww diddums.

michaels

Plus how soon were they expecting to move when they first bought - transaction costs in housing are never negliable thus unless you are banking on huge hpi it doesn't make sense to buy for shorter than about 5 years.

MacMickster

michaels wrote: »

Plus how soon were they expecting to move when they first bought - transaction costs in housing are never negliable thus unless you are banking on huge hpi it doesn't make sense to buy for shorter than about 5 years.

If they were relying on HPI, then the larger house that they wanted to move to would have increased in price by even more than their own, making the price differential greater and hence less affordable.

Graham_Devon

michaels wrote: »

Plus how soon were they expecting to move when they first bought - transaction costs in housing are never negliable thus unless you are banking on huge hpi it doesn't make sense to buy for shorter than about 5 years.

To be fair on this point, many, including myself were sold the HPI dream. I did raise this point when buying, and was told by a mortgage advisor that the increase in the property would more than pay for fees of moving, even over 3 years.

Being deluded enough to believe it however is something else.

I just don't like the "its not fair, i can't have children because my house price hasn't increased" part of the article. They seem to have hinged everything on rapid HPI. Even their mortgage.

Got burnt. But not that severely. Just think they expected far too much. But that's exactly what was sold, and still is to a certain extend by certain invdividuals on this forum.

Percy1983

One of the reasons we have gone straight to a 3 bed house and haven't had children yet, grow your family to your accommodation, not accommodation to family.

In short we have saved a bit longer and skipped the 'starter' home.