£194,400 minimum wage

davomcdave

Cakeguts wrote: »

Where do you get the deposit of £34,600 from it seems too high to me. In most of the North of England someone earning minimum wage could buy a house costing less than £75,000. The 10% deposit would only be about £7,500. That should be easy.

The post I was replying to assumed a deposit of 20% which is £34,600.

Someone on the minimum wage working 50 hours a week for 52 weeks of the year will net £15,127.

Assuming that they spend £40 a week on food, never go out, never buy clothes, cut their own hair, never take a vacation, runs a small banger for £1500 a year, doesn't drink or smoke, has a 'feature phone' which costs £10/month, no internet, no rent, no utilities then they're left with £11,427 a year.

They could come up with the deposit in 8 months in this ridiculous and wholly fictitious example.

If we then go to the Halifax website we can see how much our hard working, abstemious friend can borrow. She has a income of £15,127 a year as we've already established and outgoings of £350 so she can borrow....£15,549.00. Oh dear.

Okay, let's make an even more heroic assumption and make her outgoings nothing at all. She spends nothing on anything ever. Now she's okay to borrow her £67,500, right? Nope. She can borrow £65,000.

So even if you put in some truly stupid assumptions about someone, they can't buy a house on the minimum wage.

ukcarper

Windofchange wrote: »

Ok. Great answer.

There is a world of difference between saying something will contribute to the figures and your stance of home ownership is falling largely because of immigration. It is clearly far more complex than that, but you are black and white as ever.

Bottom line is home ownership is in decline. Not all immigrants are poor, and actually a large number of them earn very good salaries.

The majority on here seem to want to blame Bulgarians, iPhones, pub dinners, new cars, coffee, tattoos...Yup, if those university leavers hadn't brought an iPhone and got a dolphin tattoo then they'd be sitting counting their money in a £550k flat in Hackney.

Did the swinging 60's and spending your weekly pay cheque on marajuana and an orgie at the weekend stop the boomers becoming home owners? The ONS data speaks volumes - over 65, home ownership growing. The further under 65 you get, dropping off a cliff.

Put whatever spin on it you want.

You idea of the 60s is not reality and people in the sixties did save more at a younger age in fact they started work earlier got married earlier the partying was over for most people by the time they were in thier 20s. The other thing is single people very rarely bought property.

ukcarper

davomcdave wrote: »

So take home pay is £24,215. Assumed deposit is £34,600 or almost 1.5x annual income.

So if she saves 10% of her income, or 3x the average savings rate, she takes 15 years to get together a deposit (which would also mean she saves nothing towards a pension or rainy day money). If she manages to save 20%, a pretty heroic 6x the average UK savings rate, she can buy in 7.5 years time.

Even saving half her income means 3 years until she buys.

This is where your assumptions fall down.

I take home not much more than half that and survive quite comfortably and could make cuts if I had to. I don't pay rent as I own my house but my council tax is over £200 a month and thier are 2 of us. If I was taking home £24k I could easily save £1k a month.

lisyloo

ukcarper wrote: »

I take home not much more than half that and survive quite comfortably and could make cuts if I had to. I don't pay rent as I own my house but my council tax is over £200 a month and thier are 2 of us. If I was taking home £24k I could easily save £1k a month.

So if you were paying rent and a student loan and maybe a pension, then you wouldn't have any savings right? And you'd be living quite frugally presumably?

davomcdave

ukcarper wrote: »

I take home not much more than half that and survive quite comfortably and could make cuts if I had to. I don't pay rent as I own my house but my council tax is over £200 a month and thier are 2 of us. If I was taking home £24k I could easily save £1k a month.

So despite living rent free you could only come up with the deposit in 3 years.

davomcdave

lisyloo wrote: »

So if you were paying rent and a student loan and maybe a pension, then you wouldn't have any savings right? And you'd be living quite frugally presumably?

Plus wouldn't have the borrowing power to get the mortgage.

ukcarper

davomcdave wrote: »

Plus wouldn't have the borrowing power to get the mortgage.

I accept the argument that in many areas people do not earn enough to get a large enough mortgage but I do not accept the fact that if you earn enough you can't save. If you earn enough there is no reason why you can't save.

ukcarper

davomcdave wrote: »

So despite living rent free you could only come up with the deposit in 3 years.

You don't need a £36k deposit. If you earn £30k and can find a property for £130k not than difficult in many areas you need a £13k deposit. Where I am you can get a room for £400 a month including bills, my combined council tax and services are about £350.

ukcarper

lisyloo wrote: »

So if you were paying rent and a student loan and maybe a pension, then you wouldn't have any savings right? And you'd be living quite frugally presumably?

No renting a room with services included is not far off my combined council tax and services.

Depends what you call frugally I don't drink, but am quite happy to live as I do and if I was saving for a deposit I don't see living frugally as a problem.

davomcdave

ukcarper wrote: »

I accept the argument that in many areas people do not earn enough to get a large enough mortgage but I do not accept the fact that if you earn enough you can't save. If you earn enough there is no reason why you can't save.

Of course people can, and should, save. Getting a deposit together of 1.5 years' income when earning the minimum wage is a huge ask.