How do people do it?

[MrsHapus]

Lucky enough to live in a nice, sought after area in a 3 bed semi. 2 young kids with the end of nursery fees in sight, and have had childcare help from family. So although we're looking forward to the end of fees, they haven't been crippling!

Bought our house in 2018 for £250k with a £30k deposit.
my salary is roughly £40k and £15k bonus
DH salary is about the same- £58k pa

Because of bonuses, we have managed to pay off some of the mortgage and now have ~£155k left

Managed to secure a 2.3% mortgage which we have for the next 3.5 years

However, we want a bigger house with more space. With the rising costs of houses and interest rates higher than what we have, I just can't see how it's doable.

In our area, the average price for a 4 bed house in an ok state is easily £550k. Some are even more despite needing considerable work.

I know that we aren't in a terrible position, but how are people moving up the property ladder? The figures just aren't making sense. Can someone shed some light about how to afford it at the moment?

You haven’t said what your house is likely to be worth currently.

If it sells for £300k, you’ll have the guts of £150k as a deposit.

Thats typically how people move up- they build equity.

I didn’t realise moving up the ladder means from 3 bed semi, I thought that was the average end of climbing the ladder. Your income doesn’t sound enough in today’s prices I ama afraid especially if you live in London.

Building equity, salary rises, and inheritance.

I'm assuming you have about £150k equity now. A mortgage of £400k is about £2500 a month, you should have a high enough salary for that if you prioritise the house over other nice things.

Not London- South Wales area but close to amenities/good schools.

Rough price of our house is £310, so £160k deposit using the equity we have- however that still means close to a £400k mortgage would be needed!

House we live in currently is nice, but on the smaller side. As it's a new build the third bedroom is tiny. Fine for a 3 year old, but it won't be long before we will be feeling the squeeze.

Some people buy a do-er upper and add value, sell at a good profit, then buy another do-er upper.

You should be able to get a mortgage at c 4x your joint income so it is doable, maybe look at extending term as long as possible while interest rates are high?

not suggesting for a second house prices to salary ratios aren’t utterly bonkers but I’d imagine that’s how most people are doing it without some kind of windfall

How much are you managing to save monthly?
Maybe you can try to increase savings and then you’ll need a smaller mortgage. That’s what’s we’re doing

Why does it have to be a 4-bed? Two kids and two parents always lived in a standard 3 bed where I grew up. Could you not just get a bigger 3 bed? With 3 doubles?

Extend where you live? Or just make it work with the smaller bedroom

I was gonna say extension will be cheaper than your extra £200k jump from 3 to 4 bed..but if it's a new build I'm guessing there's no room for an extension.

I'd actually just move to another 3 bed with a bigger garden, not a new build, and get a loan for an extension

I do think it's outrageous that they're building houses that families can't fit in. My friend's 3 bed living room can only fit a two seater sofa

To be fair, it doesn't have to be 4 beds- depending on the size. Since Covid we're both working from home, meaning one of us is working in DD's bedroom and the other on the kitchen table at the moment, so it's not ideal. We're happy to work in the same room if there's space, so we picture the 4th bedroom being a office for both with a day bed.

Interesting about people saying to extend- we did have a quote for a 3x4m single story extension to add some downstairs space, and we were given various quotes ranging from £42k-60k plus as building materials had gone up. This wouldn't haven't given the upstairs we needed so we considered it as a stop gap until we could afford bigger. However we couldn't justify it with those prices as it wouldn't have added the same amount on return. I always imagined that buying a doer upper that includes restructuring the downstairs/having a new kitchen would be too much- maybe something we can look into though.

Someone asked about savings- both of us have guaranteed bonuses each year meaning we sort of use that as our savings. Each year we've been able to comfortably make over £10k overpayment on our mortgage.

If your mortgage is 2.3% you’ll be better off putting the money into a savings account instead of overpaying. I get over 5% on mine with no tax to pay (on the ISAs anyway).
Then if you can save more than just your bonus, in 2 years you’ll have a big chunk extra and you’ll have paid off another 2 years of mortgage so have more equity.

I think a lot of it must be related to where you live. We bought our most recent 4 bedroom (all comfortably fit double beds) detached new build for 350k a few months ago. We sold our previous house which was another new build and 5 bedrooms (although one room was very small) for 275k after paying 215k for it in 2021. For a 4 bedroom house to be 550k where we live it would have to be very very large and fancy! We had about 110k in equity. Our mortgage is around £1200 per month.

We aren't high earners at all. In fact I don't work. My partner earns about 35k with about 2k in bonuses annually and we claim UC and a couple of other benefits.

If WFH space is the driver, would a garden office be an option?

