i live in the suburbs of London. How do people afford houses?

The_White_Horse

that is what I want to know. I know people that are buying 3 bed semis for £800k. of course, these prices are madness and people are mugs BUT - where are they actually getting the £800k from to buy these houses?

these people are moving up - not selling houses in mayfair and kensington and moving out to the suburbs - these are people that are selling £400k homes and then buying £800k homes.

even if these people owned their first home completely - which 99% of them don't - they would still require mortgages of £400k and a single earner on £100k would be lucky to get that.

the reality is, they might have £150k-200k in equity. so are getting mortgages of £600k. how are they managing this??????

chucky

The_White_Horse wrote: »

that is what I want to know. I know people that are buying 3 bed semis for £800k. of course, these prices are madness and people are mugs BUT - where are they actually getting the £800k from to buy these houses?

If you know them, why don't you try asking them. It would probably make more sense than ranting about it on an internet forum.

shortchanged_2

It's a question nobody can really answer.

andrewf75

Easy question to answer. There are plenty of people earning a lot of money in London.

The_White_Horse

i don't know. most of them are single earners (a few are earning couples). whilst they earn decent amounts, i don't see them earning this much. in the old days of self cert - i could understand, but these days? there is no way they are earning £200k-250k a year.

[Deleted User]

They do it by having very rich parents and high salaries. I know loads of people who've bought £500-600k houses, through substantial assistance from the bank of mum and dad

michaels

Lots of banks will lend 5x salary to single earners on 100k+

And they probably have 300k equity, perhaps a second property to sell, bulging ISAs to cash in, inheritence from grandparents etc etc

HAMISH_MCTAVISH

The_White_Horse wrote: »

how are they managing this??????

Jack and Jill each bought a 125K 1 bed flat in their mid 20's with a bit of parental deposit help.

They now have 60K of equity and 190K of mortgage debt.

At 32 they got married, sold their flats, and thanks to original deposits, a bit of HPI, and some mortgage paydown, now have 150K of equity, which they are able to use as deposit on a 400K house.

They now have 150K of equity and 250K of mortgage debt.

At 42 they had cleared half the mortgage due to low rates (thanks Merv) and the 400K London house is now worth 600K at least, even with the "crash".

They now have 575K of equity and 125K of mortgage debt.

They buy their 800K house using 575K of equity and increase their mortgage debt to 225K.

Which is easily achievable on their joint 120K salaries.

Or even on a single 60K salary.

And still lets them pay off the 800K house before retirement.

Hope that helps.....

chewmylegoff

The_White_Horse wrote: »

that is what I want to know. I know people that are buying 3 bed semis for £800k. of course, these prices are madness and people are mugs BUT - where are they actually getting the £800k from to buy these houses?

these people are moving up - not selling houses in mayfair and kensington and moving out to the suburbs - these are people that are selling £400k homes and then buying £800k homes.

even if these people owned their first home completely - which 99% of them don't - they would still require mortgages of £400k and a single earner on £100k would be lucky to get that.

the reality is, they might have £150k-200k in equity. so are getting mortgages of £600k. how are they managing this??????

they probably aren't. they probably have larger deposits as a result of a combination of inheritance, other savings, equity in previous houses and bank of mum and dad (sometimes funded from equity in their house).

Loughton_Monkey

There are some large semis down my road. £700K typical. These are ideal first homes for city traders. Very modest mortgage of, say, 2X salary - that's £300K. The other £400K deposit only makes a small dent in the annual bonus. Get £200K of growth in a couple of years plus more bonus, and they'll be off to pay £2.1 million cash for a detached in Chigwell with all the footballers.

[Deleted User]

HAMISH_MCTAVISH wrote: »

Jack and Jill each bought a 125K 1 bed flat in their mid 20's with a bit of parental deposit help.
..

And their key trick was to buy a house 20 years ago