Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

First time buyer - will things ever change?!

25 replies

friendtodinosaurs · 02/06/2024 12:46

My DH and I are wanting to buy a house - we're both paid reasonably good wages (I'm in education and he works in pharmaceuticals). We're currently renting but would like to buy before we have children really.

We've looked at mortgages and on a 3 bedroom house in our area, we're looking at monthly repayments of £1900 even if we save a sizeable deposit.

I know nobody has a sure answer of this but does anyone think this will ever change?! Our wages are good but paying more for a mortgage than we currently pay for rent on our 3 bed house seems crazy and unaffordable. I really don't see us being able to buy if things don't change!

OP posts:
fluffi · 02/06/2024 12:52

It seems odd that mortgage is more than rent, assuming at least 10% deposit and you are renting a 3 bed now?

Have you chosen a shorter term than 25 years? Extending the term (and then overpaying in future to bring term and/or payments down) would help reduce monthly payments initially and then they’ll become more affordable as your wages go up.

DaydreamerBetty · 02/06/2024 14:21

No one can really predict the future in terms of how the housing market will go. The way to look at is at least with paying towards a mortgage you will eventually own the property. Extending the loan term to 30yrs with the view to overpaying in the future will reduce the monthly repayments.

Good luck with it though, there is never a “Right” time to buy. 😀

friendtodinosaurs · 02/06/2024 20:57

fluffi · 02/06/2024 12:52

It seems odd that mortgage is more than rent, assuming at least 10% deposit and you are renting a 3 bed now?

Have you chosen a shorter term than 25 years? Extending the term (and then overpaying in future to bring term and/or payments down) would help reduce monthly payments initially and then they’ll become more affordable as your wages go up.

Edited

Rent is currently 1300 a month - we're looking at a 25 year mortgage so could extend to longer!

OP posts:
friendtodinosaurs · 02/06/2024 20:58

DaydreamerBetty · 02/06/2024 14:21

No one can really predict the future in terms of how the housing market will go. The way to look at is at least with paying towards a mortgage you will eventually own the property. Extending the loan term to 30yrs with the view to overpaying in the future will reduce the monthly repayments.

Good luck with it though, there is never a “Right” time to buy. 😀

Thank you for your kind reply! We'll have a look at extending the years. We're first time buyers so it is scary to make the jump - especially in this climate! x

OP posts:
Youcancallmeirrelevant · 02/06/2024 20:58

Yes extend the term, go for the maximum tou can to lower your payments to get pn the ladder, you can always overpay or reduce the term when you remortgage in 2/5/10 years etc

Reallybadidea · 02/06/2024 21:01

I don't think you can equate the mortgage payment with rent, because with a mortgage the part that is paying down the loan itself is more akin to money that you're putting into savings. If you view the interest part as your rent and the repayment part as savings/investment then it makes it more palatable.

Winter2020 · 03/06/2024 02:21

Hopefully interest rates will begin to come down as inflation settles down and then mortgage rates will follow.

I wouldn't fix my mortgage for long at the moment as I hope rates will begin to come down - although there are never any guarantees.

SheilaFentiman · 03/06/2024 06:43

You are renting from someone who may well be on a lower fixed rate than you can now get, and they may well be on a lower loan to value than you would be. The landlord may be interested in covering costs with reliable tenants rather than charging the max rent possible.

Meadowfinch · 03/06/2024 06:54

Why aim for a 3 bed house? I started with a scruffy one bed flat?

Did it up, moved after three years to a scruffy two bed house. Did that up and then bought a 3 bed.

It's much easier.

calishire · 03/06/2024 07:15

Meadowfinch · 03/06/2024 06:54

Why aim for a 3 bed house? I started with a scruffy one bed flat?

Did it up, moved after three years to a scruffy two bed house. Did that up and then bought a 3 bed.

It's much easier.

It doesn't always makes sense to do that particularly if you are older. There's no guarantees. We bought 7 years ago, now have 2 kids and cannot afford to buy a bigger house as the next step up has increased in value so much and mortgage prices have also jumped. We are stuck in a house that feels too small (although I know we are lucky to have it!)

ViciousCurrentBun · 03/06/2024 07:38

I don’t think there will be any massive crash like when I was a teenager in the late 1980’s.

I am assuming you’re in the SE?

Consider an extended period, the mortgage we took could take big overpayments without penalty. So longer term but pay off as quickly as possible.

