How can you save enough for a house when house prices keep getting higher?

[grannyinapram]

when I moved out, house prices near my parents house were 90-100k
now those houses are £160-200k
I can't afford to live there anymore.

I live in a really horrible area, ex council houses are 130-140k We can almost afford it. BUT every time we get to that magic number, suddenly house prices go up and we have to save more. By the time we have saved more, we look again and house prices are up again.

Well our savings are worth less now than they were when I started saving.
When I started saving I needed £5000 (plus fees) to get a mortgage.
now I have 10k behind me but we still need £5000 to afford smaller houses than when we first started.

And our savings are just sat there losing money.
The interest paid this year is half of what was paid in last year, despite the amount doubling.
I don't know what to do! I don't know how to get there.

How do you get on the housing ladder when the ladder has been put on the back of a truck and is driving away from you?

any advice?
we are saving as much as we can. A third of our income goes into the savings.

Yup. Keep trying to save for a deposit, but rent is so expensive here (need to be in the school catchment area), and stuff just keeps needing to be fixed (teeth, car etc). Am hoping that the new 95% mortgage will help, although house prices are so high here, that even a 5% deposit seems out of reach!

House prices have gone crazy where I live. I am not in the SE anymore. We planned a move about 5 years ago and the house we almost bought was 280k, this was very expensive for the area we lived in. The garden was so big a couple of semi detached houses could have easily been built in it. It had a shocking survey so we pulled out. We had looked at a lot of houses in that price bracket. A couple of these have recently come up for sale again and they are 400k.

The price difference between houses back in our home areas in the SE and were we live now has narrowed considerably.

Well done on saving @grannyinapram

Its bloody hard to save with kids rent etc, its never ending going without so you can tuck a bit away each month. And for some folks it just impossible. But whatever you do, dont go near stocks and shares, you can easily lose money that way

I’m in the north and house prices are currently horrendous. It’s baffling I’ve had to move
Home to save as I couldn’t afford rent and savings. I’m aiming for 15% deposit which round here is roughly 30k then fees on top. I’m hoping to be done by summer if I can. I saw a house the other that last week was 95k then they took it down and now it’s 110k I don’t blame the seller as it’s their market but it’s so annoying to first time buyers.

@grannyinapram

oh sorry, we have it in help to buy isas so the government top up every 200 saved in there with £50 but thats only after the house purchase, it can't be put towards the deposit. So its really like a help after you buy isa

I'm not really sure about stocks and shares, there was just a post on here the other day about a woman who's husband lost them thousands.
I wouldn't know what I was doing. I have watched YouTube videos and read "how to" articles before but I gave up because it seems too risky for an idiot like me. Ican't even keep up with the housing market, never mind stocks and shares

Surely you’re wrong about the help to buy isa’s? The govt top up is paid as you exchange and used towards the deposit. I bought my first home 18 months ago and the mortgage companies, solicitors etc were perfectly happy to include the top up, due to be paid, as part of the deposit! In fact, I think the solicitors apply for it to be transferred as they have to provide proof you’re in the process of purchasing...

So frustrating
Is there anything drastic you could do to help get a lump sum behind you? Massive declutter and sell lots, temporary 2nd job, go without a car, move in with family or look for work with accommodation included, reclaim anything possible like ppi, delayed flights, missold bank accounts etc, massively review spending cut nice to haves and change suppliers, switch banks to get the switching bonuses etc.
Many of those probably totally impractical especially with covid but sometimes a short burst is easier to deal with that this endless slog.

I'm a big fan of stocks and shares ISAs but unless you think your house purchase is 5 years plus away, ideally more!, then please dont risk it. The market could easily dip massively on the day you need to get the money out to buy and you'd be screwed.

@grannyinapram
We used the help to buy ISA for the deposit as there is a technicality where you can do so. We bought a new build and they were happy to accept a deposit of say £1000 (which was obviously way less than the 5%) with the rest being paid on completion so the solicitors were able to apply for the bonus and that was passed on to pay the rest of the ‘deposit’ on completion. Not sure if this was only available as we bought a new build as unsure how this would work buying an older house.

