Paying the mortgage

Prothet_of_Doom

A graduate starting salary at a leading Engineering Company is about £30K, and outside London, (I'm thinking Derby, but there are lots of other places too), you can get a nice 3 bed semi for £150K. For that you need to save £20K to get a foot near the ladder. If you saved all your disposable income for 2 years you would do it. Then you rent out 2 rooms for cash, undeclared, to new graduates, and that pays the mortgage.

Or you save less and buy a 2 bed flat for £80K and rent out a room monday to friday to a contractor.

OffGridLiving

Prothet_of_Doom wrote: »

A graduate starting salary at a leading Engineering Company is about £30K, and outside London, (I'm thinking Derby, but there are lots of other places too), you can get a nice 3 bed semi for £150K. For that you need to save £20K to get a foot near the ladder. If you saved all your disposable income for 2 years you would do it. Then you rent out 2 rooms for cash, undeclared, to new graduates, and that pays the mortgage.

Or you save less and buy a 2 bed flat for £80K and rent out a room monday to friday to a contractor.

If your room rental is less than £4250 a year (£354 pw), then you don't have to declare the income as it would be exempt as part of the 'rent a room' scheme.

michaels

Thrugelmir wrote: »

Much of the activity and trade of investment banks during the credit boom era had no benefit at all to the wider economy.

That needs a thread of its own.

Imagine a fairly easily understood market like forex. There is an underlying 'real world' requirement for trade, holiday makers and so on but volumes traded are some huge multiple of this underlying demand, basically made up of a zero sum game of people tryign to make money an dobviosuly for every trade their is a commission/spread so the net effect of all this trading is a transfer from the traders to the market operators. However the 'real economy' participants benefit from all the speculative activity through liquid markets and thus low commissions/spreads plus as complete as possible 'price discovery' which should reduce uncertainty for the 'real economy' participants.

Similarly with 'deriviative' markets like furtures, forwards etc, these allow 'real economy' particiapnts to 'insure' themselves against unexpected future exchange rate movements and thus allws them to make investments in 'real output' that otherwise they might find too risky. without the 'speculative' particiapnts in such markets they would probably only be accessible for the biggest players at large cost due to the low volumes.

My issue in the boom years was actually that the securitization of products allowed profits to be booked immediately rather than accruing over a stream of payments lasting over years thus a whole bunch of 'profit' relating to transactions that spread over tens of years, not only on deals that took place during the boom years but also on deals done in the preceeding years wqas booked in a very short period - great news for the market participants with big bonuses who were not liable for the mispriced risk, great news in the short term for govts who saw a big boost in revenues but bad news in the long term for the reasons we now see, mispriced risk with insufficient capital reserves and unsustainable public sector deficits as expenditure that had increased of the bank of the tax on what turned out to be one off profits could not be reversed when the true fiscal positon was revealed.

Is anyone still reading?

[Deleted User]

John1993 wrote: »

Most people with whom you are competing won't work that hard, won't plan out their career, or won't have put in the effort to get the education and qualifications that they need, so you'll nearly certainly get there.

So your plan is to finish university at say 22 and then work until you are 42 before settling down? Most women will find it hard to have children by that point. Young people need somewhere reasonable to live and have a family.

Of course if you graduated in 2008 you could add another 10 years to that, since there are no jobs even for well qualified graduates.

[Deleted User]

Prothet_of_Doom wrote: »

A graduate starting salary at a leading Engineering Company is about £30K, and outside London,

Where is that? Looking on the various job sites it seems to be well, well above the average graduate starting wage. The average is more like £20k, if you are lucky and they don't want to screw you with some kind of internship.

At work we just took on a new graduate software engineer. He isn't getting 30k. He also had to move over 100 miles for the job, and so is of course going to have to rent. He wife is pregnant so they will need at least two bedrooms. It's going to take them many, many years to save up to buy, even factoring in expected wage rises and his wife's future earnings if she neglects the kids as much as possible.

Tancred

wymondham wrote: »

Hi All

Just had a good read about and the price of houses is sinking in with me. There is a newbie who is quite casually talking about getting a 300k property for their very FIRST home (it's a 50% scheme, but never the less)!

How on earth are these people:

a. Going to pay for it
b. Hope to pay it off without going into their pension years?
c. Cope when rates rise, as they will.....

I'm pretty sure if I was buying now there is no way I could even imagine finishing the mortgage - I had enough of a struggle on our 30k house and I had a good wage!

How times have changed in quite a short space of time, and I fail to see how this can be considered good (house prices rise so fast)?

Well, I've seen lots of young people with little kids in my area (Reading/Wokingham/Bracknell) buying 4 bedroom detached houses for £350k as if they were bags of sweets. It makes you wonder. I assume that parents are getting ever more generous - probably spooked by the fear (terror) that their offspring might have to live with them for goodness knows how long. £100k deposits are not unusual in this area among typical young middle class buyers.

Tancred

JencParker wrote: »

So you sold a fairly average house (300k doesn't get you a lot in the SE) to a couple who were in the top 5% of earners?
How can that be representative?

More like top 0.5% of earners.

http://www.ifs.org.uk/wheredoyoufitin/

Tancred

Prothet_of_Doom wrote: »

Interesting.

In 1989, my mother advised me thus:

1) Buy the nicest house you can in the nicest area you can afford.
2) Your Salary will always go up, whilst the amount you owe will go down.
3) Borrow the maximum you can afford now.

If we had listened to her, we might have spent £75K and when we came to have kids, wouldn't have been able to afford it, or when the interest rate went to 15.5% we would have defaulted, but had we survived that we might now be living in a bigger house in a more expensive area, but still be paying for it.

It proves that parents often talk BS based purely on their own experience. The housing market in 1950 was very different!

My advice is:

1) Buy the cheapest decent house in a decent area
2) Your salary will not necessarily go up at all and you may also be made redundant at least once.
3) Borrow much less than you can afford now.
4) If all else fails move to Australia.

Tancred

ukcarper wrote: »

Not the answer just a fact.

Average wages higher in the South.

Much of the higher average salary in the S.E. is due to a higher than average number of managerial and professional people in London and the Home Counties. This tends to distort the picture somewhat.

Tancred

Loughton_Monkey wrote: »

But I will repeat my rant that that the benefits of an 'Offset' mortgage must be at least considered by everyone. I cannot recommend them too highly. If you want, you can make it 'perform' exactly like an ordinary repayment. In which case you've lost nothing.

Why? If you have enough savings to make this offset mortgage work, and you do need quite a lot, why not simply pour the money into the equity in the first place?