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?

Interest rates were astonishingly low for a very, very long time. I don’t think that will ever be repeated. Everything is pointing to some sort of significant market correction. It reminds me of those cartoons where a character runs off a cliff and then initially keeps running in the air before suddenly plummeting. I think we’ve already run off the cliff!

£500k or £440k of borrowing is an obscene amount for the monthly repayment though? Could you really afford that? What if one of you lost your job? I don’t think I could ever commit to ~£3000 a month repayment even though a bank would give it to us (if we had a bigger deposit).

Agreed

Plus 90% doesn’t give you much leeway in a falling market. It has negative equity written all over it.

Me too sort of but also I’ve never really lived a stable enough life, I’ve had several relationships, lived in a few different places and only settled down later. It never even occurred to me to try to save money or get a mortgage when I was any younger than this. When my friends started buying their fancy houses I was really taken aback. They were all rich this whole time! I had no idea.

Also … if I’d have bought a house and settled down with my first boyfriend I’m pretty sure I’d be having a huge mid life crisis right now so 🤷‍♀️

I was a 70s baby. I started saving for a house deposit from my very first part-time job age 15. Compound interest is an amazing thing.

That’s the answer. It did occur to others to settle down and save in their twenties, and now they have expensive houses. It would be really hard to start in your late 30s and go straight to a £600k house, people work up to that stage for years.

Those of you who started saving at a young age, how did you know this was a good thing to do?

It genuinely never occurred to me!

I wonder if you had parents who taught you about it?

As I’ve said several times my friends didn’t buy early either. They are just buying now. We all had fun 20s and early 30s. They must just all have familial wealth.

Most of them definitely not in high paying jobs. Like, good jobs but not six figures.

Our first mortgage in the south east (when we were in our 30’s) was around £900k which from memory was about 3x our joint earnings so very affordable.

Oh yeah sure £5k a month repayment is very affordable

Our repayments weren’t that high. I think around £3,700 (30 yr term, lower rates back then compared to now) which as a percentage of our income it was affordable. I believe our bank offered 4x our joint income in principle but we didn’t want to extend ourselves too much.

Not £600k but we have a house far bigger than our wage would afford. It is inheritance.

Or they just earn a bit more than you think. The incomes needed for a £600k purchase aren't exactly unheard of in the South East.

I’m in a job/industry that it’s unlikely to be jobless for long, and if DH lost his job we could afford the mortgage on my job alone. We’re insured well enough that if I couldn’t work any more we could continue to pay that amount of mortgage. Plus my already 6 figure earnings will likely double in the next 2 years, and possibly double again in the next 5-6 years so we would be overpaying at that time.

That said I don’t have a mortgage that high, but because I prioritise other big spending instead.

I saved £50,000 over the course of many years. Bought a tiny one bed flat. In the seven years I owned it it didn’t make me any money but I was paying less for my mortgage (1.6%) than I would if I was renting. Partner eventually moved in, he saved a chunk of money as wasn’t paying rent, I saved a chunk of money, plus equity meant we could now afford our £600,000 - ish house. Mortgage is eye watering. We’re both in pretty normal jobs, we’re not talking 6 figures each. Bought the flat a decade ago in my mid 30’s

I started saving as soon as I got my first job. My job is not a professional role but it was stable and had benefits.
I travelled a fair bit but did so economically. I lived at home until I got married.
I knew to save early on and be conservative with money because I was fairly working class and my parents never bought a house. As a result, buying a property was practically my biggest goal and something I aspired to. Bought a detached property in a popular city in my early 30s along with DH. My husband also had no money, and grew up working class.

How do you know they haven’t been saving all these years though? You say they haven’t good jobs, two £60k salaries is £120k joint income, 4x that for mortgage plus £120k deposit would get the £600k house. £120k over 15 years is only around £300 each a month for a couple, taking into account interest.

No inheritance. Both my DH & I are accountants, working for large companies, but nowhere near C-suite level. We were mid thirties when we bought.

Inheritance.

I am in that age group and the difference between those of us who have inherited and those of us who haven't is stark.

Think rented overcrowded hmo or social housing vs 3 bed semi with cars, festivals and holidays.

And only one group is having kids.

So what? If you plan to live there long term, you’ll pay yourself out of negative equity eventually.

After buying a flat that ended up in negative equity, we bought our house on a 95% mortgage and now have easily £100k in equity after 5 years of property price increases and overpayments. I wouldn’t not buy a house I wanted and could afford and wanted to stay in long term because I was worried about negative equity.

I didn’t have a safety net when I graduated from uni, or the option of living with parents. I knew that saving towards buying a house was what I had to do to get somewhere stable to live and have a good quality of life.

Because saving is obviously a good thing? My parents didn’t save (probably didn’t earn enough to), but I knew I wanted long term wealth and a comfortable retirement so started saving and contributing to a pension as soon as I had a full time job. I save for long term (20+ year horizon), medium term (eg buying a car in 5 years) and short term (next years holiday) in different pots and different amounts.

I figured if I always saved a bit I wouldn’t notice it missing from my wage, and I increase my monthly saving amount with every pay rise for that very reason.

No one taught me that, it just seemed like sensible common sense to me.

It’s just not as attractive with higher interest rates and falling values. There are plenty of people posting on here who have seen no property price rise over many years (or indeed have lost value) and that is going to become more of the norm. As you say, maybe fine if you’re in it for the long term, but most people starting out are looking for a foothold on what used to be a ladder (or more accurately a conveyor belt), not their forever home.