How do people afford expensive houses

adonis10

SG27 wrote: »

Which is exactly why people are having children much later in life.

Lots of people earlier in the thread saying you meet up with a partner and have two incomes to help move up the ladder. Well today its the reverse, you need two incomes to start with. Then when you want to start a family in your early to mid 30s you drop back to one income. Or one and one part time. And suddenly you can barely afford the home you currently have let alone somewhere bigger

This is what has happened to us. Not that it was a shock. We knew it would happen. We are effectively stuck in a fairly small two bed house. We would need to save/borrow around £50,000 to get 3rd bedroom. On one income we cant save anything! And no way we could borrow anymore!

But thats life. We were pretty comfortable on two incomes. But both wanted to start a family before age made it too difficult.

Exactly what you say in the last sentence; you are adult and mature enough to understand that you can't have everything. The fact is, unless you're rich, you have to make sacrifices. One wants to start a family, they have to cut back. One doesn't want to cut back, they don't start a family.

There is far too much expectation of what one "deserves" these days; too many people thinking that certain things are a human right (big house, iPhone, Sky tv, two holidays a year etc.); they are not a human right just because advertising suggests they are. Do I spend more on holidays etc. than peers on similar incomes who have kids? Yes. Do I have kids? No. Out of choice. If I choose to have kids I fully accept that I must cut back. I also would never buy a house based on two incomes knowing that whilst still paying it off I would have kids and one income would go. It depresses me to think that people don't even consider this. Surely it's better to bring up a kid in a nice flat that you can afford to keep on paying the mortgage on than get evicted from a bigger house because you've decided to sack off work to have a child, and then end up at parents/renting etc.?

Sounds harsh, but life is harsh.

ThePants999

I'm relatively young at 31, so my experience is only of the last decade and a bit, which I appreciate skews matters somewhat. But in my case, it pretty much boiled down to "get on the ladder as quickly as possible, and let the market do the work", where my route to that was a generous gift from my dad. His £10K allowed me to get a £100K flat in Dec 2005, and in late 2007 I sold it for £120K, tripling that gift. With the now-£30K deposit I could get a £280K house, and despite 2007 being the peak of the market round here, it's now worth £410K - so from price inflation alone, never mind the capital repayments I've made, that £10K turned into £160K in a decade. I can't claim much credit for that, except in earning enough to be able to get the mortgage.

questionss

Hard work
Good job with good pay
Watch the pennies on a day to day basis - Aldi, 2nd hand, freegle, £800 car
Be prepared to live without furniture, it took us months in our first flat to afford sofas and our current house hag empty rooms for 2 years
Take a hard option to save deposit DH lodged in a box room.
Prepared to do work to add value
Increase equity by paying any extra cash off the mortgage

ladybabe

1- if you can over pay on your mortgage
2- set monthly budgets for bills and food and stick to them
3- if you can fit in a part time 2nd job do this to either build saving or again overpay
4- buy in a nice area
5 - If you want to move home then save the costs ie solicitors, storage, moving, fees, stamp duty rather than take them out of your equity
6- don't expect everything new, i did not by a television for 10yrs as had cats offs and all these went to people after me
7- by old furniture and live with it or re-work it defo cheaper and solid furniture rather than the cheap stuff you get in the shops
the rest is luck

Russe11

Has anyone mentioned low interest rates?

marksoton

Russe11 wrote: »

Has anyone mentioned low interest rates?

What about them?

onlyroz

Most people receive inheritances exactly when they don't need them. If your parents live into their 80s then you will likely be in your 50s or 60s yourself, with the kids off at uni and you well in the way to being mortgage free. I personally would have been able to do much more with a large lump sum in my 20s than I would in my 50s.

SG27

marksoton wrote: »

What about them?

A lot of people extending themselves now will be in a lot of trouble when they rise. Be that next year or 5 years.

SG27

ThePants999 wrote: »

I'm relatively young at 31, so my experience is only of the last decade and a bit, which I appreciate skews matters somewhat. But in my case, it pretty much boiled down to "get on the ladder as quickly as possible, and let the market do the work", where my route to that was a generous gift from my dad. His £10K allowed me to get a £100K flat in Dec 2005, and in late 2007 I sold it for £120K, tripling that gift. With the now-£30K deposit I could get a £280K house, and despite 2007 being the peak of the market round here, it's now worth £410K - so from price inflation alone, never mind the capital repayments I've made, that £10K turned into £160K in a decade. I can't claim much credit for that, except in earning enough to be able to get the mortgage.

You havent turned 10k into 160k because you can never realise it. Unless you sell up and move back with your dad.

The reason you was able to buy that bigger house is because you could get a 170k bigger mortgage. It was your earning power that did it.

House price growth makes it harder to move up. If prices stayed the same your current house would have cost around £224k. You would have needed to save £10,200 to make the new 10% deposit. (Not a problem if you can afford the extra 170k mortgage!) Then you only need to increase your mortgage by about £104k rather than £170k!

moneyistooshorttomention

onlyroz wrote: »

Most people receive inheritances exactly when they don't need them. If your parents live into their 80s then you will likely be in your 50s or 60s yourself, with the kids off at uni and you well in the way to being mortgage free. I personally would have been able to do much more with a large lump sum in my 20s than I would in my 50s.

It is certainly reasonable for people to expect to be completely financially straight by their 50s I feel (in final house and with all work done on it/mortgage at least well on the way to paid off/savings in place/etc).

Its certainly the case that the time of life when one could most do with a large lump sum of money is 20s/30s and then it could be used as a house deposit or for moving from starter house (dependant on circumstances).

But there are many pensioners who are still tens of thousands of £s (maybe more) from being financially straight yet. Even ones who were "set to be sorted by sixty" might end up in an expensive divorce and find their finances now much akin to those single people have had or worse.

My comment about, if I'd had children, then that would have been when I was in my 30s and that would have made them in their 50s when they inherited my house/savings from me "should" mean they didn't need it much anyway (hence my reckoning that their finances should have got to sorted enough they would just put the money in savings for their children anyway). But they might well still have needed the money themselves...

Quite frankly - even if people don't need money because they are still working on getting financially straight - then there is a good chance that they will need it in order to be able to retire at Retirement Age (rather than having to "work till they drop").:cool: