How do people afford nice houses?!

[Dededot]

We have always been extremely careful with money. Bought our first home 4 years ago in quite a cheap area that isn't very nice. It has no communal parking and we never get a space and with number 2 on the way I am desperate to move closer to my parents. We paid £250k for our house, and it's worth £290k now. We still owe £263k.

Between me and DH, we earn £96k a year, but we just cannot afford a nice house in the south. Maximum we could go to is £420k, and then I'd worry about whether it'd be affordable should interests rise to, say, 5%. For that, nowadays you can get very small houses with tiny gardens in the area I want to move to. Have looked at other areas too but seems everywhere is around the same.

I could wait another 5 years when my kids are all at school and I don't have to think about paying £800 a month on childcare, but by then maybe the houses that are 500k now will be 1000k?! Ours is in a bad area so its price isn't increasing in proportion to the nicer areas.

How do normal people afford nice houses when we're in the top 10% earners according to gov stats and can't? Seems everyone I meet has a huge house in a nice area!

This thread is quite refreshing & realistic. Normally on MNs you see "we earn 200k but would never have a mortgage over 1k a month"

Buy a place with potential in an area that you think will rise in price. Do it up very slowly as you can afford it. Do as much as you can yourselves.

Have a lodger via the Government's rent a room scheme - doesn't have to be for ever. £7500 per year tax free with little effort on your part.

We are late 30s and top 5% earners, and we are in a house that we would never, ever be able to afford on our current income. It’s because of:

1. Inheritance. Money from grandparents paid for the deposit on our first place.
2. Time. We bought as soon as we feasibly could after we got married in our late 20s, when we were both working and didn’t have children, so we’ve had a decade in the market.
3. Sheer dumb luck. We were very fortunate to benefit from massive jumps in house prices with each of our last two properties.

I really feel for people who are just now trying to buy a family home. It already felt hard to find anything in London’s outer zones even back in in the early 2010s, and we had a decent income and a deposit to hand. It is so, so much worse now.

Op can aford a nicer house but doesn't want to get the mortgage amount needed.

Very daft when they have such a lot of left over income ie £2500 per month to overpay the mortgage. Very silly question really when looking at the op circumstances.

I too suggest you go for the small house with small garden in your preferred area.
When the childcare costs go down in a couple of years you can then look at moving up the property ladder.
As they say, it's all about location.

Thank you for the responses. Those saying put all your savings into the current mortgage - we can pay off up to 10% a year without a penalty and will do this. It's only since January that we're saving 2.5k a month btw - before that it was 1.5k a month and I did have mat leave a few years ago, so it's only recently we have all this money which will have to go into solicitor fees (probably will be around 10k), stamp duty (a few grand) and other moving costs - it all adds up! Anything leftover will go to renovations and some new furniture, I imagine.

Thanks again for the advice 🙂

Stamp duty isn’t a “few grand”’FYI. If your next house is £925k for eg it’s around £37000 and £43000 if the house is higher. There are stamp duty calculators where you’d be wise to put in your purchase price for intended property.

solicitor fees are unlikely to be £10k and possibly lower.

and we’ll done on using the 10% overpayment allowance

The OP isn't looking at houses for £900k though. The stamp duty on a £500k house would be £15k, and that's a more realistic basis for her to budget on.

Solicitors fees rarely come in anywhere near £10k where I live. More like £2k-£3k

Because you live in the South East. Bonkers isn’t it, on that joint salary you can’t afford much. I also live in the South, I want to buy my own house in a few years but I will have to move back up north to afford it. On a single salary even though I earn a good salary I just can’t even afford a flat. Bonkers. I think most people get an inheritance or bought their property when prices were cheaper or get help from family to buy it. I wonder how anyone who say works in a retail afford anything in the South. Even a teacher wouldn’t afford anything. So crazy

I live in the South East and have just bought a lovely house.
9 years ago we bought a bungalow in terrible condition but in an 'up and coming' suburb of a city We did this bungalow up. Then we moved abroad for 3 years to a country with low taxes and reasonably high salaries - neither of us liked our jobs much but we were able to save an entire salary each month for three years. We used this to aggressively pay down the mortgage. Late last year we sold the house for almost twice as much as we bought it for. Used this for a deposit on said lovely new house.
So it's been a combo of hard work and good luck (in terms of the up and coming area actually transpiring as up and coming!) we are low spenders in general and have made getting our hands on this 'forever' house a priority for several years.

Some people prioritise the bigger house for now, you are prioritising saving for the future. You can easily change that if you want to.

Just echoing others RE savings/vs overpaying mortgage. Interest rates are so low on savings accounts and inflation so high that you're losing money by saving it. Far better to pile it into the equity = more return on your investment = save quicker for better house? You earn quite a lot so I think a consultation with a financial advisor would be a good idea to work out how bst to invest your cash. I'm planning on getting financial advise when I go back to work as I'll have spare money and want to make sure its working as hard as it can

You stretch yourself. Simple as. You have 168k equity, and a combined salary of nearly 100k. People stretch themselves.

I re-evaluated what I considered to be a nice house and a nice area to be closer to what I could afford. We

There’s lovely homes at £420k. That’s not a tight budget.

I think it’s probably the level of risk people are willing to take or what they prioritise. If it’s really important to you then you could definitely afford the big house with what your saving so if it’s what you want just go for it

I think it depends on where you are looking and what you are looking for.