AIBU to wonder how people afford huge mortgages and we’re struggling to make ends meet?

[Beanbag12]

AIBU to wonder how people afford huge mortgages and we’re struggling to make ends meet?

We live in a very affluent area in rural Oxfordshire. We rent. The idea of saving for a 10% mortgage is so completely unrealistic as the cheapest 2 beds around here are £220k. We currently spend more than our wages every month (high cost of living, childcare costs). Everyone, and I mean everyone that I work with either already owns or are buying hugely expensive houses. They’re on similar wages to me. AIBU to wonder how the divide between us is so big?

I know this probably has obvious answers; we should have been more sensible when we were younger, inheritance etc. but I’m interested in other’s experiences in this.
I don't really want to divulge any more information about our situation and I don't want advice (I know people will say it's our fault we're in our situation, which I am willing to accept, so no critisism please)

Before we met we had bought flats separately in two unfashionable areas of London which then gentrified and prices went up a lot. Got very lucky.

Then bought a wreck of a house in London, again made a lot of money on that. Took a huge mortgage and bought our final London home, which is now worth an obscene amount.

We’ve also had very high income for a while now (which paid for said huge mortgage), but not when we started out, it really was a gamble that paid off then. No family help but a very large amount of luck both in our careers and timing the market right. We started 20 years ago, starting now would be very hard indeed. I’d say it would be impossible. I am older than 36 and that’s the crux of it. I feel very sorry for 20 somethings right now, complete nightmare for them.

What, it is not i mpossible in our situation however - newly qualified London lawyer and head of department teacher can still buy on a 95% mortgage the 3 bed terraced hous in zone 5 which we bought in the 80s. They cost about £400k to £420k today. Even back then the midwife who came to the house could not believed we owned as most people could not afford to but because of our professions and education we were able to do so. However I am not saying it is easy for everyone then or now. In fact we started in a school property and I slept ona mattress on the floor when pregnant in that place and the school had to offer live in accommodation as even then property prices were so so much higher in London than elsewhere that the London weighting was an absolute joke - it as a tiny extra amount when the houses cost 4x what they did in the North. (I am from the NE)

So our identical couple to us buying before babies with 2 full time salaries in those kind of professional jobs in London can still buy. If they need 5% of £400k then they need to save up £10k each which is not impossible on those professiona.l salaries if you share a room in a shared house or you if your parents live near your work you live with parents.

The issue with saying you could get 100% mortgages years ago is there was no minimum wage and the multiples were more like 2xthe higher salary and 1x the lower which meant without a huge deposit to make up the difference you couldn't buy.

We put down nearl 60% on our first home as our wages were crap and the cheapest property was so much

I got 100% mortgage in 2007 with my exH and DH got one in 2009. Both on properties which were 134k. DH was single and on 27k and i was on 15k and my exH was on 24k. Those properties are now on at about £210-230k. But the wages for those roles are the same and now you need at least a 10% deposit. It's just impossible for young people.

But there's a lot of chewed fingernails and frayed nerves being juggled behind the net curtains, Beanbag, every time the postman shoves a brown envelope through the letter box.

Don't take things at face value.

I bought my first property on a 100% mortgage (2004) and live in a city that is affordable for middle income earners. By the time my now DH and I bought our family home we both had properties to sell and had a decent deposit. Then we had our kids. That seems to be the general pattern for people I know (I'm 40). I didn't have any inheritance or help from parents though.

We moved. Left London for the first place that either DH or I could get a job, and paid about 35 - 40% of London flat rent as rent for a 2 bed house rent further north. We couldn't afford to move back into "more affluent" areas so cut our cloth accordingly.

Luck and timing so important as well as wages/income.
We bought our first home with a NR 100% mortgage yet still made 20% on its value in 2 years.
Then next home stagnated in Market when it all crashed, but have since moved but being PT it meant we couldn’t get a huge mortgage.
Plus we bought our current home just as the mortgage application interrogation approach started - it is sensible and I agree with it for affordability but it meant we maybe couldn’t borrow as much as before.

Of the families we know who have larger houses, most had bought property as single people and either sold up and combined the earnings or they’re renting them out and gaining more income.

Bought land and built our first house before children (in our early 30s), we now own that house throughout and have just bought a second property, 3 bed detached, mortgage for 25 years, not as nice as first house, but in an area closer to our jobs and with good schools. We had help from family with the deposit for the second property which meant we did not have to sell the first one (which would have been difficult for a variety of very outing reasons I can't go into!).

It is only ever reasonable to compare yourself to your exact contemporaries - as time makes such a difference to relative house prices/rent etc.

We had some significant strokes of good fortune and gifts, but those all came later.

I was always a good saver and never really spent much in the years 18 - 25. In that time I was at university and in my first jobs in London.

I had lived very frugally as a student - porridge and pasta sauce!
I hadn't been travelling or had a gap year
Non smoker
Never really drank as a habit - just on a night out
Never into gadgets - no Sony Discman , stereo or mobile phone
Never bought music or branded make-up.
No car to drive, so no petrol or other costs
Bought new clothes, but nothing excessive

Written down it sounds really dull, but I was having a great time living in a London flatshare with good friends, working, going to Oxford Street, socialising and visiting the sights. It's just that my tastes weren't that expensive. I occasionally splashed out - inexpensive holiday, new winter coat, dinner out - but it wasn't a regular thing.

