If average houses where 3 x salary would you buy (q to renters)

Morgage_Confused

I would buy 2 or 3 and rent them out.

Thrugelmir

MacMickster wrote: »

We need a massive programme of housebuilding to take place in the UK to bring prices down to realistic levels.

Doesn't correct the pricing issue. As private companies will wish to maximise profit.

Linton

moneyinmypocket wrote: »

Would you buy or continue to rent

I think many people here would complain because they could not afford to buy houses costing 4X their income. After all who wants an "average" house.

Batchy

then nobody would buy a house they could afford, they would buy a house they could get accepted for a mortgage on!... at 6 times their income.

People dont buy, not becuase they cant afford, but because what they can afford, isnt suitable.

No point to someone earning an average income, in an average neighbourhood, with an average deposit, with an average credit rating, they they can have a perfectly good average house, as the 2.4 bedrooms that they get, as in 1 double, 1 single and a box room, just wont be suitable for their 5 kids, 4 cars, and 13ft trampoline, and 60" flatscreen LG TV.

neilem

Batchy wrote: »

then nobody would buy a house they could afford, they would buy a house they could get accepted for a mortgage on!... at 6 times their income.

People dont buy, not becuase they cant afford, but because what they can afford, isnt suitable.

No point to someone earning an average income, in an average neighbourhood, with an average deposit, with an average credit rating, they they can have a perfectly good average house, as the 2.4 bedrooms that they get, as in 1 double, 1 single and a box room, just wont be suitable for their 5 kids, 4 cars, and 13ft trampoline, and 60" flatscreen LG TV.

Surely the base interest rate would be adjusted to a higher level with a minimum 10% deposit requirement, which means you'd probably only be able to afford the same house when calculating the mortgage repayments. Less of a risk compared to now when house prices are high, and interest rates at a record low... bit of a gamble hoping that rates don't increase to a normal level during the term of a mortgage. As a buyer, there is plenty of uncertainty around the property market.

FTBFun

Thrugelmir wrote: »

Salaries round here are dropping to a base entry level of £16k. So doesn't buy anything at all.

Who buys property when in an entry level job?

RenovationMan

Why use salary multiples at all?

They give no indication of affordability. You could have two people who earn the same but one lives the high-life with foreign holidays, expensive cars, night clubbing, etc. with the associated loans, credit card debts and car finance and another person could have zero debts and be more interested in enjoying a quiet home life.

Seems to be asking for trouble to give the same loan to the debtor as the debt free person, you're just asking for the debtor to over extend himself and be repossessed.

neilem

RenovationMan wrote: »

Why use salary multiples at all?

They give no indication of affordability. You could have two people who earn the same but one lives the high-life with foreign holidays, expensive cars, night clubbing, etc. with the associated loans, credit card debts and car finance and another person could have zero debts and be more interested in enjoying a quiet home life.

Seems to be asking for trouble to give the same loan to the debtor as the debt free person, you're just asking for the debtor to over extend himself and be repossessed.

Think multiples are used as a general figure for house prices though? If prices really were 3x the salary, neither PersonA or PersonB would be over extending themselves, just PersonA isn't using their disposable income wisely enough, e.g. to renovate or save in upgrading up the ladder in later years. Regarding the debt, it would be up to the lender in regulating that PersonA isn't really fit enough to borrow that sum of money.

RenovationMan

neilem wrote: »

Think multiples are used as a general figure for house prices though? If prices really were 3x the salary, neither PersonA or PersonB would be over extending themselves, just PersonA isn't using their disposable income wisely enough, e.g. to renovate or save in upgrading up the ladder in later years. Regarding the debt, it would be up to the lender in regulating that PersonA isn't really fit enough to borrow that sum of money.

Person A would be overextending themselves if they only just have enough to meet their mortgage repayments and service their other debts and then their mortgage rate rises (from what you've mentioned are currently record lows).

Much better to base mortgage loans on disposible income right from the start. If the lender does look at affordability then there is no need for salary multiples.

Very few people will earn a tax free salary in this country, so basing mortgage loans on an amount of money that is not actually earned puts people on the back foot immediately. Typically you can reduce your gross income by a third to get your net figure.

Seems bonkers to base a lending criteria on income that is a third more than they actually earn. It's just asking for trouble.

Out,_Vile_Jelly

3 x salary means 3 x a dual income these days, so not much use if you're single.