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 was about to say, where I grew up, even today it's a decent budget.

It is a worry. I'm maxing my 22yr olds lifetime ISA while ever he still lives at home, and we'll probably still need to help him when he decides to buy.

I live in a 4 bed detached house it's worth about 250k. Where I live you can get a decent 2 bedroom for around 100k .

We bought this house 12 years ago for 140k we have around 13 years left to pay. Until recently our repayments were £500 pm but our deal ended we now pay £750.

Hello, fellow Sheffielder 😄

I'm in South Yorkshire, and for a 200k house, it's looking to be around £1000 a month with a 10% deposit for 35 years....while we could afford it per month, we actually spend a lot less renting so we're just waiting and saving in the meantime to see what happens in the next year or two...

Living with your parents is financial help 🙄🙄

It’s really not. £750 a month in rent and bills is actually about what I’d have paid in a flat share in the same commutable distance to my office. The only ‘freebie’ was my meals were cooked rather than me cooking myself at the end of the day.

But okay, let’s take away those six years and say I saved £200 a month (being generous) by living at home instead of a flathshare. I still would have saved over £100K in 11 years through being a hard worker and saving. So it IS doable. People just like making excuses and throwing pity parties.

Edit - for typos

I still would have saved over £100K in 11 years through being a hard worker and saving

would prices not have increased more in that time.

I lived at home & payed a small rent. 2 yrs later I wouldn’t have been able to buy my flat as prices went crazy.

Exactly this.

We’re in Manchester and looking now, £350k mortgage for a 3 bed semi (£50k deposit) is well over £1k a month. Chuck in nursery fees and it’s tight!

You dont have to head that far north, Northamptonshire - in my small town £200k will give you a number of 2+ bed homes to choose from. Where I live, London is commutable just about especially if not every day.

What you've done is amazing to save that money!

But it is a privilege to be able to stay living at home and having a stable house over your head to be able to save for a mortgage! 🙏 I've moved out of home when I was 19, had a few issues along the way, but I wouldn't have been able to save up for a mortgage deposit without having a stable private rental property that's only had one rent increase in many years.

They didn’t significantly where I bought (over a 3-5 year period) - they may have done elsewhere. But I could still have afford to buy even if prices had shot up - I just wouldn’t have been able to pick where I did, I’d have had to pick Hastings or Hailsham (which are much cheaper areas in the same county).

Two years of saving £200 a month (being theoretical) extra only makes £4.8K in two years. When your deposit is that significant (and your LTV that good) a few thousand means little (as crass as that sounds). I was saving £500+ a month from when I was 16. Even if I had never added to my savings or taken overtime in 11 years that would be £66K. But obviously my savings increased once I worked full time etc.

We’ve been slightly unusual in that we’ve bought and sold three times in three years:
1 - 2021, £200k mortgage, £700 repayments
2 - 2022,£230k mortgage, £800 repayments
3 - 2023, £280k mortgage, £1400 repayments

So in the space of three years, an extra £80k mortgage amount (over 38 years as opposed to 35) is double.

Our first house - £700 originally, would have cost £1150 to remortgage if we’d stayed for our fixed term. House prices are high in our area which is ok when interest rates were low, but now interest rates are higher it’s unsustainable. A young family would struggle to now afford what was our modest starter home.

@Devilshands im in London, my first flat went up 200k in 2 yrs. A few thousand makes a difference to me! Every penny counts when paying stamp duty, fees etc.

We're in a very similar situation. Bought our 3 bed semi in May '22 with a small deposit and our monthly repayments are around £600.

We have a small 3 bed.
bought end of 2022 as the interest rates were going up - £274k mtg Is £1312 a month.

my sister bought early 2022 and her mtg was £700 a month. They were gifted a deposit more than 3x ours though so whilst the price was the same, they got lucky and interest rates were good.

Their mtg is now£1100 as their fixed term is up. They moan, I have to bite my tongue.

You must have been paid well 14 yrs ago to clear enough to save £500 a month. I think even now 16 yr olds only get £6 ish an hr.

I qualified as a swimming teacher (Level 2) and was employed by my local club where I also trained. Going rate was £15PH. I worked about ten hours a week. Several others at my club did it as well. I paid the money back for the cost of the course and then began saving 🙂I also did life guarding. During school holidays I upped it to full time hours (equivalent) across two different swimming clubs and pools. And don’t forget at 16 I didn’t have any expenses - I didn’t go out drinking or buying nice clothes. I had no rent costs until I turned 18. It was crap. But I was motivated.

Bought in 2014, £195k mortgage on a 2 bed house for £210k. Initially our interest rate was 4.99%, then over the years it was as low as 1.04%. So we were paying just under £1k a month, then it went down to £675 now we are back up to £975 as our rate is back up to 4.85%. Our house is worth more like £325k now, so if we were buying it now repayments would be significantly higher! Definitely feel we are luckily to have bought when we did.

If everyone’s plan is to sell off the big house and downsize then who will have the money to buy the big houses?

I'm not sure houses will become more affordable. There will be some places where some houses will drop in value but the population of the UK has grown significantly in the last 20 or so years so there's just more demand.

Yes I agree.

We're in a 4 bed detached house in a nice town and pay £500 a month.

We bought our first flat in 2010 for a good price and have refurbished 3 homes in a row, gaining equity each time. We made £100k 'profit' in 3 years doing up a 2 bed terraced house. I wouldn't do it now, with the cost of tradesmen and materials and our flat economy.

But this bit:
there are a lot of people who are mortgage-free or halfway into the term who are completely oblivious of this

I'm not oblivious, I'm well aware. I just honestly only care about my own financial situation and can't worry about other people's.

I was wondering this!

I'm in the North and in my area 200k wouldn't get you far these days. A 2 bed flat, or tiny 2 bed house that needs everything doing to it.

Up north it might buy you a 2 bed, but then you’re paying £1000 a month
Up north it might buy you a 2 bed, but then you’re paying £1000 a month?
🤣🤣🤣

Something I thought was interesting on my old street of identical terraced houses was that who had been able to buy a house there (in terms of jobs/income) seemed to have changed a lot over the years.
The oldest residents were couples/single people with one unskilled wage (these people had been there since the 80s or more)
The next oldest had one skilled wage or a couple of unskilled wages (90s ish)
By the time we bought a house in the 2010s we needed 2 professional wages to afford it