To think most property owners don’t understand how hard it now is to buy a house

[Boredfromboredshire]

DP and me earn 40k between us and our rent is 1200 a month for a 3 bed house. We don’t have rich relatives, we are in our early 40’s and circumstances (ill health) meant that we didn’t buy a house before. We can’t save a deposit & houses are expensive by us. We have stable jobs & our kids are happy so moving in the current uncertain time’s isn’t an option. Life has happened to us & some of it has been out it control.

Cue well meaning friend (who bought their house for peanuts) asking me why we couldn’t afford a house when we could get a house in a cheaper area for ‘only’ 400k. I’m so fed up of it. We really want a home of our own & we would move but in the current recession, it’s not a good idea to give up a job. And we can’t afford to save. My friend (whose deposit was 12k can’t understand it and looks on pityingly while telling me the house they bought for 120k is now worth 700k.

For many of us, the housing market is closed for ever. I’m so tired of the pity and the complete cluelessness- I quite often feel utter despair about it. It makes me feel such a failure for no real fault of our own. Some people were lucky because they happened to buy at a particular month in time & then some of us couldn’t & it’s over.

I don’t think people who own really understand what it’s like. Low interest rates, cheap mortgages, everything weighted in favour of owners while renters are treated like the Victorian poor.

Aibu to be sick of it. We are a normal family in normal jobs.

All 60k will get us around here is 20% of a 2-bed shoebox flat

Take it. Seriously. It's a foot on the ladder and an extra bedroom than you have now. And, most importantly, will make you more money than it currently is sat in a bank.

All 60k will get us around here is 20% of a 2-bed shoebox flat. A house in a non-shit area is 400k+. Considering we are "middle class professionals" and we can only afford a small flat

Bit you should be able to afford the 400k house
You have 15% deposit and you should get 4x your combined so up to 360k from the bank?

The only way we were able to afford our house was by moving back up north 3 years ago (we were in London for 10 years before this ) and moving in with my parents for 8 months whilst we saved the rest of our deposit (we were 30 years old at the time so not ideal)
Living practically rent free (my folks would only take £100 off us!) meant we put nearly all our wage into savings. There is no way we would have been able to do it otherwise and it would have taken us years and years to save a deposit, especially since we welcomed our first dc last year. I think it’s ridiculously hard for people nowadays. Almost everyone I know who owns their own home got help from parents. I only know one person who did it themselves from saving (and even then, they moved in with parents for abit to help save faster too)

@Desiringonlychild - we are living in a tiny 2 bed terrace house, bought a year ago for 80k. We are currently living in the downstairs between the living room and kitchen/diner as the upstairs is uninhabitable until we fix it up. If house prices drop by 40% we cant justify pumping more money into a house that will already be costing us via negative equity. Our house done up at the moment would be worth 100-120k - meaning we would have equity for a bigger deposit to buy our forever home at 125k ( which is less than half the price that many on this thread have been complaining they cant afford as a first home). Even if we spend our budgeted savings and wages with hubby doing the work himself on getting it up to standard, we still will be in negative equity. We will be in a much worse position than if we had stayed renting (and we were also renting in undesirable areas in order to save for this house in the first place). We will have to go back to renting. We will lose the deposit and savings we scrapped and scrounged and sacrificed for over the last 10 years. All because in 2 years time we wanted to be able to be able to live in a modest little 3 bed semi detached house and couldn't save while paying rent in a nice area. Please stop making out that the housing crash will level the field and only affects the wealthy, the landlords or the people who bought as retirement nest eggs. It affects many of the working poor as well - there are many people I work with who buy cheap to work their way up the ladder rather than renting until they have enough saved for better. Our house in the state it's in, isnt habitable long term (certainly not long enough for the market to recover). Not everything is black and white. Yes we might own something, but that something isnt going to be worth anything soon, and has cost us 10 years of hard work and sacrifice. So please appreciate that while a housing crash may allow some to buy that modest little 3 bed semi, it will prevent us from getting ours. Me and OP are working towards the same house - just in different ways, and living in a mortgaged house in negative equity with no usable bedrooms and a leaky roof and a camping stove instead of an oven does not make me better off than someone renting in a nice desirable area.

And paying a negative equity mortgage is just as much dead money as paying rent is.

Bit you should be able to afford the 400k houseconfused
You have 15% deposit and you should get 4x your combined so up to 360k from the bank?

I don't want to spend over 300k - our mortgage would be way over a grand a month (plus maintenance fees) and for me that is over-leveraging ourselves. I am prone to breakdowns and quitting jobs, and also might quit work if we have a family. I don't want to pay so much mortgage that we then can't save - I've never not saved. Atm we pay £720 a month and I'd rather not go much over that. I have never been in any debt and there is just a certain level I'm comfortable with. I'm also quite likely to lose my job as I work in travel and am currently furloughed.

