How do people afford expensive houses

McTaggus

I'm a FTB just about to purchase my home above this threshold. How? I've been working as hard as I can for the last 15 years, and for the last 5-7 years I have focussed heavily on avoiding racking up unnecessary debt, saving everything I can and cutting my expenses wherever possible, taking a 2 year "hardship" posting abroad to maximise my income in as short a period of time as possible and saving pretty much everything I can while I'm away, and doing my best to get up the career ladder. It's been a long struggle, working 12 hour days and taking on assignments no-one else wanted to take, and basically having a longer term focus on getting myself to a place where I buy the right place to call my "home" first, rather than just getting on the ladder for the hell of it and hoping the property would appreciate.

TBagpuss

as others have said, its a combination of luck and hard work.
Getting married, or being in a long term, stable relationship is a massive help as youthen have two incomes but only very slightly higher outgoings.

Also, saving. I haven't been as lucky as some here. My first home, I owned for around 5 years and it sold for exactly the same as I had bought it or. however, I had started overpaying on my mortgage with the first pay rise I had after buying, so I did have a little bit of equity to put towards a deposit.

When I bought my second house ( which was much more expensive, although nio bigger, due to my having moved South!) I did the same - ioverpaid the mortgage as much and as soon as I could. I ended up in that house longer than I had originally planned due to the recession - but because I had been chipping away with overpayments I had built up more of a deposit when I moved on. The overpayments also meant that when I moved, although my actual mortgage borrowings were almost double what they were on the old house, the actual repayments didn't change, it's just that the proportion of the payment which is mortgage as opposed to overpayment is larger. And I have adjusted my budget so I can start to make iverpayments again, albeit not very large ones.

I'm not in a £400K house - but I am in a 3 bed semi with a reasonable garden in a pleasant village instead of in a 2 bed terace on a not-very-nice estate. A collague who earns the same as me but has a husband who also works has recently bought a £400K house, but I think that despite their dual income they also have more debt and less savings than I do.

All that said, I don't expect my income to increae significantly now, so unless I become half of a couple I can't see myself buying anywhere more exoensive than where I am now. (I suppose that if I were to have an inheritance or other windfall it could happen)

MandM90

saverbuyer wrote: »

4. By being born at the right time.

OH and I were talking about this. I do think it's partly that, but also attitude to money in general. Loads of our friends are really shocked that we've managed to buy a house which is 30 mins door to door to London Marylebone at the age of 24, but whilst we've seen photos of them out every weekend, taking spontaneous trips to Europe, years out to travel (which is all amazing and I envy them in some ways) we have been sticking to a strict budget, furnishing our house using freecycle, working long hours and finding extra sources of income where we can.

We were also incredibly lucky to get some help from parents.

Most of our friends suggest meeting up at expensive restaurants or bars whereas we do what our parents say they did: invite people over for a veggie curry and a few beers. When we couldn't afford a bed we didn't get it on credit, we slept on a mattress on the floor. Last year we holidayed in Devon with a borrowed tent.

I have also, in my time, wasted loads of money, but I do think that those who moan then think it's normal to spend £90 a week on food shopping for two people, pay for a David Lloyd membership they never use and use credit cards to pay for £1000 sofas can't really complain about struggling to buy

Berger_3

In my case me and now wife both bough flats about 8-9 years ago before the crash, both for about £200k with 95% mortgages.


We both had several years of negative equity when things were very dire, obviously in all this time we have been paying our mortgages and the balance has been reducing, in the last couple of years property prices have taken off again so we've both got about £100k equity.


we are now selling both and buying together, the mortgage is about the same size as our original mortgages combined and we have the equity from our flats, so essentially we are just going back to where we started about 9 years ago in terms of mortgage size (if you divide it in two) But with the equity are now able to buy a much bigger/nicer house that we could've 9 years ago. We are both also earning a lot more and interest rates are a lot lower, so we are essentially borrowing the same amount as 9 years ago but are paying less and earning more - for now at least.


So in answer the original question, one of the main overriding factors is simply just time, and lots of it.

saverbuyer

MandM90 wrote: »

We were also incredibly lucky to get some help from parents.

This helps immensely.


A few trips to Prague and a 600 mobile phone pale in comparison to the massive deposit required and average house prices moving 10% in one year. If the house you want to buy has gone up 2k in a month, the £30 gym membership isn't going to make that much of a dent. Especially when average salaries only go up 2%.