From www.moneyadviceservice.org.uk/en/articles/a-guide-to-help-to-buy-isas#how-do-help-to-buy-isas-work

“ Will my bonus contribute towards the deposit to buy my home?

Yes, the government bonus will be added towards your overall deposit.

When calculating your mortgage, your lender will want evidence of the funds you have available. This will include the amount saved into your Help to Buy ISA. Your lender will then include the amount of your government bonus when working out your mortgage loan amount.”

@RonObvious

Yup. Keep trying to save for a deposit, but rent is so expensive here (need to be in the school catchment area), and stuff just keeps needing to be fixed (teeth, car etc). Am hoping that the new 95% mortgage will help, although house prices are so high here, that even a 5% deposit seems out of reach!

The 95% mortgages will just push prices up further, as have every intervention the government have ever made regarding home ownership. That and lining the pockets of rich developers. DH and I have have been waiting for the housing bubble to burst for years and it hasn't happened so I'm not sure it ever will.

We have a 'lifetime ISA' which I believe is slightly better than the help to buy one in terms of how you can use it, but when I took it out I was hopeful we'd be able to use it within 10 years and now I just look at it and think what was the point. Without inheritance (unlikely!) we've no hope.

I feel like an idiot for going into a job that will never pay me enough to own a home (I'm a nurse). Would be nice if the government could actually recognise their 'heroic keyworkers' with housing we can afford!

we have just bought our first house at the age of 40!!
like you the amount we needed to buy a house just kept getting bigger and bigger and mortgages harder to get!
We recently were gifted a deposit from DH family due to his Nan dieing so sadly the only way we have been able to get a house is by a loved family member dieing.
House prices are crazy but we were lucky to find a house that ticked most of our boxes for a really good price, the vendors were eager to sell so it had been reduced in price and its in the less fashionable part of our small town, but if we had gone for location we would not have got all the boxes ticked that we have.

It is very difficult isnt it unless you have parents or family who can financially help you out. Another option would be to buy a cheaper doer upper that needed to a little bit of work done on it but that you could live in while work was being done. Auction properties tend to be alot cheaper as they need a bit of work done on them but you can get mortgages for them normally.

@BrieAndChilli

we have just bought our first house at the age of 40!! like you the amount we needed to buy a house just kept getting bigger and bigger and mortgages harder to get! We recently were gifted a deposit from DH family due to his Nan dieing so sadly the only way we have been able to get a house is by a loved family member dieing. House prices are crazy but we were lucky to find a house that ticked most of our boxes for a really good price, the vendors were eager to sell so it had been reduced in price and its in the less fashionable part of our small town, but if we had gone for location we would not have got all the boxes ticked that we have.

I'm 41.

The only way we will get a deposit is when Dh nan dies (she is 98 and still living on her own and going strong).

Well, unless she leaves it all to "the dogs" as she threatens every so often.

It's awful really.

Help to buy bonus absolutely can count towards your deposit

I understand the pain! We moved when our DD was very young to an area that was much cheaper. It was a huge risk, and we weren't sure we were doing the right thing.

I figured that moving while DD was so small meant I would make friends through school etc, and it proved correct. It was totally the right thing for use - we have a house literally twice the size of the one we would have had if we'd stayed in the SE, and made lots of very good friends.

The cost was leaving the friends we had, some have remained friends and some have drifted away. We are also further away from family, but we have a house big enough for them to come and stay!

So my thought would be - can you move anywhere cheaper? Though on re-reading the OP, maybe not.

OP, you decided to have children first, and then look to buy a house?

Is there any reason you didn’t just get a 95% mortgage before Covid? Is affordability the issue? I’ve met so many people who assume you need a minimum of 10% deposit to buy a house unless it’s H2B and (prior to Covid) that’s absolutely not true, we got a 95% mortgage in 2019 on an older home as did my brother and his wife (despite being warned by many people we should wait it out). Our home was £165k, we only had a £8250 deposit, best decision we ever made as we’ve now remortgaged onto a much better interest rate and our house has increased in value by £35,000 in two years (which I think just shows how ridiculous the housing market is tbh).