Overthebow · 03/06/2024 07:42

Your first time buyers, most don’t get a 3 bed as their first house, and have mortgage with much longer terms than 25 years. I think you need to accept paying £1900 to get what you want, or go for a longer term mortgage or smaller house and climb the ladder instead.

Overthebow · 03/06/2024 07:45

calishire · 03/06/2024 07:15

It doesn't always makes sense to do that particularly if you are older. There's no guarantees. We bought 7 years ago, now have 2 kids and cannot afford to buy a bigger house as the next step up has increased in value so much and mortgage prices have also jumped. We are stuck in a house that feels too small (although I know we are lucky to have it!)

Yes but buying a 2 bed that you can afford is bet tree r staying in rented. Many people have to start with a smaller house than ideal and work up.

babasaclover · 03/06/2024 07:52

We started 18 years ago with modest 3 bedroom. We earned £40,000 between us and mortgage was £1000 a month on a 35?year term. It was TERRIFYING but so worth it. Interest rate was 5.29. Things got easier after the first 5 year fixed run out as we had some equity

Food luck to you. 35 seems so a long time but when you are living your life it goes pretty quick.

Ps we have since extended back and sides and loft which was much better value than keep moving to bigger with selling fees etc.

Startingagainandagain · 03/06/2024 08:39
  • extend term of mortage
  • go for a smaller property: 2 bed house or flat
  • look at a shared ownership house
  • move to a cheaper area.

As people have said your first home is usually a compromise.

I started with a shared-ownership flat in London, then sold this to buy a small terrace in a cheaper area 1.30 hour away and it needs a fair amount of work.

There is always going to be some kind of limited housing supply in this country so prices are unlikely to crash but mortgage rates might get better.

DoublePeonies · 03/06/2024 08:54

If my maths is right, you are looking at buying (once deposit is included) a house at 400k+.
That is way above the average house price in the uk, so yes, it is likely to be hard unless you are on very high salaries and a chunk of deposit from savings or gifted.

Most people don't work up to a house of that value, let alone buy their first property at that price.

Cola133 · 03/06/2024 10:00

I live in the South of England, rents are huge for a 3 bed, around £1500pm and buying a property even higher for a 3 bed in a safe'ish area, its a minimum of £395k now. A mortgage on that would be around £2.2k per month!! If we wanted to buy a property in the same area as we are renting, then we would have to go into a flat or maisonette. Property prices are rising and I don't think they will come down much due to over population and lack of property available, which is only going to get worse. They can't build as quickly as the population is rising, so where will people go? And as property gets scarcer and rarer, what will happen? prices will go through the roof like the price of oil!

What worries me looking to the future, it's getting harder and harder to get a rental property. More than 20 people all go for the same property in the south now and the Landlord can choose who he would like; whereas in the past the LL had to attract tenants. LL's are tending to go for working couples, rather than anyone with children or pets. They obviously don't advertise this fact, but as they can choose who they would like to rent to, they go for the option that would cause the least wear and tear on their property (makes good business sense). Also, if you are not working full-time, even if you have thousands in the bank, they are now asking for a working guarantor - so the elderly and retired are pretty much screwed unless they have a family member that will act as their guarantor - There is literally not much hope or longevity in the rental market for anyone that has children, pets or isn't working fulltime, and TBH, as costs are going up for LLs too, there is going to be less and less property to rent as it doesn't make a profit of them to continue to let properties.

So what to do... my opinion, is get your own property as soon as you can, even if it has to be less than your ideal home, at least you are safe for as long as you can pay the mortgage. Get a home with a mortgage that you could afford should the interest rates rise again, which it is likely to as property available becomes scarce (this is worst case scenario btw). If after a few years, my doomsday prediction hasn't come to pass and our Government gets their fingers out with population control and house building 🙄, then look to see if you can release equity so to speak, and step up to a larger or more expensive property and keep doing that until you achieve what you want. At least if you own your own home, you are safe with a roof over your head - no two months notice of the LL going to sell up and you having to try and find another rental that will accept you against plenty of other competition.

For me, I am priced out of southern England and luckily we are in a situation where we work from home mostly, so we are looking to move North where we can get a nice 3 bed house for around £220-£250k. We are counting down the days to get out of renting and having our own home. Best of luckx

MuseKira · 03/06/2024 10:50

Meadowfinch · 03/06/2024 06:54

Why aim for a 3 bed house? I started with a scruffy one bed flat?

Did it up, moved after three years to a scruffy two bed house. Did that up and then bought a 3 bed.

It's much easier.

The traditional "property ladder" approach doesn't always work in every market, every location, every economic situation.

