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Second steppers struggle
sKiTz-0
Posts: 943 Forumite
Hi all,
I remember back in 2008 I was busy paying off my debts and getting started on saving up a deposit for my first house, which seemed an impossible task at the time. At the end of 2010 a house came along which was affordable in the local area and I snapped it up. I had moved in by May 2011. Since then I have been overpaying as much as I can, every spare penny has gone into paying down the mortgage.
Now, 5 years later, I am looking to make the second step and move somewhere a little bigger and also closer to work. Doing the maths though, even with the mortgage fully paid off (which is a long way off) I would still need around £30,000 to bridge the gap. Even that would put my max budget at £160,000 and would make the mortgage payments as much as my minimum payment now AND the extra I overpay. That leaves no buffer for interest rates rising, so obviously I wouldn't want to max out that much.
Currently in a 2 bed terrace worth ~£85-£90k.
Is it me or does it seem that us second steppers have been left in a bit of a hole? Since back then when I was working 3 jobs to get my deposit saved up, there have been various schemes launched for first time buyers - 5% mortgages, extra loans, now you can even get £3k free off the government just for saving for a deposit in an ISA!! There wasn't any of that help when I was saving for a deposit. It feels like all the help is concentrating on first time buyers these days, everyone who is already on the 3rd/4th step has managed that because they have seen massive house price increases in their time, the like of which I will never see. As an example - my parents bought their first house in 1983 for £11k, they sold it around 6 years later for £33k. For me to see the same percentage of increase, the house that I bought for £82k in 2011 would have to be sold for £246k next year. Well that isn't going to happen!!
Have us potential second steppers wanting to move up to the second rung been forgotten about? Will someone remember us and give us any help? After all, if we are not moving then there will be a lack of propeties for first time buyers to buy and will just result in stagnation at the bottom end of the ladder.
Curious to see if anybody else is/was in my position and feels the same? Everybody said that getting your foot on the ladder would be the most difficult thing. And although it was difficult, I feel like the next step is just impossible.
I remember back in 2008 I was busy paying off my debts and getting started on saving up a deposit for my first house, which seemed an impossible task at the time. At the end of 2010 a house came along which was affordable in the local area and I snapped it up. I had moved in by May 2011. Since then I have been overpaying as much as I can, every spare penny has gone into paying down the mortgage.
Now, 5 years later, I am looking to make the second step and move somewhere a little bigger and also closer to work. Doing the maths though, even with the mortgage fully paid off (which is a long way off) I would still need around £30,000 to bridge the gap. Even that would put my max budget at £160,000 and would make the mortgage payments as much as my minimum payment now AND the extra I overpay. That leaves no buffer for interest rates rising, so obviously I wouldn't want to max out that much.
Currently in a 2 bed terrace worth ~£85-£90k.
Is it me or does it seem that us second steppers have been left in a bit of a hole? Since back then when I was working 3 jobs to get my deposit saved up, there have been various schemes launched for first time buyers - 5% mortgages, extra loans, now you can even get £3k free off the government just for saving for a deposit in an ISA!! There wasn't any of that help when I was saving for a deposit. It feels like all the help is concentrating on first time buyers these days, everyone who is already on the 3rd/4th step has managed that because they have seen massive house price increases in their time, the like of which I will never see. As an example - my parents bought their first house in 1983 for £11k, they sold it around 6 years later for £33k. For me to see the same percentage of increase, the house that I bought for £82k in 2011 would have to be sold for £246k next year. Well that isn't going to happen!!
Have us potential second steppers wanting to move up to the second rung been forgotten about? Will someone remember us and give us any help? After all, if we are not moving then there will be a lack of propeties for first time buyers to buy and will just result in stagnation at the bottom end of the ladder.
Curious to see if anybody else is/was in my position and feels the same? Everybody said that getting your foot on the ladder would be the most difficult thing. And although it was difficult, I feel like the next step is just impossible.
This is WAY more fun than monopoly.
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Comments
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Wah, wah, wah.
It's not a given that house prices will increase at all never mind at a given rate. Depending on when you bought in 2008 you're lucky you aren't in negative equity.
HTB MG and HTB EL aren't exclusively for first time buyers either so you might want to get your facts right before wailing about the unfairness of it all. Life's not fair.0 -
Well what you could have done is not overpaid the current mortgage and instead saved that money to bridge the gap.
You can't really have it both ways. Upsizing and drastically reducing your current mortgage isn't going to happen unless you have a significant increase in income.0 -
I'm not old enough to have children old enough to wonder at our apparant luck. We didn't climb the ladder by houses getting more expensive. We did it despite it. It was easy to borrow.Everything that is supposed to be in heaven is already here on earth.
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HTB MG and HTB EL aren't exclusively for first time buyers either .
I didn't know that, so thank you for the contructive part of your post. I shall do some more research. Although I thought those kind of loans were for people borrowing 90-95% of the houses value, hence the presumption that only FTB could benefit. Ideally, I would like to aim for 40% LTV on my next purchase to secure the best available rate.Doozergirl wrote: »It was easy to borrow.
I think that's the difference. And I appreciate that interest rates were way higher than they are now, so there is that. It does help though that if, when you come to sell, the price you get for your house wipes out your existing mortgage and leaves you with a big wad of cash left over. Although I guess that the downside of that is, of course, that even though your property has tripled in price, so has the one you are buying.This is WAY more fun than monopoly.0 -
Well what you could have done is not overpaid the current mortgage and instead saved that money to bridge the gap.
I'm not too sure how that would help? If I am using equity from my property, plus whatever cash I have saved up to fund the next purchase, surely it's irrelevant if the cash is liquid or tied up in bricks and mortar as it is all going into the same pot when the time comes.
As savings rates are so shocking I was under the impression that long term, I have been doing the right thing as I have been saving myself the extra interest by paying down the mortgage.This is WAY more fun than monopoly.0 -
If you have a 40% deposit then you shouldn't need help from the government.
Rising house prices aren't really going to help you any way. If your house increases in value by 10% then so will the type of house you are trying to upsize to.0 -
If you have a 40% deposit then you shouldn't need help from the government.
Rising house prices aren't really going to help you any way. If your house increases in value by 10% then so will the type of house you are trying to upsize to.
40% LTV is a 60% deposit! Expecting help is certainly a case of wanting the cake and eating it.
The grass is always greener...Everything that is supposed to be in heaven is already here on earth.
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But again, you're trying to have your :bdaycake: and eat it...
How so? As a single guy paying this mortgage on my own, what I'm trying to do by securing the lowest rate is make my money work harder for me (paying less interest) and also making sure my monthly payments are affordable.
At the moment, just under 45% of my wage goes towards paying my mortgage only. This is higher than I would like it to be and higher than various sensible recommendations I have seen over the years. Going forward, I am going to have to borrow this money over a longer period (25-30 year term) so I would like to get my monthly payments down to ~30% of my income.This is WAY more fun than monopoly.0 -
If your current house is worth £85-90k and you expect your next one to be £160k, I'd say that's one large step. You must be increasing the number of bedrooms, or going semi, getting a bigger garden and maybe in a better area .... just a 2nd step would, I'd have thought, cost you £110-115k.
Nothing wrong with trying to get the biggest/best next house you can, but you do seem to be leaping over a lot of houses that'd improve 2-3 aspects of your current one.
You should try being my neighbour .... you'd have to pay £250k for a 2-bed mid terrace!!0
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