How has this house gone up so much?

Herzlos

Elliott.T123 said:

Use the savings (I am going to assume £100k for simplicity) an equity you have in your current flat and a mortgage to buy a house you are happy with.

You mentioned that you would have been happy with one that sold for £475k recently, use your savings and equity and you are looking at needed maybe £350k on a mortgage (possibly less if your savings are higher) I am sure you mentioned your income is around £50k if your wife earns £25-30k you could probably find a lender who will give you around £350k.

This option will not make you a millionaire but it will buy you a house you are happy with....

That's what I was thinking. Given that house prices aren't going to go down, so the best route to 'happiness' is to take the savings and equity and buy now. Given he apparently has £1600/month spare* then getting a mortgage high enough for a £500k house doesn't sound impossible.

*Though how anyone manages to have £1600/month spare on a salary of £50k is incredible. That's just under half of his take home. I'm on ~£75k and can't save a quarter of that.

Mark_Glasses

@Elliott.T123 from a very young age I've always said I'm going to be a millionaire. At school I was top of the class for every subject except PE but I hated every subject except PE. What kept me going was the understanding that being clever will make you rich. The fact my not as academically gifted classmate is now likely a millionaire shows that it's possible. 

How did you calculate I would need a mortgage of £350k?

You're right about my wife's salary but my salary is higher than £50k. It was lower than that when we bought our flat.

@Herzlos our household income is less than £100k. Our mortgage is just over £800 a month which is around the same as we paid in rent when we first moved to London and I was taking home just under £1200 a month at the time but still saved a bit each month. 

You're absolutely right that I could do with working to be more financially literate. This is why I'm posting here. I'm sick of just saving. In the last few years I've been saving like mad and constantly worrying about money. The person who sold this house has gone skiing and driving a Porsche and gained £440k which is a lot more than I've gained.

@EssexHebridean how much do you think an emergency fund should be?

MultiFuelBurner

Have you considered some therapy?

Talking all this through with a professional?

Herzlos

Mark_Glasses said:

@Elliott.T123 from a very young age I've always said I'm going to be a millionaire. At school I was top of the class for every subject except PE but I hated every subject except PE. What kept me going was the understanding that being clever will make you rich. The fact my not as academically gifted classmate is now likely a millionaire shows that it's possible.

Alas there's no correlation between being clever and being rich; lots of clever people die poor, like Tesla. The only sure-fire way to being a millionaire is to be born to rich parents or live long enough for assets to appreciate. I'm sorry you've wasted 41 years on that idea.

A lot of people are millionaires on paper due to house pricing, but that doesn't make them any happier or any more successful a person as someone with a net worth of £900k.

Mark_Glasses said:

@Herzlos our household income is less than £100k. Our mortgage is just over £800 a month which is around the same as we paid in rent when we first moved to London and I was taking home just under £1200 a month at the time but still saved a bit each month.

You shouldn't have any problems buying a £500k house then? I'm not sure what's stopping you.

Mark_Glasses said:

You're absolutely right that I could do with working to be more financially literate. This is why I'm posting here. I'm sick of just saving. In the last few years I've been saving like mad and constantly worrying about money. The person who sold this house has gone skiing and driving a Porsche and gained £440k which is a lot more than I've gained.

This is one of the things I think the school system fails terribly at. I'm about your age and left the education with a degree that got me a good job, understanding of quadratic equations, rock formations and what not but essentially no financial literacy and it's cost me a *fortune*.


Outside of fixed rate savings, which are usually fairly low yield, investing in all shapes is a gamble, however it's a fairly safe bet that stuff like stock and land/property will go up in value. How much is impossible to know, but on a long enough time scale all should have grown. For stock, there's additional risk that a particular business/industry may collapse so you want to mitigate losses there by using funds or spread stock across markets.

With houses, outside of temporary blips around crashes, which usually come with affordability squeezes, they'll all certainly go up. Using a house near me as an example, when built in the £1970's it cost about £30k. Last year it sold for £280k.

The best time to buy a house was 20 years ago. The 2nd best time to buy a house is now.

There's absolutely nothing you can do to emulate someone elses luck in making £400k on a property sale, without some kind of corruption or insider trading going on, such as buying a house knowing that your friends construction company will need to buy it from you in a couple of years time to build something.
Stop dwelling on it.

EssexHebridean

Emergency fund. Over on the DFW board we usually suggest something along the lines of:
For someone renting, fully furnished, no car or pets - £250
Someone renting furnished but owns a car - £500
Renting, unfurnished, regardless of car, OR a homeowner with no car - £1000
These days, if you are a homeowner with a car I’d suggest that £1500 should be the minimum to aim for. 

