How do people in their late 30s afford £600k+ homes in the South East?

[bluntscissors]

So many people I know with jobs worse than mine have houses worth £600k+

We are in the South East so £600k+ isn’t actually a super fancy house. Of course no one talks about their finances and it would be crude to ask.

I am almost certain if you have a house worth this much then you must have had at least £300k in cash for a deposit otherwise the mortgage would be too much.

My group of friends is only late 30s/early 40s so haven’t had decades to build up equity.

Is my hunch right that they all must have been gifted 100s of grand from their parents? This seems absolutely wild but I can’t imagine another route.

If you have a house that is 600k+ tell me honestly how you managed it?

Money from family or very high paying jobs or a combo of both. We bought an ex council house in Sw London. When we came to sell it the estate agent said most flats he sold to first time buyers were outright cash buys from bank of mum and dad. We had some help to be fair but the amount of money some kids are gifted is insane.

I do know one couple that managed it alone and I don't know how they survived. Lived in a studio for 10 years to save up. In a terrible area but they did it.

I would disagree (again). The vast majority of wealth in older generations is tied up in property & in their primary home. Millions are cash poor & asset rich so trust charges put many off & moving in older age can be too difficult. It’s human nature to not acknowledge ageing/death and feel it won’t happen to you plus many get scared by the prospect of care so end up hanging onto cash. Again circumnavigating future care costs can be complex & involve initial costs.
And then some like my parents have no issue with us paying IHT (I don’t either).

We inherited from grandparents , 400k bought a 600k project house spent 300k mortgage on extensions and non stop work and sold for 1.3 moved to another project.

Without the inheritance we’d still be in a project as it’s one of the few ways to move up the ladder but I’d say we’d be in a 400-500k home by now on our 50s.

@TaraRhu we sold our flat to cash buyers buying it for their dc. It was quite crazy to watch how the demographics of our road/area changed as it became fashionable.

We're in an expensive area but saved hard when younger so got on the market in our early 20s then overpaid the mortgage as much as we could and it's built up a lot over the last decade. Unfortunately missed out on the price increases that someone in their late 30s could have had by a couple of years but you'd be amazed how much equity builds up when you're focused on paying the mortgage off even without that extra couple of hundred k. Also very lucky to have been able to get well paid jobs pretty young so that helps massively. The people I know in this situation have generally made sacrifices to get there.

I will add that family have helped out with significant deposits so we've been able to get better rates but only when we were already able to buy solo because they wanted to be sure we wouldn't fritter it away. That has been a massive leg up that got us from being able to afford about a £700k house comfortably to over a million.

I earn 100k and my DH earns 150k so combined were on 250k.

We bought our first house with a 50k deposit I saved up in my 20s (we were on much lower salaries then) by renting the cheapest flat we could until we could afford to buy.

That house was worth 500k, sold for 570k, so our equity was then about 130k. We added savings plus a redundancy payout when we moved. Our new house has risen in value by 150k since we bought it a few years ago as it was badly decorated/dated and we bought it for a good price, probably about 150k under what similar houses are worth.

Long story short we have about 450k equity now and our house is worth around £1m. No inheritance or help from parents - but we're rare in that, all our friends have had family help.

It's mainly due to us being high earners though, rather than being good at saving or anything else

Well for some people yes. But a lot of people are financially savvy and are doing all they can to avoid inheritance tax and are planning on this now, passing money to their children in various ways now, setting up trusts and all sorts. I know lots of my peers parents see financial advisors and have been sorting this type of thing for a long time. And that's how they've got their 600k houses in the SE!

hmmm 35 and bought my flat for 370 so borrowed 330

8 years later just sold it for 480£

looking at getting a 650ish place now

mortgage is kinda the same it looks like as we were paying - about 1900 which we can afford 🤷‍♀️ so I don’t think it’s that unusual

no i inheritance or gifts or anything

Oh & when we redid our will after moving our estate will be over the maximum inheritance tax threshold (allowing for next yrs pension changes) but I am not interested in reducing my liabilities, I may feel differently in 40 years!

You have no idea whether its "the norm", or even whether it's "common", because you haven't bothered to check and are relying on instincts. It's easy to check...

According to this report, in 2024, over 50% of new UK mortgages were taken out with terms of more than 30 years (compared to just 10% in 2005). Mortgages with a term of 40 years or more represented nearly 10% of new loans in the first quarter of 2024 ... https://www.fxstreet.com/analysis/is-extending-loan-maturities-an-effective-way-to-improve-access-to-home-ownership-202412231720

That's one person's salary. Doable and a lot of people are more willing to take a risk than you are?