We stayed in the smaller-but-adequate house. 3 bed moderate size detached. Split the big living room into a smaller living room and playroom/teen games room. Got a garden office. Visitors sleep on sofa bed in playroom, or we give them our room/ensuite and we sleep there. Or family visitors stay with dm half a mile away. The relatively smaller mortgage has seen us through mat leave x 2, redundancy x several, COL , nursery fees. It would have been difficult to cope with any of those costs with a larger mortgage.

A substantial amount of people get help from relatives. Parents who downsize or pass down some inheritance early. You're doing more than well

No help from relatives here, and both useless at DIY so choose houses that need minimal work

We climbed the property ladder by a mix over overpaying the mortgage/saving and also both climbing the career ladder.

But I am sure we were also very lucky and benefitted from some of the housing market fluctuations and that was luck not timing! We also got a long ISH term mortgage knowing we both had promotions looming and then shortened the term with chunky overpayments

When we moved last year we were looking for 3 bed plus office, rather than a 4 bed which would have been completely out of reach.
So a 3 bed with an integrated garage to convert, or a garden room, conservatory or awkward loft conversion.

People just manage.
A combination of factors which will differ depending on who you speak to.

Some will overpay the mortgage, others will focus on pension, decent salary increases, successful Share Saves, PB wins, help from parents, foregoing holidays or a new car etc etc.

Just focus on what you can afford and work to that budget although it never hurts to stretch yourselves.
It is a slow process.

I understand you totally OP. The next jump seems massive
We're in a 4 bed detached that we bought about 6yrs ago for £330k probably worth £450k ish now we have 4 children though.
Our current set up is that our teenage daughters room is downstairs which was our dining room (not next to kitchen). It was meant to be temporary but she really loves being downstairs and its a lovely spacious room. Then we have 4 decent sized bedrooms, en suite and bathroom upstairs.
If we moved we'd want to stay in the same area and a 5 bed detached is about £650k plus. There's not many of them around. The ones that are priced around £660k would need a fair bit of work too.
We've found that the 5th bedroom is usually tiny and the overall size isn't much more than what we've got now. It just doesn't seem worth it to add another £200k plus to our mortgage when we're approaching mid 40's

But it sounds like you all have plenty of space? No-one needs a 5 bedroom detached house. It’s a want, not a need.

Honestly, the south east skew on this site often drives quite a strange, privileged narrative :/

yes, we would all like bigger houses but the UK is really small and land near places with jobs is at a premium. houses are typically smaller than in continental Europe, the US/ Canada, and Australisia.

literally no-one I knew growing up had more than 3 bedrooms apart from the family that won the pools. And they had a pretty standard new build but with a games room (imagine!), having traded up from a terrace with 2.5 beds with 3 kids.

big houses have never been a feature of most UK residents’ lives.

Well we can afford to upsize because when we bought our current house our combined income was £80k, and now promotions and job changes means it’s closer to £180k. If we’d stayed on the same income we wouldn’t have been able to upsize. Have you got scope to increase your income?

Although @Jmaho am guessing you are actually not in the south east come to think of it, not if you got a 4 bed detached for that price.

Still, I do think we need to think hard about whether property ladder climbing serves much of a purpose. Yes, you don’t want to be tripping over each other. Yes, it’s human nature to want more space and a bigger house. But it can become an end in itself and I do sort of think we are a bit spoiled. My best memories and happiest times haven’t come whilst living in bigger and shinier houses. Mind you I’d really love this mansion I’ve found near here 😂

We did the doer upper route. It's been really hard, and it feels neverending sometimes. I'm currently sat on my sofa in a room that has unfinished walls, a bit of tape over a hole in the ceiling (wasps were coming through), temporary window blinds and a 40year old carpet. It's also very small but it's in a fairly expensive area and has lots of room to extend if we can ever afford to. But I'm also sat here knowing that I have a great amount of equity built up, an affordable mortgage, and this is probably the last house I'll need to redo as it's the one I'm staying in hopefully. I'm happy with the choices we made.

@the2andahalfmillion no we are in Worcestershire.
No we don't need a 5 bed detached which is why we will likely stay put as its too expensive mortgage wise to move up now at our age. I'd rather focus on getting the mortgage paid down.
The issue we have is that although they all now have their own rooms our kitchen is small and the table is crammed in there now we've lost the dining room.
It's a fairly modern house so doesn't have a huge garden so not a lot of room to extend the downstairs. Like the OP we did look into a small extension on the kitchen but it was a lot of money and we'd lose some of the garden.
But we're fine. I grew up with 6 of us in a small 3 bed so know what's it's like to live in a house where there really isn't enough space