I was told by quite a few people two years ago that I was making a foolish decision and there would soon be a housing market crash and I would be left in negative equity, (when in fact it’s been the complete opposite). So my advice would be don’t sit around waiting for this hypothetical housing bubble to burst or you’ll be probably be waiting forever and houses will just keep increasing in value, get on the ladder as soon as you can, if 95% mortgages become available again take one.

We’re in the same boat... Be careful with the help to buy isa... we did this for a few years, factored the government top up into our figures then DH says it can only be used on a property with value of £250k or less... (haven’t seen it myself but he quite reliable usually) but around here they are all higher than this so we can’t use the top up.

I know how you feel OP.

I bought a flat in 2018 thinking that the best thing was to get on the ladder. I'm pleased I did it for the security but now worry that the cost of moving itself - with the fees, stamp duty, increased deposit needed etc - will mean that we will struggle to move more than once again in our lifetime. But there is NO WAY that our next move would possibly be to a decent-sized 'family home' as we are so far below that bracket at the moment.

I am seriously considering whether our best option would be to rent an adequately sized home but then you have the uncertainty of rents going up, landlords selling so forcing you to move, and also what we will do after retirement age.

It all seems so unattainable nowadays.

It's ridiculous, around here a 2 bed is minimum £350k, for a flat. A house is around £100k more. To buy in my own is just not going to happen. The housing market needs to have a crash and I hope it happens. It's become unattainable now.

As long as people are paying the current prices, the market won't fall.

When I was young i just saved everything, never went out, life was crap, but igot on the ladder with a flat.
In time your equity goes up as mortgage gets paid and house prices increase, then more doors open.
I feel sorry for younger people as its much harder. 5% deposit schemes will help

I don’t know about H2B but I bought my house in 2019 and used the government bonus from my lifetime ISA towards the deposit - have you looked at them instead? The bonuses are more generous as well I think. The solicitor had to send off a form claiming the amount, it didn’t go directly to me.

@Ifailed

OP, you decided to have children first, and then look to buy a house?

yes really OP, what were you thinking?!?!? Clearly that's what you've done wrong, and there is no structural or systemic issues at play. You should have delayed having kids until you bought a house. No matter if that meant not starting to try to conceive until you were 39...

I bought my house at the age of 37, and only because I inherited a bit of money after losing my father. It is hard to afford to buy these days.

Good luck

I saved for the best part of a decade but every time I had enough to buy the prices just seemed completely out of reach - the insane thing was that asking prices on Rightmove weren't even the amount they would go for, property would go for 50-100k more than that through sealed bids.

In the end it took a 20k redundancy payment for me to be able to finally get on and even still it's not exactly my forever home.

The help to buy do cover deposits! We made sure when arranging ours that they would be...! Otherwise what is the point of it? It’s why we need the help! 😂

it does annoy me on threads like this when people come on and say things like:
why did you have kids first?
why didnt you buy when 100/95% mortgages were available
why dont you move 200 miles to a cheap area (where they are cheap because no jobs/no family links etc)
why didnt you buy in your 20s

they dont stop to think that peoples lives arent all rosy and easy, things happen to people that mean getting a mortgage isnt appropriate at the right time when you are 'supposed' to buy a house.
When we are in our twenties we went travelling and working abroad for a few years. none of our parents (both sets divorced so 4 seperate households) owned houses, they all rented so no-one was telling us or leading by example that we should get on the ladder. when we left the country banks were hadning out 110% mortgages like sweets so it never occurred to us that we would have any trouble when we got back,
other people get pregnant unplanned that delays house buying plans, other get into debt espeically if they have no financial guidance from parents, others come from long lines of people who rent so house owning isnt seen as a thing you automatically do/seems out of reach.