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.

@Fuckadoodledoooo if a mortgage is cheaper per month than rent then once you get past the hurdle of the deposit you can afford to do more stuff with your income. Plus once your house is paid off that’s it and you can put a lot more towards travel etc like a lot of retired people do.

It is shit...im.on the ladder only because my parents died at a very young age...there is no way my kids will be able to buy or even afford to leave home at this rate.

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

For us it was because it was cheaper & more secure than rent. But we had help & couldn't afford the equivalent now.

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.

Yes that what I think is a shame particularly for young people.

[quote PattyPan]@Fuckadoodledoooo if a mortgage is cheaper per month than rent then once you get past the hurdle of the deposit you can afford to do more stuff with your income. Plus once your house is paid off that’s it and you can put a lot more towards travel etc like a lot of retired people do.[/quote]
Yeah that's one thing.

It would be cheaper than rent.

We're still probably never going to be able to buy though.

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.

Yep & the wage stagnation legacy from 08 took ten yrs to start swinging back the other way.

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.

I'm a homeowner but I honestly now see it as a Ponzi scheme with the newer entrants carrying more & more burden.
If you're buying now, future proof as much as possible & perhaps skip some stages eg flat.

The funny thing is, things will be different for my son. He's 18 and joining the police. 22k starting salary.

A studio or one bed in this area costs £60k, some are 50k.

I'll be helping (not money wise but you know, helping him in all the other ways) to buy one as soon as posssible.

Plus once your house is paid off that’s it and you can put a lot more towards travel etc like a lot of retired people do

I'm in my 30s & imagine once the mortgage is paid off, I'll be having to support my dc &/or still be working. I think retirement will look very different.

I have zero pension and privately rent.
“Retirement” is going to be interesting to say the least

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.

I remember a few friends saying this in the late 1980s, when prices were going up and up @Elsiebear90.

Then the bubble burst, house prices fell by 50% over a few weeks in some areas, loads of people were in negative equity, repossessions went through the roof* and at least 3 people I know have never been in a position to buy again.

*I concede that the record low interest rates make a huge wave of repossessions unlikely, but a rise in unemployment would undoubtedly lead to an increase.

We bought first in the 1980s - 3 bed terraced, then 3 bed semi, then bought 2 buy to let flats which we sold at big losses and sold our next house - 4 bed detached as a loss too BUT we then put the money from all those into this one big house so as I have always moved up never down any big drop has not been a problem because it means the next house up is cheaper. we locked into a 10 year loan at 13% interest in the 1980s when our mortgage rate was over 14% and then rates dropped to a huge low of 8% (which seems high today compared with 1.44%) and we were stuck at 13% so used every penny to pay off the loans on both buy to lets and our last house.

Who knows if it is better to buy or rent (there are pros and cons) but for me it has been better to buy

@LakieLady I think the main problem in that situation is people borrowing what they can afford based on current interest rates which are very low, I’ve seen people say they are borrowing over five times their salary and are really really stretching themselves to buy the best home they can. I think that’s incredibly risky, especially in the current climate.

We bought well below our affordability (house was 165k, we could borrow up to 325k) for that reason, so in the event house prices went down and interest rates went up we could still afford to pay the mortgage. In uncertain times I would never advise anyone to max out on their affordability, but if people keep putting off buying a house waiting for this crash that people have been saying is imminent for years (and has not materialised) they’re losing money on rent while houses continue to increase in price. If I would have taken the advice to wait I would still be renting now as the houses I would be looking at buying are now 30-40k more expensive, and I would need an even bigger deposit to buy them (which was the issue for me and the OP, not the affordability). Instead I now pay £170 less a month (fixed for five years) than I was paying in rent for the same sized house in the same area and have 40k of equity. So I am 100% confident that we made the right decision not to wait.

To clarify on using the HTB bonus for deposit, you can’t use it for the initial part of the deposit you give on exchange, as the solicitor can only apply for it after exchange. But you can use it for the balance of the deposit that you pay on completion.