Well done, you bought. Some people do have the folks to help. Not everyone in London makes good money and really if you were born in the 50/60s you were really really lucky. Good pensions and cheap houses.

chelseablue

I've just bought a house for £400,000 with my partner


I sold the flat I purchased before I met him for £235,000.


I wouldn't say my house is anything spectacular, its a 3 bed semi. Its just where I'm from (also near Reading!) is an expensive area.


When I bought my flat I worked 2 jobs to save up the money for a deposit. It cost me £156,000 and I put down £47,000

saverbuyer

MandM90 wrote: »

Also worth noting that my home isn't worth anyway near the £400k mark!!

My folks own a 500k house. Average enough jobs.


Don't think they ever bought in a charity shop. Nice holidays every year, final salary pensions. Oh and the 50k mortgage seemed to help.


Sure if someone buys the house off them and its worth 5 millions they can be glad they didn't join the gym, didn't go out for food and shopped in Saint Vincent de Paul.


Or they'll look back and think "Hey, maybe the old folks just had it so much better than us".

lippy1923

I would say living within your means. It will get you an expensive house in the end if that's what you want to achieve in life.

mumps

MandM90 wrote: »

OH and I were talking about this. I do think it's partly that, but also attitude to money in general. Loads of our friends are really shocked that we've managed to buy a house which is 30 mins door to door to London Marylebone at the age of 24, but whilst we've seen photos of them out every weekend, taking spontaneous trips to Europe, years out to travel (which is all amazing and I envy them in some ways) we have been sticking to a strict budget, furnishing our house using freecycle, working long hours and finding extra sources of income where we can.

We were also incredibly lucky to get some help from parents.

Most of our friends suggest meeting up at expensive restaurants or bars whereas we do what our parents say they did: invite people over for a veggie curry and a few beers. When we couldn't afford a bed we didn't get it on credit, we slept on a mattress on the floor. Last year we holidayed in Devon with a borrowed tent.

I have also, in my time, wasted loads of money, but I do think that those who moan then think it's normal to spend £90 a week on food shopping for two people, pay for a David Lloyd membership they never use and use credit cards to pay for £1000 sofas can't really complain about struggling to buy

My DD is about to buy her first house with her partner, she is regretting alot of what she has spent money on. e.g. She is on her 3rd iphone, she has had 4 laptops, decided to rent a flat in her last year at uni rather than share, she has had holidays to India, Africa, Australia, Russia, Egypt, Morocco, Italy, New Zealand, Czech Republic, Poland, Austria, France and I can't remember the rest. She has so many clothes she struggles to get them in 3 large wardrobes. She learned to drive at 17 and bought herself a car while doing A levels. All her choice, all perfectly valid choices but she would have tens of thousands more for her deposit if she hadn't made those choices. She is mid 20s by the way. She has also had the gym memberships and never actually used them and spends what seems huge amounts of takeaways as she doesn't want to cook.

At her age I obviously hadn't had a laptop or mobile, they hadn't been invented. I had been on one foreign holiday, didn't have takeaways, hadn't learned to drive let alone had my own car but I did have a house.

MandM90

saverbuyer wrote: »

My folks own a 500k house. Average enough jobs.


Don't think they ever bought in a charity shop. Nice holidays every year, final salary pensions. Oh and the 50k mortgage seemed to help.


Sure if someone buys the house off them and its worth 5 millions they can be glad they didn't join the gym, didn't go out for food and shopped in Saint Vincent de Paul.


Or they'll look back and think "Hey, maybe the old folks just had it so much better than us".

My in laws house is worth 7 figures, they paid £113k 25 years ago (borrowing near enough all of that IIRC, and moving in there from the mobile home they lived in whilst saving). They've both worked their socks off, gone through a huge remortgage as main earner was off sick - cancer - and paid it back again.

Mum's house is work about 500 but she only earns 35k a year now. She rents out part of her home and is mortgage free so lives quite well. Again, I saw her go through years and years of sh*t to get this comfortable. When she bought her first house she rode a bike (no car) and had no furniture so when people came over they all sat on the floor.

Wouldn't say they've had it easy at all. I'm not saying everyone has to scrimp and save to afford houses, but that's how many people do. Not all people who were born in the 60s had 800k houses just fall into their laps and not all those who can't buy them lay blame on the previous generation.