Getting on the ladder

tracy76

meanmachine wrote:

Parental guarantor mortgages sound the way forward. But making financial decisions - which is what buying a property is, I'm afraid to say - based on what may or may not happen in the future - is highly risky.

Maybe I should go into the bank tomorrow and ask for a £1m mortgage based on my future intentions to win the lottery!!!!

Banking on mum and dad snuffing it at the right time is again a risk that no one should have to make.

Nobody knows what the future holds - unless you are mystic meg (maybe that could be my 'very stable' job! and in which case I can predict you have no hope of winning the lotto! :T

I am not 'banking on mum and dad snuffing it' as you put it. I am lucky enough to have a family that thinks about my future and are willing to help me what ever way they can. So as you have pointed out it is not the way you would do it but thats your personal choice.
At the end of the day everybody needs some where to live and as financial choices go, I see it as a better one than throwing away money on rent every month.

meanmachine_2

Good for you and your family.

But who'll bail you both out of neg equity should the market crash?

I'm not saying it's an entirely bad idea. Borrowing money off your parents is better than a bank, but it does expose you both to risks.

All I'm saying is that you should take on board both the positives and the negatives. And as a priced-out FTBer myself, I can entirely empathise with your frustrations.

wisbech_lad

GreenB wrote:

I was only going on some old posts i was reading when there was discussion between you and a DougK.............

Every persons assessment of affordable is different I suppose. To me 40% of my income makes house buying affordable.

Seriously? You take 40% of income on housing as a benchmark?

Wow. Trying to get my head around this:

Tax: 30-35% (approx)
Housing 40%

That leaves you 25-30% for everything else? Including savings/utilities/transport/vacations?

Either the 25-30% is very big (in which case tax take is over 40% or so) or you are making some serious sacrifices.

I spend 16% (well, actually I don't - it is more tax efficient for the firm I work for to pay my rent on my behalf, but if it were added in my income it would be about 16% of total)

Woby_Tide

might be 40% of net income rather than gross

meanmachine_2

40% of net is manageable, and gives you a small buffer should int rates rise. But if they were to double then you're pretty much screwed, or living off credit cards.

I guess, as a FTBer it isn't too horrendous. But with low inflation, that 40% burden ain't going to diminish that quickly.

GreenB_2

yes Net amount. (i.e after tax and pension etc)

The risk of rate rises goes away if you get a long term fixed rate.

As I say it is very individual what is affordable. I don't do new cars or expensive holidays (i.e those over about £300 -£400) so the money some people spend on those I put toward the house. Don't do SKY (£40+ a month is a rip off!) or lots of nights out (maybe once a month and then probably don't spend over £40). Volunteer for various things to keep my time occupied and at no cost.

I know several people who spend 50% of there take home pay on rent as they are on low incomes. If they can manage at 50% there is no problem managing at 40% at a higher income. It's all relative to the salry you earn.

meanmachine_2

GreenB wrote:

I know several people who spend 50% of there take home pay on rent as they are on low incomes. If they can manage at 50% there is no problem managing at 40% at a higher income. It's all relative to the salry you earn.

And how, pray tell, can someone on low income afford a property in the first place? Let's assume they're on 15K - below the average, but not bad in some places away from London.

You would need to lie to buy, say borrowing over 6 times your salary - £100K for a tiny one bed flat. Repayments are £600 a month, which is 60% of net. If interest rates were to go up by just 1%, then you're on tinned baked beans for the foreseeable future.

GreenB_2

The key is you don't buy as an individual do you? - if you are buying as a couple this is then £300 a month or 30% so affordable. So low income people can buy too. Actually it would be interesting to see how many more "single" people buy now compared to say 15 or 20 years ago. The traditional "family" is dead.

The difference is now most people work full-time (couples that is) - 20 years ago only 1 partner worked full time.

Demand for houses is greater (as traditionally , people were happy renting) and also there are lots of people with two homes . I can name several people who have flats in london or outskirts for staying in during the week (hence taking up the FTB's houses) and then they travel "home" for the weekend.

Difference is travel is far easier now with cars the norm.

John_M_Business

GreenB wrote:

The traditional "family" is dead.

Steady on, Greeny, although less people are in the traditional 'nuclear' family, there are many that are still alive and kicking and functioning perfectly well thankyouverymuch. My wife, my brothers' wife and my sister are all 'full time mums'... and doing a great job of it too.

The death of such families is only prophesied by those that either wish it to be the case, or are caught up in non-'nuclear' environments.

Pennywise

GreenB wrote:

The traditional "family" is dead.

Is it really?

Well, we must be a mightly weird family as myself and spouse are married, brother and SIL are married, sister and BIL are married, parents on both sides are married. In actual fact, everyone in my immediate family is traditionally married with children and we don't have any ex's, children from different partners, single parents, or anything else which could be construed to be "the modern way". Come to think of it, most of our neighbours are "traditionally married with children" and most of our more distant relatives are as well.

We do have a divorcee living next door with her two children, and a distant cousin is a single mother.

In my opinion and experience, the "traditional family" is far from dead.