In fact as you’ve already made clear OP you will have plenty of savings to cover the level you need - again, another reason why in fact you may well have the financial privilege to change your position if you want to. 

Why not investigate what the equity in your existing home plus a mortgage you can afford (and would still be able to afford if rates increased a little) would get you in the way of a house? I can’t begin to tell you how glad I am that we decided to take a mortgage again in order to buy where we are now - owning everything from the foundations to the roof is one thing, knowing that nobody will come along and tell you they are about to do a load of work to the property and you will be paying for a share of it it a huge relief, but above all, for us having a garden is just the icing on the cake. Yes, it reduced our “ cash in the bank” by. Chunk, but we will be able to rebuild that when the new mortgage is cleared. Sure, we have less ready cash to spend each month (we’re still saving a chunk as well as paying the mortgage) but still - precisely zero regrets.  Is this house worth a million? Nope. Is it in the middle of London? No - but travelling in when needed is easy enough (we both do it several days a week) and frankly if it WAS in London, at this size, it probably WOULD be worth a million so we’ll out of our price range. Do I care that it’s not a “more expensive house”? Not in the slightest - it simply doesn’t matter. 

sheramber

A million when you were young will be worth a lot more now.

When you have one million you will want two million.

DAo you know a millionaire who does not still want to increase thier fortune?

How do you know your boss cannot afford a dearer house? He may be happy where he is and does not want to move. Not everybody hankers an expensive house.

Do you know how much he has in savings?  He may have a million stashed away somewhere. Not everybody wants to flash their money in public.

He may be saving for a specific purchase or event in the future.

What he chooses to do with his money is his choice and nobody else's.

Not everybody is as unhappy with their lot as you are.

Mark_Glasses

@MultiFuelBurner I don't think a professional therapist is an expert in housing or finances

@herzlos even if my parents were rich they wouldn't give me money. They've always said if you want it you work for it. I want to make sure we get it right when we buy a house, getting it wrong could be a costly mistake.

If you left education with no financial literacy how did you learn about it? I know it's cost me a fortune too. You think there's something dodgy going on with this house sale then? 

@EssexHebridean I'm surprised it's a little as £1.5k, I've not had that little in the bank since I was at university. We bought for £275k, put down a £75k deposit and borrowed £200k and I think we've got around £150k left to pay. That would be £125k equity. Our mortgage advisor in 2017 said we could borrow £300k but then he was dodgy so I don't know how true that is. We do have a higher income now though so it might be true. £300k + £125k = £425k so that falls short. We could buy a bigger flat for that price but not a house.

@sheramber my boss was living in a flat and wanted a house. He picked the area he lives in because that's where he could afford a house, he would have preferred to stay in the area he was previously in but it was too expensive. Once he moved in I could see what his house looked like from our Zoom calls so once the sold price was available I was able to identify the house from the pictures and it was less than £500k. It's quite possible that he makes over £100k a year, I'm 99.9% certain his household income is over £100k. 

MultiFuelBurner

Mark_Glasses said:

@MultiFuelBurner I don't think a professional therapist is an expert in housing or finances

@herzlos even if my parents were rich they wouldn't give me money. They've always said if you want it you work for it. I want to make sure we get it right when we buy a house, getting it wrong could be a costly mistake.

If you left education with no financial literacy how did you learn about it? I know it's cost me a fortune too. You think there's something dodgy going on with this house sale then? 

@EssexHebridean I'm surprised it's a little as £1.5k, I've not had that little in the bank since I was at university. We bought for £275k, put down a £75k deposit and borrowed £200k and I think we've got around £150k left to pay. That would be £125k equity. Our mortgage advisor in 2017 said we could borrow £300k but then he was dodgy so I don't know how true that is. We do have a higher income now though so it might be true. £300k + £125k = £425k so that falls short. We could buy a bigger flat for that price but not a house.

@sheramber my boss was living in a flat and wanted a house. He picked the area he lives in because that's where he could afford a house, he would have preferred to stay in the area he was previously in but it was too expensive. Once he moved in I could see what his house looked like from our Zoom calls so once the sold price was available I was able to identify the house from the pictures and it was less than £500k. It's quite possible that he makes over £100k a year, I'm 99.9% certain his household income is over £100k. 

No but they can help you see past why you feel the way you do about your life versus others.

Mark_Glasses

@MultiFuelBurner I've never gone a day in my adult life without worrying about money.

RelievedSheff

Mark_Glasses said:

@MultiFuelBurner I've never gone a day in my adult life without worrying about money.

So get some help from the professionals. That is not normal behaviour.