To not understand how people afford next house up?

[evilnaggingwife]

We purchased our first house about 3 years ago. A 3 bed terraced house with a tiny garden for around 230k. As first time buyers, we only saved a 5percent deposit and got a mortgage with a high rate! That will end next year when I hope we can get a more sensible rate.

Our house has probably gone up to around 280-300k I'd imagine based on local prices.

dh and I earn around £60k combined (although he is self employed so always tricky to prove income). We have saved enough to pay cost of moving and stamp duty and fees etc of next move.

I keep looking on right move and houses that I would consider next one up are stupid money. I'm talking 3 bed semi with a drive and larger garden... £400-500k!!!! How on earth do people manage this? Are we stuck here forever?

I go to a mortgage calculator online, it tells me how much I can borrow and when I do a search on right move the same types as our house come up... Terraced, not in town, no drive, small garden, small 3rd bedroom.

Also now people seem to have higher expectations. Younger gen don't seem to want an old doer upper they want the new or already done up at least three bed semi preferably detached house.

3 years isn't a long time. I'm aiming to take the next step in 10 yrs so 12 years after moving to where we are now and in that time I'll be saving for it.

We can manage it due to a rise in house prices so we will have about 160000 equity in our current property and the fact that my husband is now earning very well and therefore we'll have a biggish mortgage.
We've been in our house for 10 yrs now though. The next step up is goin to involve doubling the value of our house. Talking to my mum she said they did similar 20 years ago and increased their mortgage by a comparative amount. It's just what it costs to go up the ladder.

Also agree about the higher expectations, but that's capitalism for you. Playrooms and a bedroom for each child are much more common and expected now.

I'm not convinced doer uppers are the solution these days, not in these parts anyway. A fair proportion of the buyers want the doer uppers, and fewer are prepared to pay a premium for a finished one, so doers-up have to pay more for the house and sell for less of a premium than in 90s. There's not much margin, if any, round here (fairly desirable area with amazing schools).

Doing up a dump only works in an area where prices are generally going up, though.

Not really. If you can do alot of the work yourself, the improvement in the property puts the prices up. As long as it's less than you spent, you have made money.

We are currently fitting our own kitchen. We spent this afternoon building the units it in the garden. We have learnt skills as we have gone along. So all work on our home is cheaper.

This house won't be sold, but will be worth more due to the work we are doing.

Working mothers are a massive part of the ridiculous increase in housing. People say they need two earners to afford a home. Thirty years ago when the majority of mothers were sahm a nice three bed semi with drive and garden was affordable on one regular wage ie teacher.

bigger incomes can afford bigger mortgage repayments. its as simple as that really. If you haven't had a promotion since your last mortgage was agreed, you won't have any or much capacity for taking on more debt

for static income you'll need to make over payments to reduce your mortgage term. budget cuts, saving money on your everyday spending.

Maybe people inherit? Maybe people get lucky?

That's a ridiculous statement really and smacks of unrealistic expectations. Here's what we (me and DP) did to move up to next house/ pay off most of our mortgage.

1. Worked from the age of 16, including an average of 25 hours a week whilst I was studying full time at uni, DP worked full time from the age of 16.
2. Bought the shittest house on the best street we could afford as the age of 21 using the deposit saved whilst at uni and secured against my first job.
3. Did not buy said shit house anywhere in London or south of there as we are realistic about what we could actually afford.
4. Spent 3 years spending our free time, effort and any earnings we could spare on doing up the shit house ourselves
5. Worked hard at work to secure pay rises and promotions
6. Used the increased value and equity we had put into the property as a deposit for the next house along with our enhanced income to borrow 4x joint salary
7. Bought shit house number 2 on an even better street
8. Got planning permission to build houses on the garden of shit house number 2 (which came with 120ft of road frontage) this was not luck but a combination of market knowledge and extensive research prior to purchasing
9. Sold land as we acknowledge that we are not builders and building 2 new houses is beyond our skill set

10. Paid off mortgage using proceeds from sale of land 11. Continue to renovate shit house number 2 ourselves at weekends and evenings (2 years and counting) 12. Now that we are financially secure, have baby

If we wanted to we could move onto the next house etc etc, however we are having our first baby this summer and I plan to quit my job and enjoy family life. Me and DP are both still under 30 and at no point have we inherited (parents still alive!) nor have we been given or won money.

It's not luck it's hard bloody work. We spent months with no kitchen, no bathroom, the odd day with no electric or water whilst still going to work full time and trying to make it look like everything was normal at home. It's all down to personal choices I guess, not everyone wants to live like this in order to get what they want.

Round me dooer uppers go for almost the same as the done up ones as people buy the potential.

The london affect has grown, so now anything south of Northampton, west of Chelmsford and east of oxford/ basingstoke is commuter belt. So where you would move to the next town for something cheaper, you can't anymore. It used to just be the M25 and greater london, but thats really not the case anymore.

We moved with the same type of jump the OP quoted. I think the only answer is to stay in it for long enough so you pay off a significant portion of your mortgage before you move!

I'm not sure how you can have a high rate with your income (£60k) and not that expensive of a house (£230k). Given the house could be valued at £300k now, and even if you still owe £220k, you should have a LTV of lower than 75%. What's the rate you are paying? If you can remortgage or that your SVR is good, then you might be able to pay off a good sum of your mortgage.

Same here Baboon. MIL went into a home last year and her house had to be sold. It had no central heating or double glazing and needed rewiring (plus other work) and still sold for £400K. We'd thought about whether we could afford to buy it and there was no chance.

