How do any single buyers manage to afford houses when only able to borrow 4x income??

pioneer22

Autumn868 wrote: »

This is something that severely intrigues and concerns me,
how do people actually manage to afford to buy even just 2-bedroom flats/houses, when you can only borrow 4x income for a mortgage?

And im not talking minimum wage - sub 20k salary people, nor am I meaning the absurd London property market,
instead I mean just normal middle-income/decent-income earning professionals, who live in average regions of the country,
how do they afford it?


Take for example a qualified and experienced teacher/nurse/fire-fighter/social-worker/prison officer,
they all earn between 25k-30k per year (depending on area of the country they work in),
and are classed as good level income jobs that are highly sought after, and take years of training to do.

However even if you are working as a qualified and experienced nurse or teacher earning 30k per year, 4x your income will be merely 120k mortgage loan amount.
Meaning that you will have to find the rest yourself to add onto that to meet the price of a property.

In London/Surrey/Most of the South East, even in the crappest cheapest towns and areas, 120k wont even get you a bedsit, let alone a 1-bedroom apartment.
You will typically need a minimum of 150k-170k for a 1-bedroom flat, and 160k-200k for a 2-bedroom flat, and that's in the most cheap and rundown areas.

Im sure those prices will be about accurate even if ou go up north to any towns or cities like Birmingham, Manchester, Liverpool, Newcastle... ect


But so a qualified and experienced nurse or teacher who earns 30k per year, will only be able to borrow 120k as a mortgage.
Therefore even as a high earning professional, if they want to buy a 2-bed flat they would need to someone manage to get hold of 50thousand pounds cash to use as a deposit! :Z


And considering that after rent, bills, and travel to work costs most people are left with merely a few hundred pounds per month at best, equating to maybe £2,000 - £4,000 per year savings,
their rate of savings would not even be keeping up with house price inflation (10% per year = £15,000+ per year).

But so how on earth does such a huge percentage of people manage to afford to get mortgages and buy homes?
(Especially when the majority of people in this country do not earn 30k per year)

http://www.rightmove.co.uk/property-for-sale/property-57854014.html

Quite easily really this place in Leeds is 120k so 10% deposit. For a nurse earning 30k thats 2000 a month after tax including the odd over time shift and so on.

Bills = £1000
Savings = £500
Disposable income = £500

Deposit after 24 months plus fees and so on.

108k Mortgage with a 3% interest rate will be £416.

With my example they could rent the other room out if they wish. So it's not impossible.

Nurses, firefighters etc will also get overtime/oncall/weekend and bank holiday topups too.

chelseablue

I purchased a 2 bed flat when I was 27 and single

It was in Berkshire, South East England so an expensive part of the country.

I paid £156,000 in 2010

I put £46,000 down as a deposit (I worked 2 jobs to save the money). I was a PA for my day job and worked on a supermarket checkout evenings and weekends.
I also lived with my parents while saving

The flat did go up in price a lot due to Crossrail.

I sold it last year for £235,000

So it can be done if you're buying alone with an average job

Herzlos

How much will the house price have gone up in those 24 months though? And is it reasonable for a nurse to be earning 30k?

pioneer22

Herzlos wrote: »

How much will the house price have gone up in those 24 months though? And is it reasonable for a nurse to be earning 30k?

Not that much in Leeds Leeds, there are plenty of houses here for 100k.

Reasonable, they get 21,600 as a starting salary. Plus 1.5X for anything outside of normal hours.

So not unrealistic

steampowered

chelseablue wrote: »

I purchased a 2 bed flat when I was 27 and single

It was in Berkshire, South East England so an expensive part of the country.

I paid £156,000 in 2010

I put £46,000 down as a deposit (I worked 2 jobs to save the money). I was a PA for my day job and worked on a supermarket checkout evenings and weekends.
I also lived with my parents while saving

The flat did go up in price a lot due to Crossrail.

I sold it last year for £235,000

So it can be done if you're buying alone with an average job

Out of interest, do you think you could have done it if you were 27 today?

If you were 6 years younger, you would need to have paid £235,000 rather than £156,000. Bearing in mind that wage growth in the UK has averaged about 2% since 2010.

[Deleted User]

steampowered wrote: »

Out of interest, do you think you could have done it if you were 27 today?

If you were 6 years younger, you would need to have paid £235,000 rather than £156,000. Bearing in mind that wage growth in the UK has averaged about 2% since 2010.

I bought a house in Outer London for £200k when I was 27. This was 10 years ago. The house would now cost me £360k.

So before, we managed with a £20k deposit and a joint income of £45k. Now you'd need a £36k deposit and £81k joint income.

That's a pretty brutal change. It's was only a 2 bed mid-terrace

chelseablue

steampowered wrote: »

Out of interest, do you think you could have done it if you were 27 today?

If you were 6 years younger, you would need to have paid £235,000 rather than £156,000. Bearing in mind that wage growth in the UK has averaged about 2% since 2010.

Very good point!

My salary is £35,000 now so on 4 x salary Id be able to borrow £140,000 (although I just did the Nationwide mortgage calculator and said I was single with no dependents and they said I could borrow up to £166,000)

So borrowing £140,000 I would need to save nearly £100k to buy the same place today, so no I wouldn't be able to buy the same property today.

I'm no longer single and needed joint salaries to purchase our house (paid £400k for the house and needed £230k mortgage)

pioneer22

It's that mental rapid price increase that prices people out. It can't be sustainable. Those 400-500k houses are going to come down eventually there's got to be a point where people won't be able to afford them.

Failing that come and move up north!

This is what 400k would get you in Leeds

http://www.rightmove.co.uk/property-for-sale/property-56677363.html

And for 400k in Barnsley

http://www.rightmove.co.uk/property-for-sale/property-55665676.html

chelseablue

pioneer22 wrote: »

It's that mental rapid price increase that prices people out. It can't be sustainable. Those 400-500k houses are going to come down eventually there's got to be a point where people won't be able to afford them.

Failing that come and move up north!

This is what 400k would get you in Leeds

http://www.rightmove.co.uk/property-for-sale/property-56677363.html

And for 400k in Barnsley

http://www.rightmove.co.uk/property-for-sale/property-55665676.html

Wow! I want sell my house and move north now

p00hsticks

pioneer22 wrote: »

Failing that come and move up north!

Sssshhhh ! Please don't encourage them ;-)