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.

YANBU OP.

We’re in a similar boat, and can’t buy but do have savings. I’ve also got them in cash savings accounts and H2B ISAs- a stocks and shares ISA that follows a tracker fund is probably safe for you, but not to do before you buy a house.

The only advice I have is to keep saving, look in to Help to Buy, Shared Ownership and potentially moving to another area (appreciate this is far from ideal when you have four children, some of whom are presumably in school).

The Stamp Duty holiday is a disgrace: its led to a boom in second home ownership. Our well paid neighbours (we rent, they own) have just bought a cottage in the Cotswolds as a second home- thereby reducing housing stock and contributing to the overall problem. It’s awful.

Please don’t give up though; you’re doing the right thing and setting a great example to your DC.

Maybe the 95% mortgages coming back will help you? It’s the only thing that will help me and DH to buy.

I don’t come from a family who is good with money or used to having it either, but I’ve worked in financial services and the best advice I can give you is save, save, save throughout your life, get on the ladder (though I’d move area for a bigger house, not just buy a flat with 4 kids) and pay as much as you can (both of you) in to your workplace pensions throughout your working lives.

Good luck, you will get there. It’s just really hard if you don’t have wealthy families or high paying jobs.

Some people choose to make buying a property a priority before having children. It means they can work overtime, get an extra job evenings/weekends, go without things like holidays, a car, etc.

Others choose to have children first, four in your case. Raising children is expensive, they limit your ability to work extra, etc which means saving for a deposit is harder.

That's how some people find it easier than others to save.

@brieandchilli absolutely!! Somebody that gets it and has explained it perfectly

YANBU. I am acutely aware that I would never be able to afford to live where I do (couldn't even afford to rent here); I moved in with my now-DH who bought 20 years ago when prices were cheap. We can't afford to move (even though we both have good jobs) unless we want to take on an insane (to us) mortgage, thankfully we don't have children so are fine to be 'stuck'.

My PIL are now devastated that their other children are moving away from the area, but can't accept that it's a legacy of house prices becoming unaffordable. They have a really nice 3 bed detached, in a desirable area with a large garden - they bought in the 1970s, my MIL has never really worked and my FIL had a low-paid manual job with several periods of insecure work/ unemployment. No one in their circumstances could afford that house today.

I am not sure whether the new 5% thing will help; I've read several articles that suggest that Help To Buy has actually pushed prices up (as people go to the maximum they can afford). What we need is more, cheaper, housing stock, not more families competing for a dwindling pool of properties. Even though it would mess us about financially (our house price has tripled in 20 years), I am beginning to wonder whether the government should legislate to cap housing prices, forcing it back down to small(er) multiples of the average wage, like it was until the 1990s/early 2000s.

Sorry OP. Been where you are. In the end our only option was to consider moving further away from our desired areas. Long commute but now we've moved we would never move back to the more expensive, posher area - far too busy and I hardly recognise the area I grew up in now anyway.

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

I think the only way is to do something drastic. What does that look like for you? What short to mid term sacrifices can you make so it happens?

How old are your children? Are you able to get a second job? Could your partner get a second job? Could you downsize your rented home? Like, really downsize? Go into a one or two bed? Make the children share (2x2 bunk beds) and you sleep in the living room (drastic if a one bed)

Do you have anything to sell?
How close to the bone can you live your life frugally?
Enter competitions to win money. (Free competitions)
Look up the frugal hashtag on insta
Get inspiration from others doing drastic things to achieve what they want (stay legal! )
Buy a house that's less than perfect and make do. That's what we've done.

What's your affordability score like? Could you afford to pay a personal loan and still get a mortgage? (This is a really unwise idea but fits the drastic concept) could you take a personal loan to get a deposit together? Could a relative take a personal loan that you ABSOLUTELY have to pay back?

What about this as a drastic idea? I can't find the article but I saw a man who took a mortgage out on his parent's fully paid for home (£110,000 IIRC) and then bought outright. He paid the mortgage every month. It was risky but it worked. His parents were fully involved in the topic. I suspect they actually took the mortgage out and he had to pay for it.

I think you need a drastic solution.

Good luck.

Have you got an agreement on principal?

Because it seems like you need professional advice if you aren't aware of how LISAs are factored in to your deposit and having a meeting could really help you instead of falling into the trap of thinking you can't afford it etc.

If you google drastic ways to save for a house deposit some of the ideas I've suggested (downsizing and loan) are there! Also lots more.

e.g. Mortgage offsetting via family savings
Getting a guarantor

We're only where we are due to luck and good timing. Have had no help from family (in fact we've had to pay money to support ours). We made difficult decisions that will hopefully pay off.

@species5618 why do you think you won't have grandchildren as a result? Many people in London are just starting to try mid to late 30's. Unless your daughter doesn't want them of course

@species5618 cool username! My favourite are species 3259. 🖖 LLAP.

A huge number of politicians are landlords. So of course they back an economy of high house prices and also high rents. As a result home ownership from people in their 30s and 40s has plummeted massively over the last two or three decades. Even more so for people who can't get a mum/dad deposit handout. As long as the Tories (and to a lesser extent Labour who have slightly fewer wealthy MPs) can make a government with votes from around 20% of the electorate, nothing will fundamentally change.

Mortgage advisors aren’t really worth it. They have certain places they’ll always check while others they refuse to tell you about because they don’t get commission from them.

