Getting on the property ladder in London

Austin_Allegro_2

I earn £27,000 a year and barring a sudden inheritance from an eccentric aunt, or me marrying into money, or marrying at all (all three scenarios about as likely as Elvis being found alive on the Moon) the situation doesn't look good.

Currently I rent a reasonably decent little garden flat in a nice part of London, for £628pcm inclusive. People react in horror when they hear how much I pay in rent, but what are the alternatives - commuting four hours a day to a Barret studio in Northamptonshire, or buying a former crack den council flat in a part of London where even the policemen are scared to go.

Any suggestions/success stories etc?
Thanks.

vansboy

How about doing what Kirsty & Phil, had a girl do in one of their progs, a few weeks back?

She was in similar situation as you, so she bought, where she could afford - Lincoln IIRC & let it out, so as to, fingers crossed, build up a 'profit' element, to use in 5 years time, as a deposit on a place to live in, in London.

At least you'll have SOMETHING, in bricks n mortar!!

VB

Anya

Have you looked into shared-ownership properties? We bought a 50% share of a brand new house about 6 years ago as we didn't earn enough to be able to buy even a flat above a shop. We found out about this shared ownership scheme where you get a mortgage for a percentage of a property, and then pay rent on the other half. When you can afford to increase your mortgage - or your unknown aunt dies and leaves you a fortune!! You can "staircase" and buy another share until eventually you own the whole house. Even with a 50% share, you have all the ownership rights so you can decorate as you please etc. This was the only way we could at the time get on the property ladder. Hope that helps.

foot_loose

Alright M8

1: do a selt cert at northent rock.  Bassically this means you tell them you are earning 35000 a year (you don't need to prove it because the loan is secured on the property you want to buy)  

2: they will proberly lend you 140,000

3: take the morgage out over the longest period of time possible for eg Nationwide do a 35 year mortgage.

4: make sure you take the mortgage out on intrest only


if you do all this your repayments each month will be approx 500 pounds encluding buildings insurance.

in 35 years time your property would at least be worth around 500,000 and you would be earning at least 100,000 a year (going by inflation)

so you could sell the property give the bank back there 140,000 and you would of made 360,000 profit

i will give you an eg my mum bought a three bed semi  in 1984 for 36,000 it is now worth 250,000 and she earns around 30,000 a year
do you see what im getting at

deemy2004

Self certifying a mortgage beyond your means is very high risk !

foot_loose

yeh i know thats why i said take the mortgage out for the longest term at intrest only to lower the monthly payments ;D

mkdoodle

yeh i know thats why i said take the mortgage out for the longest term at intrest only to lower the monthly payments ;D

LOL - Question to Martin - Is there a "Bankrupts" board?

filigree_2

Mortgage brokers aren't stupid. My soon to be Ex is a mortgage underwriter for a living and deals with self cert and other out of the ordinary mortgage applications all the time. Some dodgy applications do get through, but in reality most get picked up during the application procedure and are refused.

Borrowing up to the hilt when the market is at an all time high is a surefire recipe for negative equity. Anyone trying this route has to be 100% certain that:

They have rock solid job security
They aren't likely to have a drastic change in lifestyle, like have a baby
They don't plan to move until the market recovers and restores their equity

In the very long term the risk would pay off, but you would need to be very, very sure that you could afford to ride out any short term financial crisis.

You could try sitting tight and pray that the housing market crashes soon, then you can scoop up a cheap repossession property at a bargain price. A few people in the early 90's made out like bandits by doing this *smug grin*

Austin_Allegro_2

Anya, thanks, do you have any more info on shared ownership? Is this the same as part rent part buy housing association properties - I looked into that, but was bottom of the waiting list due to being single, in work and not having any children.

Milky_Mocha

I am in favour of getting a "brick & mortar" in some distant land and renting it out so you at least make an investment and then sell it in say two years time. That way the appreciation in value can be added to your hopefully by then increased income (u know job promotion and stuff) to enable you buy a studio flat in a decent part of London. I believe this would work because London property prices are now growing at a rate slower than outside of London. Property prices are not going to crash no matter what people say or have been saying for the past goodness knows number of years.

Hey, here's a hint: buy in Folkestone or Ashford, Kent. The first half of the high speed railway has recently been launched and by end 2007 the whole line would be finished. This would bring travelling time from these areas to London to 45 minutes (down from 1hr 20mins currently). Hence property prices there would shoot up earning you a tidy profit (wink, wink)

Pal

I think that buying to let out while you rent on another part of the country is a stupid idea for most people. You are inheriting all the risks of a BTL business, you live no-where near the house being let out, you get none of the security benefits of ownership, in the hope that the value of the property rises at some point. Given the current market I can see bankrupcy looming!

Location Location Location ought to be ashamed of themselves for that programme.