How has this house gone up so much?

EssexHebridean

You can buy a house within easy travelling distance of London for far less than £400k - trust me, I know. Well, either that or the place I'm intending to travel back to London from after work this evening doesn't really exist, and as I didn't get wet while sitting in it on Saturday, I'm inclined to think that probably isn't the case. 

We're 20 miles out as the crow flies. You can buy a house in the town I live in for 250k for a 2 bed. 

If you wanted to buy a house - if that was actually the important thing, then you could buy a house. 

Herzlos

Mark_Glasses said:
If you left education with no financial literacy how did you learn about it?

I've mostly been learning from my mistakes. Hindsight is great and all that.

Mark_Glasses said:

You think there's something dodgy going on with this house sale then?

Absolutely not. I don't know the house or the context so I can't comment, and whilst it's gained a lot of value it's unlikely to be anything dodgy.

Herzlos

Mark_Glasses said:

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

It's normal for people in poverty to worry about money, but it's definitely not normal for someone who is financially stable to worry about money every day.

What exactly are you worried about?

Elliott.T123

Mark_Glasses said:

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.

You said there was a house that sold for £475k you would have been interested in.

You said you have over £85k in savings as you have to spread the money over multiple accounts
I rounded numbers up to make them easier, you may have £85,001 in savings but I bumped it to £100k
You also mentioned you own your flat, I made a stab in the dark that you have £25k equity in that currently

£475k - £100k - £25k = £350k

Very rough and dirty calculation.

Also, sorry on the £50k this thread has been ongoing a long time and I thought I remembered that figure being mentioned somewhere a few weeks back.

Well if you are over £50k and your wife is vaguely around £30k You should be able to borrow close to (or above depending how far above £50k) £400k as a mortgage. Add in your savings and equity and you are probably looking at £500K +



Mark, it has been mentioned by just about everyone here in one form or another some in a nice way some blunt.....

What you are doing is not healthy and not normal. You need to forget about comparing your situation to friends and colleagues. There is no magic want for knowing which house is going to go up in value. Property is not usually a way to fast millions. At your point in life there are probably 5 ways to become a millionaire:

1. Win the lottery or similar
2. Inherit from family
3. Be involved in some accident that you can receive huge compo (if you receive that much would life be worth living)
4. Start your own business / invent something
5. Rob a bank or similar

Realistically the only option there is option 4 so if you are that determined to become a millionaire rather than focusing on property think about that option.

95% of people look at property as a house/flat/caravan/insert other to live in and call home. They buy based on what they can afford vs what they want to live in. They do not buy as in investment (outside of buy to let). So move on in your way of thinking, look at buying a house that you want to live in and forget the finances!

If you don't do that you will be miserable for the rest of your life and no one on these boards or anywhere else will ever change that!

Mark_Glasses

@RelievedSheff is it that unusual? I've heard Peter Andre say he worries about money every day and I'm sure he's a millionaire

@EssexHebridean I'm guessing from your name that you live in Essex. A friend bought a house in Essex and from our conversations what would put me off is he said his evenings are non-existent because he gets back so late and he needs a car. It's important for me to do things in the evening because my job in the daytime is so boring. When I moved to London I accepted I'd be paying more money for inferior accommodation. At the back of my mind though I saw it as a sacrifice and something better would come along once I'm rolling in the money.

@Herzlos I know I've made lots of mistakes but all I've learned is what not to do rather than what to do. How do you learn what to do?

The reason I'm worried is that I also know what it's like to be made redundant and have an income of zero. I work in an industry I hate with a passion, job security doesn't exist and I'm very much an outsider. I've not successfully been able to escape to another industry that's more aligned with my interests. Many colleagues have said I'm really good at my job but that hasn't translated into my climbing the ladder. I've found my work incredibly easy from day one but am told by 99% of people who interview me that I'm not capable of doing my job. I need to find sources of income outside of work otherwise I probably will end up in poverty.

@Elliott.T123 you're right that we do have over £100k in our savings. We paid £275k for our flat in 2017, £75k deposit so borrowed £200k and we have around £150k left to pay so I calculate that to be £125k equity. Is that correct?