@fashionqueen0123 You can still be financially savvy without setting up a trust, I simply said many don’t circumnavigates tax & care costs for a variety of reasons. It doesn’t mean they don’t need to see a financial advisor about other investments etc.

I already said upthread we had help with a deposit to get on the ladder as did my siblings & I never claimed it was unusual.

Of course it’s better to cash in investments etc & help your dc in their 20s onto the ladder but as mentioned much wealth is tied up in the primary property so accessing it can be hard. The average age to receive an inheritance is 60 I think.

@bridgeagapI think you misunderstood my comment. Read it again, it wasn’t just a comment about 40 year mortgages….

”Mortgages with a term of 40 years or more represented nearly 10% of new loans in the first quarter of 2024.”

Although I don’t think the above proves they are the norm….

Everybody has a different risk appetite & different attitudes to what we do with our money. It’s ok to disagree!

@beigepaints It shows its not uncommon to take out a 40 year mortgage, and its reasonable to assume people are happy to do that because they know their salaries will increase over time or they will have some other source of funds to pay it off. They are choosing it with their eyes open.

Of course you can be. But there are lots of people who are handing over large sums of money and that's how some of these houses are being bought.

Where have I said they are doing it with their eyes closed? I am allowed to feel sorry for younger generations.

Again why are you misconstruing what I said?

The word I used was norm
I don’t think 40 year mortgages are the norm.
I actually said originally I didn’t think it was the norm to take out a 40 year mortgage and reduce the term by a decade in a few years.

If you are secure in your choices why are you arguing with me over things I didn’t actually say?

@fashionqueen0123Where did I say people weren’t handing over large sums or bank of mum & dad doesn’t help people? I just said it doesn’t mean you have set up a trust to avoid IHT or care costs.

I am almost certain if you have a house worth this much then you must have had at least £300k in cash for a deposit otherwise the mortgage would be too much.

That’s obviously not the case, is it? A 10% deposit on that is £60k not £300k. Some people earn enough to pay the mortgage on the remaining £540k. I had a mortgage of around that size as a lone parent after I divorced so on two salaries many could manage it. Obviously lots of people will have bought a smaller house first, renovated/ built equity and then traded up with a larger deposit. Then yes, of course there will be some who will have had parental help/ inheritances.

It obviously depends what you earn, when you first bought property and whether that was a good investment, whether you overpaid mortgage to build equity quicker, as well as whether you have received family help. I’m not sure what you’re asking as it should be obvious people’s finances and incomes and spending decisions/ priorities differ leading to different outcomes?

Yep
my son inherited from my late parents
so him and his partner were able to buy a 3 bed / 2 bath house huge extension WFH office in the garden
they have a small mortgage and they aren’t in London
but house was still around 350ish and they have a mortgage of around 90k and they are 31 & 27

DD is a FTB aged 27. She'll have 200k from dad, min. 50k from me, and 75k inheritance. It won't go far in London.

I bought my first home in 1990 for 47k with a 100% mortgage. 8 years later I made a loss on it 😕

So she'll have £325k? She could literally buy a flat outright for that in some areas of London but that's also a hefty deposit for a house depending on how much she can borrow. It will go very far.

In what world would that 'not go very far'?!

It’s a different mindset if you live in an expensive place. I can see how you’d think that if you lived in London, or were very privileged (which you would be to give/have family give a child that much).

325k is an absolute fortune to me. My 4 bedroom house is worth 250k 🤣

I’m not in SE, late 40s and have only bought 2 houses in my whole life. Bought a 2 bed flat at 26 in a cheap but ok area. Gifted the 5K deposit from parents. Sold it and made 30K. Used that to buy a modest 3 bed semi with my husband in a much nicer and more expensive area. Extended this one to a 4 bed, from inheritance and savings. Was on only an only interest mortgage for 10 years when I was not earning that much due to childcare and working part time. That’s a big regret for me as mortgage still ££pm as I try to pay it off in next 10 years. Value of my home has doubled but that does not mean I can now buy a bigger house or even downsize as every thing else has gone up over the years as well. I could not afford this house now, if I sold up yes I could pay off my mortgage and have some equity but only if I moved to a much smaller home (my house not particularly big anyway) and in a much cheaper area