The main stroke of luck was that we were living in a flatshare that charged a bit less than market rate and we shared a room for five years - whereas I think many couples would have wanted to move out to their own flat. For me, combined with my frugal lifestyle, it meant that, when I got my first job with a professional salary, I was able to save £10K in my first year.

My now DH had also been saving and when he got his first professional job (on a very good salary) we were able to buy.

My OH was told yesterday he’s being made redundant. You couldn’t make it up 😂 Thanks everyone for your replies.

We bought pre DC so we were both working ft in good jobs with no childcare costs. It was still hard to save though as we were paying £800pm rent while we were saving £20k for a deposit. We hunkered down for a couple of years and just didn't spend a lot elsewhere.

No stamp duty due to mortgage offer and PIL gave us enough to cover solicitor fees, surveys etc.

We moved to a cheaper area of our already cheaper city (but with a great school, it's a hidden gem) so £200k got us a 4 bed detatched with a big garden with a mortgage the same as the rent we paid on a 2bed flat.

Then we moved in and had no furniture so we bought that on 3/4/5 year interest free credit. All finally paid off 3 years ago.

Aw beanbag that’s very bad luck. Hope he finds a new job very soon

We moved last summer and took out the biggest mortgage we could afford because this is our forever home but we have 50% ish equity in the house to make it affordable. This is how we did it:

Inheritance
Bank of Mum and Dad
Lived with parents for several years and saved
Started saving young
Bought first house at the right time and made 40k on it over 4 years
Mortgage before DC (well, first DC)
Childcare help from parents

I’m aware of how lucky we are.

Postponing babies , buying before you have a baby, buying as soon as you can, buying with a partner or spouse, buying in an area that isn't very nice and both working full time in graduate type jobs all seem to help looking at the replies on the thread. I took 2 weeks off (annual leave) when baby 1 came too to preserve career which meant we could continue to afford the 12% interest rate mortgage too which obviously helped although not a choice everyone on here might want to make. Also my husband moved hundreds of miles South for my career as we knew I would make the most money and would do so in London and that paid off too (although it meant not even a night a year of free family babysitting)

Xenia I sold up in London a couple of years ago. Decent area, young couple (solicitor/doctor) couldn’t afford it. I couldn’t afford my own home at the time I sold.

Our eventual buyer was non national - a doctor but had big family cash propping him up.

So much harder for younger people.

Xenia I presume the 12% interest rates were in the first half of the 90s

I think it was 1984 actually as I did a comparison recently between then and now and it was 12% in my records. Also this link shows 12% in July 84 which is when we bought www.bsa.org.uk/BSA/files/5c/5c180498-5e52-4a41-b022-5821c25f3cbd.pdf.

Bascially when I last calculated it the cost of that terraced house in outer London for a couple in the same jobs we had costs about the same today as then as a % of your after tax income. That does NOT mean things are the same now. Things get easier and harder and easier again over everyone's lives. Eg on this thread some people had nothing liek the trouble we older ones had to get a mortgage and some people buying just before the credit crunch seem to have got 100% mortgages (unheard of when I bought and my parents bought).

Also the UK and US for lower paid workers has had quite a few wage freezes particularly outside the public sector although the recent rise in minimum wage in the UK has meant a slight change to that so those not in high paid professions in the last 10 years have not had an easy time of it. I would say that's because the state supports low pay by in work benefits which means workers are paid less than they would be as the employers know the state makes up the difference with tax credits.

First small house stayed 8 years, it doubled in price.

Which made good deposit for second house, again stayed 8 years, it doubled in price.

Only mortgaged 2/3 of third house, stayed 23 years, paid off mortgage in full after 12 years, savings and redundancy. Just sold it, made £250k.

Bought a much larger place in the countryside for cash.

No gifts or inheritance, just sheer hard graft.

I think a lot of it is decisions you make when you are younger. We bought our first house aged 23 and 26. We relocated after less than 2 years and made a bit on house 1 as we had done it up a bit. Prior to buying we lived with my Mum for one year and paid £100 a month to cover extra bills incurred by us. Mum couldn't afford to give us a helping hand (not that we expected it) so this was her way of helping. No inheritance for us either.

Our first house was £210k in 2015 for a two bed semi, so whilst not as insanely expensive as some places we haven't lived in especially cheap areas.

Oh and obviously there is two of us. Incredibly hard if you are by yourself.

I don't know anyone who has managed to buy a house without parents giving a deposit or inheritance.

Cook
Where are you in the country ? That makes a big difference.

newly qualified London lawyer and head of department teacher can still buy on a 95% mortgage the 3 bed terraced hous in zone 5 which we bought in the 80s. They cost about £400k to £420k today.

Well thats ok then!

Let me just go change my entire career trajectory so I can buy a house then...

Xenia, I didn't think it was as much as that as we also bought a 3 bed terrace in 1984 in zone 5. I came out with £220 per month worked as a clerk in an office, no qualification and dp was on if I remember correctly about £400 (qualified professional but very junior). Then we both worked extra jobs.
The house cost £36000 and the mortgage was about £340 per month

I can think that if my main wage was not there we would have struggled but I think those evening and weekend jobs would have been a huge help and we would have been just ok.

Up to that point we had lived on far less