My salary isn't that far above £50k, it's £68.5k. How does that affect your calculation?

I've always seen myself as a businessman but have never had the opportunity to become one. I work in an industry that I've never understood or seen the point of and have no business ideas. I do have business ideas for other industries but can't see how I'd be taken seriously with no industry experience. I really want to do option 4 but don't know where to start.

EssexHebridean

I’m a Londoner but now live *just* in Essex. I work in London - if I leave work at 5pm I’m generally home a good bit before 6. A car certainly makes it easier - and cheaper - but it could be done easily enough by public transport if required. There are of course the bits of the county which are even on underground lines as well - which makes life even simpler. If we lived in Romford for example, we probably wouldn’t run a car each any more as the Elizabeth Line makes getting into London so fast and easy. The district line has a similar effect in Dagenham and areas around there. 

Lots of advantages to living just outside the M25 though - it’s fab having nice countryside on our doorstep! 

Herzlos

Mark_Glasses said:

@RelievedSheff is it that unusual? I've heard Peter Andre say he worries about money every day and I'm sure he's a millionaire

@EssexHebridean I'm guessing from your name that you live in Essex. A friend bought a house in Essex and from our conversations what would put me off is he said his evenings are non-existent because he gets back so late and he needs a car. It's important for me to do things in the evening because my job in the daytime is so boring. When I moved to London I accepted I'd be paying more money for inferior accommodation. At the back of my mind though I saw it as a sacrifice and something better would come along once I'm rolling in the money.

@Herzlos I know I've made lots of mistakes but all I've learned is what not to do rather than what to do. How do you learn what to do?

I got a lot from reading on here and learning from the mistakes of others too, and generally just reading guides on what it is I'm trying to figure out at the moment; mortgages, house buying or whatever.

Mark_Glasses said:

The reason I'm worried is that I also know what it's like to be made redundant and have an income of zero. I work in an industry I hate with a passion, job security doesn't exist and I'm very much an outsider. I've not successfully been able to escape to another industry that's more aligned with my interests. Many colleagues have said I'm really good at my job but that hasn't translated into my climbing the ladder. I've found my work incredibly easy from day one but am told by 99% of people who interview me that I'm not capable of doing my job. I need to find sources of income outside of work otherwise I probably will end up in poverty.

If you've got a few months worth of salary in savings then you don't need to worry about losing your job.

Unfortunately, being good at your job usually just means getting more work to do rather than getting promoted. Moving up in companies is more about internal politics and giving the correct impression rather than any actual competence.

It certainly sounds like the job is miserable, so I'd stick with focusing efforts on improving that; whether it's the same job in a better company, or an equivalent job in another field.  You presumably need to have had some qualifications to get a £68.5k job, so that should open you to other things albeit may not with a salary that high.

The median wage for your age group is £40k, so you're well ahead of 'average'. Just your wage puts you in the top 8% of households in the country. Assuming a household total of £90k puts you in the top 2%.

With a salary like that, savings, and £125k equity you're not going to end up in what most of us would view as poverty. That £125k equity would buy you a small house outright up North.

Mark_Glasses said:
My salary isn't that far above £50k, it's £68.5k. How does that affect your calculation?

It's 37% higher, that's a huge margin.

Elliott.T123

Herzlos said:

The median wage for your age group is £40k, so you're well ahead of 'average'. Just your wage puts you in the top 8% of households in the country. Assuming a household total of £90k puts you in the top 2%.

With a salary like that, savings, and £125k equity you're not going to end up in what most of us would view as poverty. That £125k equity would buy you a small house outright up North.

Mark_Glasses said:
My salary isn't that far above £50k, it's £68.5k. How does that affect your calculation?

It's 37% higher, that's a huge margin.

Mark, I think the above comments are a perfect example of needing a little more perspective on things....

As Herzlos says your household income puts you in the top few % of people in the country, are there people better off, yes of course. Unless your name is Elon Musk then that's the same for everyone in the world but there are literally millions of people in this country worse off than you.

You say its not far above when actually its over 1/3 higher. That is a big jump, not much would be £51-53k or so. 

