First time buyers in London

gazsux

I don't know much about mortgages admittedly, but I don't understand how people even on good salaries get onto the property ladder in London. I have read that around 4.25X is about the top whack you can get on income. So even if someone was on say 30k, then they could still only be looking at property around 130k at best. Bearing in mind a 1 bed-flat is like 180k in even some dodgy areas of London, this seems like a problem. I have read that nurses and nannies have problems buying property in London but I assumed this was because they were on particularly low incomes. I assume there must be a way around it since London is filled with young people who aren't all earning 50-60k salaries.

So my question... can someone get a mortgage to buy a property at like 6x their income with no collateral? and wouldn't they be over-stretching themselves to attempt it? I'm assuming stuff like large deposits, sharing the mortgage with a few people or predicted rental income come in to play.

Cheers!

Joe_Bloggs

No chance and a certain overstretch for an individual. There are shared ownership schemes where you can buy a significant fraction of the property and pay a modest rent on top to a housing association.
J_B.

Katgoddess

I suggest you look at living in the Suburbs.

135,000 would get you a 2 bedroom maisonette in Barnehurst DA7, London Borough of Bexley. Near to the railway station, with trains every 15 mins, and a commute of 40ish minutes.

Hope this link works...

http://www.rightmove.co.uk/viewdetails-5711972.rsp/svr/3006;jsessionid=9F28105035905D6647095D73D531EBA4?pa_n=2&tr_t=buy&chnl=buy

gazsux

Ahh ok. I guess the guys living centrally have been a couple of steps up the property ladder before buying then.

Cheers for the info!

falcon21

I wonder if there's a dimension here everyone is missing.

People in this country are - in general - becoming more affluent. Because of that, people who are reasonably wealthy and educated move into areas that are initally considered "dodgy". As a result, the areas improve.

We should turn our noses up at living in the Bexley or wherever. Sometimes I think as young people we expect too much instantly.

gazsux

That's certainly true with areas such as Brixton that are now quite trendy with new media companies moving in and such, taking advantage of the relatively low rents. Even so, I still can't afford to live in areas such as Lewisham or South Bermondsey. Here's a price guide for Lewisham:

London SE13 (Lewisham, Hither Green)
To buy a
studio flat £ 141,368
1 bed flat £ 153,594
2 bed flat £ 207,774
2 bed house £ 228,097
3 bed flat £ 233,749
3 bed house £ 271,911
4 bed house £ 347,760

Admittedly it is more realistic than the notting hills and kensingtons but still not first time buyer territory. I guess there would have been a good buying time for Lewisham maybe ten years ago. Nevertheless, i've been looking into the housing association and shared ownership stuff and it is looking quite promising.

Joe_Bloggs

There is a key worker living scheme that could help out NHS nurses, teachers, police, prison officers and mysteriously, planners.
See http://www.odpm.gov.uk/stellent/groups/odpm_housing/documents/page/odpm_house_027908.hcsp
I've no idea of how many people this has helped out to date.Shared ownership can be a component as are equity loans for non housing association properties.
J_B.

herbiesjp

If you were a relatively recent graduate, or your profession was classed as professional you may be entitled to higher income multiples

gazsux

I've just finished a Masters so I may look into that cheers.

As for housing associations apparently there are 2000 in the UK, catering for a variety of personal circumstances. However, demand massively outstrips supply. For example a recent year's figures showed that the HAs had housed 10,000 people but had 130,000 applications. Unfortunately (for me) I won't be a priority case and i'm not a key worker though having looked at some of the properties available to government-funded organisations I may well start applying!

I think I will stick my name down on my local councils HA waiting list (some have a central waiting list whilst other HAs have their own) and continue to rent until something turns up. I don't really fancy the commuter route as the idea of wasting a couple of hours per day in transit doesn't appeal. Maybe i'm too British and our country's fixation with house ownership has gotten the better of me but long term renting just seems so wasteful.

Joe_Bloggs

To buy a shared purchase you may nead at least 5% deposit in savings. You may have to pay; stamp duty , legal/conveyancing disbursments, mortgage fees etc. So maybe £5000 to £7000 in savings you can part with.
I recently saw some new built 50% shared properties for £100000. These properties seldom need to be advertised as they are often sold by word of mouth long before they ever hit the local press or the estate agents window.

You can also earn too much to be eligible shared ownership by certain HA.

Many sub non shared £130,000 properties never hit the estate agents window for the same reasons. Often you have to register with the estate/letting agent to ask them to tell you if they have something.

Constantly research your options and register with HA on the borders of where you would rather live also.

J_B.

gazsux

I should be ok savings wise as I have about 12k of unspent student loan in an ISA.

I didn't realise I could register with HAs outside of my area, that's useful to know. Thanks!