Is home owning for young people just a pipe dream?

Eponym

I thought I'd posted this yesterday but it seems to have disappeared.

I just bought my first property as a single 27 year-old. It's a 3 bed mid terrace on the outskirts of Birmingham and cost £127000. I'm not very highly paid either. When I left uni I started on about £16k and this went up through promotions and wage rises to about £18.5k until another promotion 6 months ago put me at £23.5k.

I'm naturally a saver and was able to save up a 25% deposit, which I saved by:

• Living at home after uni (parents charged low rent)
• Not having a car until very recently, as I didn't need one more than a couple of times a week and then I could borrow my mother's car
• Not having particularly expensive tastes - I'm not a shopper or a big drinker
• Few holidays and those that I had were generally cheap - with one notable exception which was 100% worth it!

Currently dreading my credit card bill for all the paint and other bits I've had to buy, but I know I can cover it because I budgeted for it.

My parents also gave me some money towards the fees.

I'm very grateful to them as I wouldn't have been able to save it anywhere near this quickly if I'd had to rent privately.

kitty_kins

PasturesNew wrote: »

The system relies on you either staying put, earning significantly more, or accepting that you can only now buy a smaller house/elsewhere.

Very true but that's the entire nature of the scheme - it is to help you buy a permanent home, not to keep moving. Otherwise, why would we bother buying at all?

We've done the sensible (in our opinion) thing and bought a house that we can live in for a very long time - it has enough room to start a family in a few years and it is in a great area for schools.

You are correct though, the HTB scheme is not to be entered into lightly.

Speedybrain

ArthurOnline wrote: »

Hi guys,

I'm new to this forum, so just thought I would try and get some opinions on a topic. There has been so much in the news recently about how unachievable home owning has become for young people, partly due to the difficulty of attaining a mortgage. Do you think this is actually the case? If so, do you think that the rental market will see a steady growth in demand?

Thanks in advance! :j

The problem is that renting is, in many ways, even more expensive than buying. The key thing is to buy what you can afford.

Speedybrain

Eponym wrote: »

I thought I'd posted this yesterday but it seems to have disappeared.

I just bought my first property as a single 27 year-old. It's a 3 bed mid terrace on the outskirts of Birmingham and cost £127000. I'm not very highly paid either. When I left uni I started on about £16k and this went up through promotions and wage rises to about £18.5k until another promotion 6 months ago put me at £23.5k.

I'm naturally a saver and was able to save up a 25% deposit, which I saved by:

• Living at home after uni (parents charged low rent)
• Not having a car until very recently, as I didn't need one more than a couple of times a week and then I could borrow my mother's car
• Not having particularly expensive tastes - I'm not a shopper or a big drinker
• Few holidays and those that I had were generally cheap - with one notable exception which was 100% worth it!

Currently dreading my credit card bill for all the paint and other bits I've had to buy, but I know I can cover it because I budgeted for it.

My parents also gave me some money towards the fees.

I'm very grateful to them as I wouldn't have been able to save it anywhere near this quickly if I'd had to rent privately.

This example makes it clear that the ideal is to carry on living with parents and save heavily over several years. Unfortunately, not everyone can do this, for various reasons.

sydenhambased

I'm 26 and my OH is 31; both self-employed (musicians). We're buying in South East London with a 25% deposit on a £250k property. We both came to London to study (me 8 years ago, OH 13 years ago) , so have been renting privately, living frugally and saving everything we possibly can. We're borrowing £20k from parents but we've saved £50k ourselves (and at the rate we've saved we should be able to pay parents back their £20k within 2 years).

We (I in particular) do earn more than national average, but we drive an old Ford, rarely eat out, don't spend serious money on clothes, don't holiday, never take taxis etc.

It's possible, even in London, but saving a deposit is hard. We currently rent at £450 EACH (plus bills, council tax etc.). We have friends who have no intention of buying and are forking out £6-700 per month in rent, in slightly larger properties or in nicer parts of London. That leaves very little wiggle-room for saving.

We actually managed to secure a 5-year fix at 3.64% via a decent broker that understands our profession - high street lenders didn't want to know when we explained we're both self employed and have incomes that fluctuate from year to year.

leanne2901

I don't think it's a dream. Myself and my boyfriend are both 22 but when we put our offer in we were 21. We have both worked since we left school, and have full time jobs. We also rent a property so it has taken even longer to get the deposit we need. Hopefully (as long as everything runs smoothly) we will be exchanging in the next few weeks!

ArthurOnline

kitty_kins wrote: »

We've used Help to Buy to buy ours. Everything has been quite easy to understand and deal with. We weren't initially keen on the scheme due to the "loan" aspect but once we read into it in more detail we felt it was a good decision for us.

Basically, you are loaned 20% of the house value (decreasing the amount you need mortgaged) and pay back 20% when you sell the house or after 25 years. The loan is interest free for the first 5 years and payments after that are interest only.

We used a FA who understood the scheme and he helped us by filling out and submitting all the relevant HTB paperwork to the relevant authorities. Ironically, that was the only stress-free part of our house buying journey!

Overall, we are big fans of the scheme as we have been able to buy a gorgeous little townhouse for ourselves and its brand new! We loved being able to choose our internal options and we feel really lucky

Hope this helps xx

Thanks Kitty_Kins!

That all sounds good to me - sounds like a step in the right direction for potential home owners.

Let's hope it can help more people like you!

ArthurOnline

leanne2901 wrote: »

I don't think it's a dream. Myself and my boyfriend are both 22 but when we put our offer in we were 21. We have both worked since we left school, and have full time jobs. We also rent a property so it has taken even longer to get the deposit we need. Hopefully (as long as everything runs smoothly) we will be exchanging in the next few weeks!

Thanks Leanne!

Looks like there more 'exceptions' than 'rules' in this thread, which is very encouraging! Good luck with the exchange

xemmax

I think if you can stay at home for as long as possible then it is entirely possible. At 27 and single (have a boyfriend but still early stages so not ready to jump into anything together) i'm going through buying my first home at the moment. I'll be moving out of my parents house and have always made sure I've put money aside when I can into savings. However last year unfortunately my father passed away and my fairly large deposit has only been made possible because of the money from this, leaving my savings for me to play around with to furnish the house and make repairs etc.

I have friends my age who have absolutely no savings and complain about it and moan they'll never be able to move out. But they waste money on things all the time so I have little sympathy. Don't get me wrong, I do go out occasionally and like to go shopping etc, I just know when to reign in my spending and put some aside for a rainy day.

ukcarper

Speedybrain wrote: »

This example makes it clear that the ideal is to carry on living with parents and save heavily over several years. Unfortunately, not everyone can do this, for various reasons.

I think that is a contributing factor back in the 70s when people bought in their early twenties the majority of people lived with their parents until they bought and very few single people bought. But things have changed and as you say that is not always possible also people marry later. A few months ago I would have said things were not much harder than when I first bought in the 70s but over the last few month prices have increased dramatically where I am in the south east.