Yes, definitely a mc wage would buy the above mentioned.
A wc wage would buy the equivalent dooer upper
and those with ad hoc low wages, would probably have the equivalent shell to do up

We started off with a four bed cottage, long before internet EA had files.
After we'd exhausted everything they had she produced this file and blew the cobwebs off it. We bought the last one in the file that nobody wanted.
It took us 3 years to do up with a baby too. We made quite a bit when we sold it.

We have done it by moving to cheaper areas and always improving the houses.

Our first flat was a two bed in an unfashionable part of London, we did it up, the area became more fashionable so sold it with a good profit and bought a 3 bed in a nice town. Three years and three kids later we sold that house and for £10k less bought a four bed house in a village in cycling distance of the nice town.

We won't ever be able to afford to move again but luckily we don't need to as we have the space we need and now just need to focus on paying off our not too massive mortgage.

Tbh not sure if we were savvy or just lucky! But my tip would be buy the places that need work and then slowly improve each place you live in.

mrs giraffes you can do up your "dump" by adding the money onto the mortgage or taking out a home improvment loan.

We chose adding it to the mortgage, we bought our current house valued at only £100,000 for £60,000 as the property was considerably run down, had no double glazing, no central heating, electrics were from the 70's, everything you can imagine needed changing. we were cheeky to put in an offer that low but so glad when it was accepted.

We added another £20,000 to the mortgage eaning our total was still only £80,000 and for the past 5 years (ds came long 1 year in so slowed us right down) we've been slowly doing it up. dp took a course in basic plumbing & tiling so fitted the bathroom himself and saved us nearly £5000. Its not for the faint hearted though, there's been so many tears along the way. Ill never forger coming on xmas morning and the pipes had burst, not long after wed bought it. How i longed for a new build back then.

But all our hard work has paid off and our house is now valued at £220.000, the area was run down, but sometimes that's the type of place you want to look at, the council will see its run down so invest a lot of money sorting it out (as they did here), were 10 mins from town centre, with good transport links, a bus ride from good schools. Id recommend buying a fixer upper OP if you think you can handle it. Id have no problems doing it again and ive hopefully made all the mistakes you can make on this one!

letthefundusbegin so nice to hear someone else has been through hell! .

Rather than people's expectations changing, I think the problem is that the rise in house prices over the last 20 years or so has outstripped increases in wages to such an extent that what used to be a 'normal' family home is now completely unaffordable in many parts of the country.

For instance, in 1995 buyers in London needed to spend 4.4 times the median salary to afford the median house price of £83,000. By 2015 London buyers would need 12.2 times the median salary to afford the median house price of £300,000.

(Source: www.theguardian.com/uk-news/2015/sep/02/housing-market-gulf-salaries-house-prices)

If we could just afford a comparable home to those our parents owned (which weren't extravagant many any means) we'd be over the moon. Yet despite us earning more than either set of parents, there's no way we could afford a home like that without a lottery win!

I think the only people I know who've upgraded recently where we are (SE) have had large inheritances.

Otherwise I think most people will largely have to made do with what they bought pre dc.

I don't think it's possible here to make the jump by doing up a wreck any more and paying some mortgage off. The jump is too great now. (As an example we're in our 2nd house, having been paying a mortgage since 1999). We'd currently need a mortgage of over £300k to move up to a 3 bed semi. That's despite buying run down houses and doing them up. Wages stay the same but prices keep going up.

Totally different situation where my sisters live in the Midlands however.

We bought an ex-LA flat in a rough estate that was between two quite desirable places, guessing/hoping that it would eventually gentrify. Then we did work to it to spruce it up a bit. And dressed it to appeal to hipsters knew our target market when we came to sell.

We are really lucky that we were then able to buy a house, but we did spend a few years somewhere no one else wanted to live! (It was actually a great flat!)

And then when we bought a house we moved to a cheaper area as well.

Buddahbelly
Yes and I didn't mention the number of times I ran off to my mums because the house was a disaster and was trying to kill me and returned home shame-faced later the same day.

For context for my previous post (without making it obvious who I am or where I live) I live in a pretty market town which has been named in The Times/ Guardian numerous times as a top 10 place to live in the UK and is within an hours commute into London by train so far from shits-ville but admittedly not comparable to the SE!

Also, in many areas even a 'doer-upper' is way outside the budget of most families. If you go to Rightmove and search for 3 bed semis (what I'd say is a fairly normal family home) in London, the cheapest available is OIEO £290,000 and the property needs tonnes of work. And it's out in SE London which is likely to be a decent commute for most people.

Working mothers are a massive part of the ridiculous increase in housing.

I assume you meant increase in housing costs.

However surely (an increase in?) working mothers are a consequence Of the increased housing costs rather than a caus eof it?

letthefundusbegin

, the amount of people who say it's good luck, gained an inheritance, won money, remortgaged, took out loan etc.
We did none of that either, have inherited a little since then that we are going to live nicely off now.

Martha

No, the course unfortunately.
Why keep prices down when 2 mugs are happy to earn money to pay, rather than 1.
Prices wouldn't have gone up so much if we didn't have dual income families.

Working mothers are a massive part of the ridiculous increase in housing

what d you exactly mean ??

Newlife youre going to have to break that one down for me. How does having two earners increase house prices? Surely increased demand for housing increases the prices?

Higher birth rate
Lower mortality
Not rocket science