You’re better off shopping around for your own mortgage.

@emilyfrost

Mortgage advisors aren’t really worth it. They have certain places they’ll always check while others they refuse to tell you about because they don’t get commission from them.

You’re better off shopping around for your own mortgage.

I don’t think this is always the case at all. As long as you speak to a couple for balance eg Habito and London and Country, they add lots of insight that you couldn’t have. The lowest rate isn’t always the best mortgage to apply for depending on your circumstances, they will be able to advise on which lenders are most likely to look favourably on any particular set of circumstances which are all individual. There’s no point in applying to then be declined because your specific situation isn’t optimum for that lender. You then end up reapplying somewhere else, now with a recent credit application on your file. It’s not the answer for everyone but taking advice from someone like London and Country or Habito is really useful even if you don’t end up completing an application using them.

Some people choose to make buying a property a priority before having children.

I know tons of people who bought a house before having children but are stuck in houses too small & can't move. One has sold & now moved into rented. 2 are looking at renting their home out & renting elsewhere.

You have 4 children you say.

Sorry this will sound harsh but the time to buy a house is before having children. You essentially could save enough to afford a house but have more expenses because of your children.

You'll either have to move into another area or keep saving and reduce expenses down as much as possible. Or third option is earn more money somehow.

Reading your post and others' personal accounts on here brings home just how appalling this whole housing racket has become. And the worst thing is knowing you could afford a mortgage that would be lower than the high rent you're paying but can't save enough, or quickly enough, for a deposit because of paying out so much in rent.

As someone already said you need a lift to get out of the trap. Do you have a job or any form of paid work? If you haven't, is there any scope there for doing something part time or from home to fit around children that would increase your rate of savings and give you that leap forward that you need?

I don't know if you know that you can now get longer mortgage terms from some lenders who have raised the upper age limit for paying off the mortgage to 80. This would help with affordability of monthly payments. Nationwide had started doing this the last time I was looking at mortgages and I am assuming it's still the case.

Haven't read the thread. I don't know how practical this is, but the theoretically correct approach to this, as a financial problem, is to put your savings into housing, in the specific housing market you are interested in. Each year, buy whatever fraction of a house you can afford with that years savings. That way your savings are hedged to the housing market. (Also borrow as much as you prudently can to leverage each increase in exposure.) When your portfolio of property fractions adds up enough, liquidate it and buy a home.

Buying a fraction of a house probably means banding together with other people wanting to be buy-to-let landlords. I think there is at least one on-line company that sells shares in buy-to-let properties, so maybe they could provide the legal and administrative infrastructure for this, but I guess you could also find people locally in a similar position to you and form partnerships.

I think the hardest part will actually be liquidating when you want to withdraw your money, so I'd pay special attention to how that's going to work.

(The point of investing in buy-to-let houses similar to your desired property, rather than any other investment, is that, for example, if you own 50% of that type of house, you are immune to the effects of house-price changes on that 50%.)

What is the future of all of this? 40 yr mortgages, all income being swallowed up by housing, only the rich having dc. Depressing

@fronz

What is the future of all of this? 40 yr mortgages, all income being swallowed up by housing, only the rich having dc. Depressing

Pretty much :( It is sad.

Part of me wonders why I want to own a home though.

I work in care. All I see is people who have worked all their lives to pay off their mortgage have to sell them to pay for the home, Sitting next to people who have rented and had no savings, in the same place being paid for by the council.

I know it's not a given you will have to pay for care and my view of it is obviously skewed because of my job, but it does play on my mind.

It's like why save and do nothing else, no travel just to buy a house. When I could have amazing life experiences instead of buying four walls.

(I will admit i'm having a bit of a mid life crisis at the momnet)

Have your earnings not increased at all? Could they?

I agree with MadHatters that brokers can be helpful. They are knowledgeable where you may not be and can tell pretty quickly what is feasible or not in your circumstances. I have used London and Country in the past, which you can do without obligation and they are quite transparent about how they operate. The only thing I didn't like was doing everything remotely. Some people prefer a personal service with a local broker with an office nearby. You can increase your own mortgage knowledge by reading personal finance pages in newspapers or money saving websites such as MSE.

There is little excuse now for harking bsck to when house prices were low etc.

End of the day if your essentially 18yrs+ you should be fully aware of what life is like, how much houses can cost, that children are an expense to. Any parent should be instilling this in their children and advising them to make careful choices. If you want to own a home one day the choices you make along the way csn impact that.

I didnt go on any holidays for 8yrs, I was renting but knlg house shares with bulls included. I save everything, going out was done as cheap as possible. I never felt like i was missing out or not having a life. Moving up in jobs helped too. I bought my house only 5yrs ago at the age of 30. Now I have great disposable income to go party, holiday, have fun and think about having children.

Its not impossible for anyone to do the same. Its all about what you decide to prioritise.

House prices are being propped up artificially by the government. I think you risk being caught in negative equity if you buy this year or next. Assuming a major correction is around the corner in order to allow buyers at the bottom to join.
One thing is for sure. Wages for most people aren't going to rise over the next couple of years, thanks to a post-pandemic recession. Wages weren't rising in step with house prices anyway.
I'd actually love to see all first time buyers just step away from the housing market for a couple of years. To force a correction by lack of demand and a lack of fresh Ponzi scheme victims.