Has the objective of buying a house changed?

lena_halo

In my post I just meant I bought my share for £50k, sold it for £80k so I have £30k equity to put down on the new house. I just think of it (the ladder) as equity on the current house is the deposit on the new house, whether that!!!8217;s right or wrong. I think as long as you purchase what you can afford then it!!!8217;s all good

lena_halo

Maybe I!!!8217;m just not in the upper rungs yet and I will understand more when I get there

Hoploz

Years ago people bought a home for security and so that they could make it just as they wanted it. My parents' generation buying in the 1950's - 1970's were able to afford a home for life, big enough to have a family and stay in.

More recently following massive house inflation many people can't afford to buy a house big enough for a family to grow up in. (I speak from Surrey experience, though I hear it said all over the place.) Therefore we expect we will have to go up the ladder. I bought a flat on my own, then moved up to the next rung when I met my husband and we had two salaries.

As you go on you are often able to borrow more. FTBs have no history of making payments and are penalised with higher rates. Sometimes lack of employment history also. Later in life your income increases, you make a bit on one house to put towards the next. You've saved a bit. You are a better risk and can get better interest rates. You've paid off a chunk after all those years of repayments. You are likely to have a lower loan-to-value ratio.

In the end if you've got it right you won't need to be paying for a roof over your head past retirement. And if you've gone high enough up the ladder you might downsize when your children grow up. That's when you will see your 'profit.'

Crashy_Time

lena_halo wrote: »

In my post I just meant I bought my share for £50k, sold it for £80k so I have £30k equity to put down on the new house. I just think of it (the ladder) as equity on the current house is the deposit on the new house, whether that!!!8217;s right or wrong. I think as long as you purchase what you can afford then it!!!8217;s all good

You have to consider liquidity when planning to use "profit" like this.

SG27

Hoploz wrote: »

Years ago people bought a home for security and so that they could make it just as they wanted it. My parents' generation buying in the 1950's - 1970's were able to afford a home for life, big enough to have a family and stay in.

More recently following massive house inflation many people can't afford to buy a house big enough for a family to grow up in. (I speak from Surrey experience, though I hear it said all over the place.) Therefore we expect we will have to go up the ladder. I bought a flat on my own, then moved up to the next rung when I met my husband and we had two salaries.

As you go on you are often able to borrow more. FTBs have no history of making payments and are penalised with higher rates. Sometimes lack of employment history also. Later in life your income increases, you make a bit on one house to put towards the next. You've saved a bit. You are a better risk and can get better interest rates. You've paid off a chunk after all those years of repayments. You are likely to have a lower loan-to-value ratio.
'

This isn'treally true. Most FTBs are in their late 20s or 30s. They have had 10+ years of making credit card/loan payments to get a good payment history.

Im moving, my loan to value is increasing as the new house is more expensive. My wages have increased slightly since buying but I also have a child now and my wife is part time so overall we cant borrow as much as before. We are increasing our borrowing by pushing our term from 19 years left all the way back to 35!! :eek: amd buying a run down house that we can refurb over a number of years as the money is available. Its tough...

Lauralou79

To be honest we just wanted a home. We are in our late 30s so prob skipped a rung on the ladder. However it's intended to be our home for a long time.

We didn't get anywhere near our top budget and intend to pay the mortgage off quicker than the 25 years. We both don't like owing money but needs must! It's 3 bed and no kids so plenty big enough for us with room for guests as needed.

I know it's an investment and we are in a good area and prices are still rising and that's nice to know. But we are more keen to live and enjoy life than keep moving to bigger and more expensive houses and mortgages(unless we came into masses of cash, then maybe)

harrys_dad

Rising house prices make the rungs on "the ladder" further apart and harder to climb. Falling house prices bring them closer together and make them easier to climb. When I moved from my last house (after 32 years) to my current one, the notional selling price had moved (2006 - 2009) from a high of £170000 a few years previously to an actual price of £130000. The notional buying price of my current house had fallen from £260000 to an actual buying price of £190000. The "price to change" for me had reduced from £90000 to £60000 and I have £30000 more cash than I would have had otherwise.

Yes I have "less equity" in my current house than otherwise, but I am going to live here until i die so what does it matter? I am enjoying spending the extra £30000

Caraway90

The objectives for me were a lovely place to live, our own space, independence, the next step in our relationship and responsibilities - I don't see our house as a money making machine.

TamsinC

We bought our first house in our early 20s with my partner, our reasons were I needed a place to live near my work, and my father advised us that money was always safe in bricks so we bought a smallish but big enough for guests terrace. It was what we could comfortably afford at the time and was never intended as a 'for life' house. We lost 9K on a 45K purchase price in 1998.

We sold eventually and as we were then living in MOD quarters didn't buy again for a while, then we bought a 1 bed flat purely for investment purposes (we could see house prices rising quickly and wanted to keep one foot on the ladder). Sold that one when they began throwing up new build flats nearby. Broke even on that one really but at least someone else paid the mortgage for 2 years and we over paid significantly on it so created our first 'equity', really just a savings plan. (except I would never have saved that if we didn't own property)

Waited a few years again and then bought what was meant to be a house for us to retire into. Again to keep one foot in the market and rented out until we could get in it. So sort of semi investment/semi home. A few years later plans changed. MIL needed help but lived in a different part of the country so we sold. This one was a bit better and we 'gained' 40K in price again some of mortgage paid by others and overpaying built up a bigger 'equity/savings plan'.

Now buying, finally, what we expect to be our forever home, still near enough to MIL to help out, completely opposite side of the country to where we expected to be. Whether there is going to be equity quickly built up in the house we don't care, we want to make sure the house is easily saleable for if either a) we decided to downsize in old age (in 30+years) or we die and the kids need to sell it (we don't want that to be hassle for them). The mortgage will be paid off by then and the house will be their inheritance.

Each purchase has had a different reason behind it. The main objective though is having a place to live. Or for some one else having a place to live. Our first house lost us a lot of money - circumstances conspired against us in that the local USAF base closed and all their quarters were in the village we were in and they were selling the houses at 2/3rds market value - which of course devalued the whole village. Our house went from 45K to 27K just as we were needing to sell (getting married and moving to the other end of the country for hubbies work). We couldn't sell at a price we could afford to pay off the negative equity so it was rented out. The slump came and it took years for it to climb up to 36K when we finally sold it as hubby got some inheritance and we could afford to pay off the negative equity. Of course only a year later there was a price boom and it is now worth 135K. Money is no longer necessarily safe in bricks and mortar. I suppose what I am trying to say is be aware "about the resaleablity or the increase in value" cos if it drops you could be stuck there for years and not moving up the ladder at all.

cloo

It's different at different stages I think. Yes, attitudes have changed, of course, as it has become so much more expensive, to the point where downsizing might be able to fund your retirement in some cases.


My parents bought the 5-bed detatched house I grew up in for about 1.3 times my dad's income. We bought a 4-bed terraced house for 8 times our combined income! That's going to make a differencein attitudes.


I thought a bit about profitability and ease of resale with my first two places, we were less bothered with our current, which is our forever (well, until at least retirement) home, although it still should do well especially given improvements we have made and are likely to make in future.