Mark_Glasses said:

@Elliott.T123 you're right that we do have over £100k in our savings. We paid £275k for our flat in 2017, £75k deposit so borrowed £200k and we have around £150k left to pay so I calculate that to be £125k equity. Is that correct?

My salary isn't that far above £50k, it's £68.5k. How does that affect your calculation?

I've always seen myself as a businessman but have never had the opportunity to become one. I work in an industry that I've never understood or seen the point of and have no business ideas. I do have business ideas for other industries but can't see how I'd be taken seriously with no industry experience. I really want to do option 4 but don't know where to start.

I ran those figures through NatWest's calculator for you (only because I find their one easy to use). Assuming your wife is on around 25-30k then Natwest would lend you roughly £450k plus your savings plus your equity, you are looking at £675k as a budget for a purchase. Seeing as you said there was something that sold for £475k you would have liked why not budget £600k max, give yourself a cushion and go wild!

As other people have said, if you don't need to stay in C. London then look at some of the surrounding areas, Essex could get you a lovely place with an easy commute for that money and a much slower and less stressful pace of life.

Mark_Glasses

@EssexHebridean Romford and Dagenham are in London aren't they? Certainly inside the M25 and you have the London Borough of Barking and Dagenham. How is your commute so quick? It can take me that long if I'm waiting long enough for tubes to turn up. I would imagine you'd still be looking at £500k+ for houses in Romford or Dagenham.

@Herzlos do you have any resources you've found useful? 

I am qualified to do my occupation which exists in every industry more or less. I don't mind my occupation but I really hate my industry. I've been trying to change industries for years but with no success. 

I find it hard to believe we're in the top 2%. I feel like most people make more money than me. I did have one friend reveal he only makes £35k a year and I did tell him I don't make much more than that because that's how I felt. 

I don't think you can buy a house up North for £125k. For example one of my school friends never moved out of Leeds and he paid £359,950 for his house. He thinks I must be rich with my job in London yet he paid more for his property than I did.

@Elliott.T123 It doesn't feel much higher. I was thinking it's closer to £50k than it is to £100k. 

I don't live in Central London, it would cost over £1million to live there. I know someone who does live in Central London and they paid £455k for their one bed flat. He thinks my area of London would be too far out to live.

How accurate are those calculators? I know you need to provide bank statements and I think the reason for this is so they can review your spending habits and reduce the amount they're willing to lend you. If I could buy somewhere for £535k then at least I'd know it's possible for it to be worth £975k in years to come.

Herzlos

Mark_Glasses said:

@Herzlos do you have any resources you've found useful? 

The Debt-Free and investing forums on here have been pretty useful.

Mark_Glasses said:

I find it hard to believe we're in the top 2%. I feel like most people make more money than me. I did have one friend reveal he only makes £35k a year and I did tell him I don't make much more than that because that's how I felt.

Ditto, but we are. I think it's because the average is skewed so heavily by celebrities and footballers.

Your £70k sounds like nothing compared to someone who gets £3m. But then someone on the median wage of £32k sounds like nothing compared to your £70k.

Taking those 3 figures, the median salary is £70k but the average (mean) is £1,000,034. So whilst you're far below *average*, that average figure is completely meaningless.

Take a quick guess at home many people in your office earn more than you - your manager, directors, senior staff, etc. Then take a guess at home many people you encounter in a working day that earn less than you - the reception staff, cleaners, security, bus drivers, baristas, shop staff, call centre staff, etc.

You'll almost certainly find at least 10x more people earning a lot less than you, than those above you. That'd put you in the top 10%. The ratio is actually closer to 50:1 which puts you in the top 2%.

Most people are earning a lot less than you think, and I'm genuinely baffled how many of them manage but they are probably a lot more disciplined with money than I am. In the same vane I have no idea how anyone can afford to live in London.

Wealth is also skewed a bit by property values. Take a couple of teachers in their 60's. They'll be on a fairly modest £30-40k each, but they probably bought a house in the 1980's and paid it off in by the 2000's. That house could easily be worth a million now despite them earning less than you do, so it looks like you're doing badly in comparison but the reality is that they are 20 years ahead of you and got lucky with a few huge booms. Hence they are called boomers.