To be honest this has always been the case, we chose to prioritise saving for a house before having children and live in the southeast in an area where £160k wouldn't buy a flat. I bought my first flat in 2010 a one bed on my own and needed a 20k deposit plus other costs

buying pre 2015 or whenever the legislation changed was much easier & often people were only 100% interest only mortgages.

@Elsiebear90
We had a mortgage in principle and a house, was just waiting in a chain but then the lender pulled the mortgage offer because of covid. they dropped all of their 95% mortgages so we lost the house.
They did initially want to wait for us to see if things picked up because of the chain it seemed like we may have enough time to perhaps wait it out. But on the end they sold to someone else.
it was heartbreaking to be honest. We almost made it!

And as Dishi has said they want to bring 5% deposits back. Covid has changed allt but its not forever just means you cna continue to save until they offer those products again.

@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

That is shit! how is it help to buy if it only applies after you buy?

[quote grannyinapram]@kizzykat91
we have asked our mortgage advisor about using the isa top up as deposit and she said it is up to the lender, and apparently computer says no for us, but we have a low deposit as it is, only 10% so maybe they accept it on higher ones?
worth asking again though, who was your lender? I know some mortgage advisors favour certain lenders so maybe we could shop around a bit more.
looks promising[/quote]
I had a 5% deposit on a non new build flat and used the top up! It is definitely doable

It's fucking awful. My in-laws gave us some of our inheritance early £50k. With our combined income we can get £275k. That can get us a small, top floor flat where we are. Ex council houses are going for £325k. It's absolutely ridiculous. We thought "Hey! Nows our time", but very sadly its not going to be. We could move out of the area, but why the hell should we? Infuriates me no end 😡

Being told to just 'move out of the area' is so incredibly insulting. Why should you move just so wealthier people can live there.

We would have to move from where we are to afford a house, but that would mean no longer being close to the school DD loves.

We live in a grotty council house it is quite large for the money it cost 135k in 2016. A 4 bed detached in our area are going for over double the money for the same square feet or even less. to buy an actual bigger house we are going to have to spend 425k cause of the price increases, it's mad!!

Sorry haven’t RTFT but a) you don’t keep your savings in a savings account as they won’t grow in there - I put mine in a low risk stocks and shares ISA with NatWest. It was as safe as possible in an ISA but did rise more than interest each year. B) you get promoted so the amount you can borrow increases - this will happen dramatically if both you and DH get promoted. C) you Move area - I moved from my parents’ leafy suburb to a “gritty” area of town, but it’s been absolutely fine and much more of a community feel. We’ve owned for 5 years now and our property has increased in value a lot more than the leafy suburb ones so we are now selling up and moving to a bigger house near my parents. Good luck!

[quote PattyPan]@Fuckadoodledoooo if a mortgage is cheaper per month than rent then once you get past the hurdle of the deposit you can afford to do more stuff with your income. Plus once your house is paid off that’s it and you can put a lot more towards travel etc like a lot of retired people do.[/quote]
Depends how much cheaper...if 100 a month that will go towards maintenance and repairs....don't forget the total cost mortgage plus buildings insurance plus maintenance plus funds for new boiler or new roof etc...

You could rent a smaller cheaper house for a year to save more?

I've completely given up the hope of ever buying my own home. It might sound dramatic but it has devastated me to realise it. I'm 30 self employed and just making ends meet. I have around £100 a month in excess of essential bills. So hard to build any savings as things inevitably crop up.
My dream of having my own place is gone and with it any hope of being able to have a family. I'm so sick of this country and what this world is becoming. I don't want to be part of it to be honest.

This thread has been a breath of fresh air compared to a lot of property threads on here where every poster seems to have 600K minimum to spend.

It's really hard. We moved to the cheapest area possible in the South East in order to buy. I was so happy when I realised we could afford a house where we are (2up2down). The choice of house we could afford in the area came up with 7 results :). We've been here for 3 years and have made it a home, although it's tiny we can't move.

I really irks me when Mumsnet slags off my poor town - there's a good reason we're here and we're not all high earners.

I'm sure it will happen for you OP, you we're nearly there once!