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Property ladder - how does it work?
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This is just something I was thinking about the other night - I was wondering how the 'property ladder' works.
I know that people usually start off buying whatever house they can afford and then maybe aim to move up to a bigger or more expensive house a few years down the line. Is it simply the case thatduring the time people are in their first property their income increases and then in time they are able to afford something more expensive?
The reason I ask is that in my case, I bought my first house about 6 months ago, its comfortably big enough for my fiancee and I and certainly one child (maybe two at a push), and we certainly won't be looking to move for at least the next 5-7 years if not longer. The mortgage is affordable with money left over for saving and as long as we both remain in our jobs we will have no problems paying the mortgage.
However, at some point I would like to trade up to get a driveway, garage, extra bedroom maybe but even though we are able to save, I can't see how we would ever be at a point where we could move up to a 'better' house which might be approx £50k more expensive than the one we're in now (at today's prices). Even more so if we do have children and my fiancee takes time off work etc.
Just wondering what peoples views are on this?
I know that people usually start off buying whatever house they can afford and then maybe aim to move up to a bigger or more expensive house a few years down the line. Is it simply the case thatduring the time people are in their first property their income increases and then in time they are able to afford something more expensive?
The reason I ask is that in my case, I bought my first house about 6 months ago, its comfortably big enough for my fiancee and I and certainly one child (maybe two at a push), and we certainly won't be looking to move for at least the next 5-7 years if not longer. The mortgage is affordable with money left over for saving and as long as we both remain in our jobs we will have no problems paying the mortgage.
However, at some point I would like to trade up to get a driveway, garage, extra bedroom maybe but even though we are able to save, I can't see how we would ever be at a point where we could move up to a 'better' house which might be approx £50k more expensive than the one we're in now (at today's prices). Even more so if we do have children and my fiancee takes time off work etc.
Just wondering what peoples views are on this?
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Replies
If your income doesn't rise then you won't be able to step up the ladder..
also may buy a bigger house with my partner in future. otherwise it is a case of saving or borrowing more/for longer (i don't think this will be possible now or int he future)
If you also get promotions or other pay rises then your income rises even faster and so you can get something even bigger and save even more money while you wait.
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Then you should have savings+capital+larger mortgage so you can buy house 2.
Personally, even without this recession, i don't think property prices could have gone that much higher. The level of peoples wages are not going to up enough in comparison unless mortgage lenders would have given something like 10x your wage.
unfortunately, people who have bought more recently won't see their house price increase ten fold. unless the minimum wage goes up to £50 an hour
second house 2005, 147k needed 20k work, 35% deposit, Wage 25k sold July 2008 182k
Third house Feb 2009, 205k, 52% deposit, 35k wage
My ladder experience - which of course has happened through the HPC