Mortgage payments of less than £1000 a month are a bit of a thing of the past

[Chillisnaps]

Was chatting with someone I know earlier who bought their 4 bed house in late 2020, and they are paying back £750 a month. We are currently buying a much smaller, cheaper property yet we will be paying a few hundred a month more.

If you bought your house decades ago, low house prices mean you’ve been lucky enough since to gain significant equity.

If you bought 3-5 years ago, although house prices were rising your mortgage rate was likely to be incredibly low.

It’s a catch 22 now.

On a 200k property over 35 years you will be paying around the region of £1000 a month.

In most parts of the country, 200k doesn’t buy you a lot. In parts of the south it would get you nothing. Up north it might buy you a 2 bed, but then you’re paying £1000 a month (minimum!) for a small flat or house not suitable for growing families. It’s unlikely to gain in equity at the rate properties used to and you have to find the cash to move, as well as have the available funds each month to cover the repayments on a more expensive property than this. It might not be possible if having kids has affected your earning potential, or you have large bills such as nursery fees.

What is the answer? Surely something has got to change? I have no idea how anyone younger than me is going to be able to buy their own home and think there are a lot of people who are mortgage-free or halfway into the term who are completely oblivious of this.

I think prices will stagnate for years particularly in markets that are already expensive. As you say it’s not feasible, many flats in my part of London haven’t increased in value if bought in the last few years so building equity is difficult. Wages are low in general and the economy has been too focused on house price increase.

I also think inheritance/wealth taxes may change as the country needs more revenue but there is too much weight on PAYE.

We plan to move in a few years but have reduced our budget. I just don’t want to pay loads more in interest.

And those cheap areas up north? They are cheap because prices don't rise stupidly, so not necessarily loads of equity.

But 4 bed detached round here for 200k isn't unreasonable

We first bought 10 years ago but our mortgage was above £1k a month then. We live in an expensive area, but mortgage rates are manageable for many with the higher average salaries. Everyone we know who’s our age (mid-thirties) have been able to buy here and the younger generations that we know are just starting to buy now too so doesn’t seem to be stopping them.

I think more young people will look at other cities instead of coming to London. I’m in London and some boroughs are seeing school closures as the birth rates have dropped so much which is not good for the pupils remaining so I would future proof any purchase as much as possible.

We are incredibly lucky to have bought in 2014. 80k - needed work which we have done over time and now worth 145k. Our mortgage is £292 per month with a 2.99% fixed rate. 3 bed with garden in a nice area. We are 30 mins from the lake district in Carlisle (cheapish housing). We feel incredibly lucky. FTBs now would have to seriously sacrifice to afford the same.

Bear in mind that downsizing is not easy in the current market. I’d love to downsize, but it’s not happening.

We live in London and our mortgage payments are significantly under £1000 a month but when we bought we had a big deposit (65%) and we renewed/fixed the rate before the Liz Truss debacle. We are incredibly lucky.

Bear in mind that downsizing is not easy in the current market. I’d love to downsize, but it’s not happening.

Theres a theory that larger homes will lose more value in the future vs other types of houses when the “boomer” generation start to die out and there is a glut of larger homes for sale at the same time & people will need/want quick sales. I don’t know if I agree with that tbh but because of future uncertainties I definitely won’t be buying as large a home as I originally wanted pre pandemic.

Where I live in Scotland you just need to travel 9 miles along the road to add £150000 onto a three bed semi. We live in the cheaper area. Still lovely, good schools, parks and great commuter links. However, we bought in 2006 after benefitting from the crazy house price increases so had a decent deposit. Still in that same 3 bed semi, nothing special at all, except the mortgage is under £400 and it is paid off in 3 years time. I do worry for my children and something has to change. Good affordable housing is the key to everything.

I have a 3 bed in the South East and pay around £680, but I had a large deposit.

Everyone on here hasa mortgage of £7.65 a month.

In the real world a lot of our friends (london) are servicing mortgages of between £2-5k per month having bought homes in 2019-2023

£5k pm is not the 'real world' for the majority. Most households don't have an income anywhere near £5k pm, let alone qualify for a mortgage payment of that amount.

I've got a four bed that mortgage repayment is 460 a month but we do overpay. Bought three years ago and got 72k left to pay off.

Paying 5k per month for a mortgage really isn't "the norm", though, even in London.

Most people don't even earn 5k a month as a household.

But on here it's not just people who live in London, so youl get a broader range of "real world" figures.

My DS has just bought a (tiny) 3 bed semi up north and his mortgage is double yours. The north is a big place. Some areas are cheap, some are not so cheap.

In the SE where I am, it's a complete disaster and I honestly don't know how people are managing. We bought our house 15 years ago for 270k. It's more than doubled in value (although we've also done a lot of work to it so our mortgage amount is actually very similar now to what it was when we bought it as we've remortgaged and taken capital out twice, for a total of over £100k). We had to remortgage recently after our fixed term expired and we're paying £1800 which is a LOT higher than the approx £1200 we paid for the previous years. It's a 3 bed semi but now technically 4 bed as we did the loft (but the 4th bedroom is tiny).

Meanwhile, we have family who didn't get on the properyy ladder and now can't because they can't afford to buy at upwards of £500k and even if they COULD afford the mortgage, no one will give it to them. Instead, they're renting at even higher prices than we're paying for our mortgage.

I worry about this a LOT.

Yes, I was really fortunate to loose both my parents in my early teens 🙄

We bought our current home in early 2022.
An overpayment makes our monthly payment £750 pm. This was with a 40% deposit which we had from equity in our previous home. Had it valued last month and it’s already valued at 57% more than we paid. Houses are still selling quickly around here at similar prices to our new valuation.

Yes, I was really fortunate to loose both my parents in my early teens

I think you misunderstood, you were not fortunate to lose your parents but fortunate to receive an inheritance. Or do you think everyone who loses loved ones inherits?

I live up north. Would love a 4 bed semi for 200k 😂

Relying on inheritance for future generations is not good planning. Bar misfortune and poverty a lot of people are living into late 80s even assuming they had dc in late 30s that still makes dc in 50s when they inherit. Most people will have wanted a house long before then.

True, but it often skips a generation and goes to grandkids. I know several people who bought with large deposits left when grandparents properties were sold. Guess it depends on the size of the family though.

Relying on inheritance for future generations is not good planning

I think particularly now days with the state of NHS & care.