House prices going up quicker than I can save a deposit :-(

meady100

I'm getting a bit fed up. Am I missing something financially, could someone reassure me?! I'm living at home and saving £1200 a month towards a house deposit which I think is pretty good going - I've managed £20,000 so far and want to reach £40,000, but the prices of even small houses (about £170,000 round here) are increasing at more than this per month. How will I ever get on the housing ladder? In a years time that house will be £17,000 more and I will only have saved £14,400! Even my best efforts mean I'm getting further and further away from getting on the property ladder instead of closer. I think saving £1200 is doing quite well, so what is everybody else doing who can't even who manage this much? Will these house price increases begin to slow? I just can't see what my options are...

wantstomove

Saving £1200 a month is doing brilliantly! Depending of course on how much you earn (if you pick up 3k a month then it's not all that great!)

Would you be able to take out 160k in mortgage? If a house would be ~200k and you have 20% deposit then it could be doable.

meady100

wantstomove wrote: »

Saving £1200 a month is doing brilliantly! Depending of course on how much you earn (if you pick up 3k a month then it's not all that great!)

Would you be able to take out 160k in mortgage? If a house would be ~200k and you have 20% deposit then it could be doable.

Well I'm not going to be in a position to buy for at least 24 months due to my partner being at university, so I intended on saving until that time. It's pretty crazy that putting that amount of money aside every month in the meantime is not even keeping my purchase hope's head above water! I've been considering investing half of it in P2P saving schemes at 6-8% interest rates just to keep some kind of parity while keeping half in premium bonds in the hope of winning an amount to save my problems while keeping it secure.

bsms1147

On your 170,000 house with your 20,000 deposit, you have nearly a 12% deposit.

Assuming you save 14,400 over a year as you say, and the house goes up by 17,000 while you save that

Then on a house now worth 187,000 and a 34,400 deposit, you now have slightly over an 18% deposit. After two years it would be a 24% deposit.

I make that you catching up, not getting further away.

Hope that helps.

meady100

bsms1147 wrote: »

On your 170,000 house with your 20,000 deposit, you have nearly a 12% deposit.

Assuming you save 14,400 over a year as you say, and the house goes up by 17,000 while you save that

Then on a house now worth 187,000 and a 34,400 deposit, you now have slightly over an 18% deposit.

I make that you catching up, not getting further away.

Hope that helps.

Well that's good news!!! I think I'm going to have to scratch my head a bit, I'm new to mortgages. So I'm £14,400 better off but the house is £17,000 more costly. That sounds bad. But I have a bigger percentage deposit. And that sounds good! Which is it?! Is it financially more advantageous to have a larger deposit on a slightly costlier house?

Running_Horse

Those of us who first bought in the 1980s will remember being told to buy now or never afford it at all. Then we heard it again around 2000 onwards. Now here we are again in 2014. This time it could be true, or it could be just another cycle. Keep saving, and buy when you feel comfortable to do so. Please don't be pressured into buying an inferior dump just from fear of missing the boat.

cupid_s

meady100 wrote: »

Well that's good news!!! I think I'm going to have to scratch my head a bit, I'm new to mortgages. So I'm £14,400 better off but the house is £17,000 more costly. That sounds bad. But I have a bigger percentage deposit. And that sounds good! Which is it?! Is it financially more advantageous to have a larger deposit on a slightly costlier house?

Definitely. The rate you'd be able to get with a 20% deposit will be much better than with a 10% deposit (just looking at my mortgage provider, and getting the same type of mortgage I currently have with a 10% deposit the rate is 4.3% and with 20% deposit it is 2.9%) so the monthly payments would actually be less even if you've had to pay significantly more for the house.

Also prices may be rising ~1% a month currently but it may well slow down to less than that and you'll find that what you can save is then more than what they are increasing by.

BTW I'm quite jealous you can buy a small house for 170k! Where I want to buy, the cost of a small house is going up by ~5k every month, so things could always be worse

Pixie5740

I used to tie myself in knots about this last decade when a lot of my friends were getting the 125% LTV mortgages from Northern Rock whilst I had gone back to university. When I was ready to buy in early 2008, house prices fell and I got on the ladder and my friends were stuck in negative equity.

My point being, don't worry about. Nobody knows for certain what the housing market will do just keep up the good work with your saving.

:beer:

jonewer

Owning a house is not the be all and end all of living a happy and fulfilling life. Relax.

I_have_spoken

Once your partner leaves Uni, I'd look at emigrating before buying in Britain

jackieblack

Running_Horse wrote: »

Those of us who first bought in the 1980s will remember being told to buy now or never afford it at all. Then we heard it again around 2000 onwards. Now here we are again in 2014. This time it could be true, or it could be just another cycle. Keep saving, and buy when you feel comfortable to do so. Please don't be pressured into buying an inferior dump just from fear of missing the boat.

Oh so true.......