It clearly worked for you - fair enough.

But for lots of other people, buying in different time periods, different locations, different circumstances, it hasn't worked and they've been left in negative equity, or seen price rises on their next "step" but no price rises on their lower " step", etc.

MuseKira · 03/06/2024 10:55

Overthebow · 03/06/2024 07:42

Your first time buyers, most don’t get a 3 bed as their first house, and have mortgage with much longer terms than 25 years. I think you need to accept paying £1900 to get what you want, or go for a longer term mortgage or smaller house and climb the ladder instead.

Back in the day, it was easier to hop from smaller to larger homes up the ladder every few years, but it was all contingent on getting on the first rung and an active/inflating housing market.

Trouble today is that lots of people can't get on the first rung, so they are still having to rent when they need to move up from a flat to a small house, then to a bigger house, etc., i.e. when they need to work from home or children come along and a bigger house is needed.

So they need a much bigger deposit and face much higher mortgage repayments as they're looking for a bigger house as their "first home" compared to the past when people could buy younger/sooner and needed a smaller/cheaper start home!

Go back 2 or 3 decades and it was a lot easier for people to buy a small flat, and then use it as a springboard. Now, lots of people can't do that because of the shortage of homes, house price inflation many times higher than wage inflation, etc.

It's a completely different scenario for today's youngsters.

Overthebow · 03/06/2024 11:17

MuseKira · 03/06/2024 10:55

Back in the day, it was easier to hop from smaller to larger homes up the ladder every few years, but it was all contingent on getting on the first rung and an active/inflating housing market.

Trouble today is that lots of people can't get on the first rung, so they are still having to rent when they need to move up from a flat to a small house, then to a bigger house, etc., i.e. when they need to work from home or children come along and a bigger house is needed.

So they need a much bigger deposit and face much higher mortgage repayments as they're looking for a bigger house as their "first home" compared to the past when people could buy younger/sooner and needed a smaller/cheaper start home!

Go back 2 or 3 decades and it was a lot easier for people to buy a small flat, and then use it as a springboard. Now, lots of people can't do that because of the shortage of homes, house price inflation many times higher than wage inflation, etc.

It's a completely different scenario for today's youngsters.

I know I’m living it, we couldn’t buy two decades ago as we were in school! But many of us have, and still do buy smaller houses or flats and move up when we get higher salaries and build savings. We boo o unhygienic a small 2 bed as that’s what we could afford and had our first DC in it. If we hadn’t been able to afford put next house we would have had 2 DC in it as that was our original plan and it would have been fine. There’s no need to buy a 3 bed straight off, even with DC, it’s just wants.

GrumpyPanda · 03/06/2024 11:30

So you're currently renting for £1.3k/month and looking to buy a house the same size? The very first thing I'd do is to look at the price to rent ratio for your region (house price as a multiple of annual rent payments) to see how much sense buying makes in the first place. Internationally, 20 annual rents is often considered a cutoff above which you'd be better off continuing renting and investing the money you'd spending on higher mortgage in other appreciating assets such as global funds. In your case that would give you a house price of £312k max for buying to make sense. Yet a pp thinks you're looking at significantly higher prices?

https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

Price-to-Rent Ratio: Determining if It's Better To Buy or Rent

The price-to-rent ratio is the ratio of home prices to annualized rent in a given location and is used as a benchmark for estimating whether it is cheaper to rent or own property.

https://www.investopedia.com/terms/p/price-to-rent-ratio.asp

Meadowfinch · 03/06/2024 12:24

Also, why rent a 3 bed house when there are only two of you? Why not rent a one bed flat, save twice as much and get on the property ladder sooner.

I'm puzzled

SheilaFentiman · 03/06/2024 13:16

Meadowfinch · 03/06/2024 12:24

Also, why rent a 3 bed house when there are only two of you? Why not rent a one bed flat, save twice as much and get on the property ladder sooner.

I'm puzzled

I don’t think saving an extra few k will make much difference to the proportion of the deposit and hence OP’s ultimate monthly mortgage cost

SheilaFentiman · 03/06/2024 13:19

Also - OP hasn’t explicitly said that they are currently renting a 3 bed, though it sort of follows from the things she has said.

BurntOrange · 03/06/2024 13:24

We bought a four bed with a 5% deposit and 35 year term in 2018. You may not be able to secure a 95% mortgage now, but I know they are offering terms of up to 40 years depending on age. We reduced the term each time we remortgaged and now have 22 years left as the house increased in value

New posts on this thread. Refresh page