Take it. Seriously. It's a foot on the ladder and an extra bedroom than you have now. And, most importantly, will make you more money than it currently is sat in a bank.

See I just don't believe we can make any money on a new-built shoebox flat that IMO is already overpriced. I also think house prices will go down a lot after furlough finishes, government runs out of aid money and redundancies, bankrupties and reposessions kick in.

I do feel for you Op it is shite .We brought our home in our early 20"s and our mortgage finishes next year .We brought when endowments were basically the only mortgage you were offered .We knew we would have a shortfall but it was only small so we extended our mortgage by a year to finish it otherwise our mortgage would now be paid .I worry for my eldest DC and their partner who rent ,You are so right you need an astronomical deposit now.

I just think the concept of taking on a lifetime of debt is ridiculous, and now the government have realised lots of people can't afford it, now you can take on a lifetime of debt for 50% of a house! It's just nuts, it can't spiral upwards forever. With our 60k we could buy a really nice flat outright in a different country, which I'd be tempted by if house prices don't go down at all. It's not "supply and demand" that drives those crazy prices - we can all demand a nice house - it's what banks are willing to lend out. The more they lend, the higher prices go. Sometimes I think I'd rather just rent and save for 25 years and buy somewhere at the end of it - because when you buy a house it's not really yours, it's only yours when you've paid the mortgage off.

I am sorry @beijing but you are paying 720 for 1 bed flat. Obviously bigger property, especially a house, will be more monthly.
I get why you want to keep on a safe side and i hope your job will be sage, but if you want bigger, it costs more.

@BeijingBikini I don't think you realise quite how dense you sound. You'd rather pay rent for 25 years and save to buy a house outright?! So, you'd rather live in worse conditions, with fewer rights and less security, for 25 years because you're scared of mortgages?

@BumpBundle I didn't say I'd rather do that definitely, but sometimes I feel like that, yes. A mortgage is a just a huge debt, and anything can happen in life. You can get ill, have a breakdown, hate a job, etc, and be totally unable to pay your mortgage. If you're paying 40%+ of your income on a debt, that doesn't give you much leeway. I am a frugal person and always will be, for a 400k house I want to wait until we have something like 100k of deposit. That's just me, we're all different with money and risk.

Hence us wanting to buy a cheaper place in a cheaper area, less debt, pay off more mortgage (hopefully we could pay it off in 8 years) and build up equity for the "dream house". If we borrow a shedload of money for dream house now, we will be paying so much interest and have the stress of "what if something goes tits up".

Also, you do own the house. Basically you just secured large loan against it. In very simplistic terms. You can do whatever you want to to it, you can sell etc. Ok, you may not be able to rent it out at least at the beginning, but that's to stop landlords securing houses with low deposits.

And our rent is pretty stable as we rent from a company that own the entire block, and lots of others. Their entire business is renting and has been for decades so I don't think they're about to sell.

But as soon as you stop paying the mortgage, it can get repossessed. If you buy outright no-one can turf you out. Anyways, regardless of all that, I think house prices are insane and I think insane amount of debt have just been normalised so that anyone who doesn't want to take on a huge debt is seen as strange. I do not believe houses are instrinsically worth that much and also that they are due a large correction, having been propped up by so many ridiculous schemes for so long.

I was lucky to get on the property ladder in 1996 and brought my first 3 bed house for 59k. Now seperating from my partner and looking at housing market with half my equity. Im lucky to have this but on my own I cant afford another house anymore. Im seriously thinking about renting until I retire.

@BeijingBikini How on earth would you pay rent if you couldn't pay a mortgage?!?! What you're saying makes zero sense! It's a much longer and harder process to repossess a house than it is to evict someone from a rental property.

You are not strange for not wanting a mortgage. Lots of people don't want mortgages. Your arguments are what's strange.

Also. Yes, they can turf you out because you secured loan with the house. Same like is with some large business loans. If I take a business loan and put my house as collateral, it doesn't mean the bank owns it. I own it. I just used it to get a loan.

@Namechangeapril20 my 2 bed flat is tiny too- 53 square metres. But it does have two bedrooms for a family of 3 and there are a lot of kids in my development so clearly other families do it. We also have a big communal garden and I also have a loft which helps. I need to be in London and I prioritize being near good schools so that is what you get for a £400k budget which is quite low in London. In the home counties I would get a small 2 bed terrace house for £400k and have to pay rail fares on top of that which would make me financially worse off in the long run so I prefer a London flat esp since I have a garden too and would also be near family that could help cut childcare costs.but owning a London flat means I can't afford to move to a house which would cost £800k in my area.

We make do with what we have.i am sorry if I am confused but why wouldn't you do up the house despite being in negative equity? A house doesn't cost you when you are in negative equity unless you remortgage or you want to move. If you do it up, it's for yourself. Often when you sell it, a person doesn't even necessarily take all the cost of the renovations into account. When I bought in 2019, everyone told me that I should only buy somewhere I could live for the next 5-10 years. Flipping, doing up a house to move onto the next house is a very risky strategy and usually attempted by developers.

@BumpBundle because currently we have 60k in the bank, I could be unemployed for years and still pay rent. If we spent that 60k on a deposit, then both lost our jobs, the house could be repossessed, sold cheaply and we get none of that money back. Or we could easily be in negative equity in a years time after the corona dust settles.

I feel safe having cash in the bank, losing my job doesn't worry me, and unless we go full-on Zimbabwe with hyperinflation, I think the cash is pretty safe.

I'm not against all mortgages, I begrudgingly accept that's just the way things are nowadays, but there is a ceiling and level of risk we're all willing to go to and currently it's probably wise to wait and see what happens - high chance of price falls after the recession kicks in in autumn.

@BeijingBikini What if the bank goes bust like Northern Rock? What if you get sued - HCEO's can't take your house but can take cash from your bank account? Savings interest never matches inflation so your money is worth less every year you keep it in savings. If you're in negative equity then don't sell - obviously. The housing market, according to every reputable economist is due for a V recession so shouldn't last long. Property is the most stable investment you can make. If you have an irrational fear of not having £60,000 in liquid cash then that's your prerogative but don't try to present it like a sensible financial opinion - it's not.

We pay 1200 rent too!
We did own a house but lost it when our business went under. Both me and my husband are early forties. We can't afford to save for a house as would need 30k so we Are saving to buy a little flat and then rent it out. At least we will have something for when we are older.
It's not easy to just move. My kids are settled at school and my mum is terminally ill. To be honest I am not that bothered any more if we do buy. Do I really want a 280k loan? Life has thrown these curve balls in our way and I think I would see financial security as having money in the bank now!

What if the bank goes bust like Northern Rock?

Isn't up to 85k with each bank protected in case the bank goes bust?

Me getting sued is unlikely, us losing money on an already-overpriced 2-bed new build is almost certain. I think V-shaped recovery is very optimistic and has pretty much been ruled out - Rishi Sunak and other economists have said it will be a long road to recovery, more like bathtub shaped. Those bankrupt businesses won't be replaced over night.

We all have to act in accordance with our appetite for risk and what we are comfortable with. It's not that I need all of 60k lying around, it's that I don't want a huge debt/no savings on an over-inflated asset during the worst crisis of our lifetime. Pre-corona we were about to buy a new flat, now I think the chance of losing money on it is too high so we are waiting.

Beijing the standard mortgage term is 25 years. It is not a life time debt as you keep saying. Monthly rent however, is a life-time commitment because you will need a roof over your head for as long as you live. You have a very strange logic...

It's not impossible to buy a house but it is difficult and requires some sacrifices (unless you receive a nice lump sum as a gift/inheritance etc.).

DH and I had no savings at all 3 years ago - we were both recent graduates, DH was unemployed, and I was doing a paid internship in London from which I could only save about £100 a month.

There weren't any good prospects for my DH's industry in the UK, so we moved abroad.

We now have enough deposit to buy a house when we return to the UK, but may stay here longer so we can buy a house outright. We have had no financial help from relatives/no inheritance/no windfalls of any kind.

My point is that if we stayed in London, we wouldn't have been able to buy a house in Islington (where we lived) with DH's job prospects and my meagre savings.

We had to make sacrifices:

• I had been offered a full-time placement following my internship which I had to refuse to follow DH's contract
• I now do a job I loathe, but have managed to work up to a well-paid position
• I also do a part-time online teaching job as a second income
• I had to leave my friends and family behind which was really hard, but we still keep in contact via social media/WhatsApp/Skype etc.
• We've held off on having children until we had our deposit saved, we've only just properly started TTC (unsuccessfully so far!)

If your earnings are relatively low where you are, then moving is a good option. You'll build up a new support network wherever you go, and the change may be beneficial for you in the longterm.

Alternatively, a second part-time job does help - I earn around £40 a week with my second job, which translates to about an extra £2000 a year income. This goes straight into the deposit kitty and adds up over the years. If you have any skills to teach, I'd really recommend online teaching as it can be extremely flexible and cost-effective.