How to afford a mortgage in south east?

[houseprob]

I am not sure if I've just got this all wrong - currently rent - joint income £60k. We pay £1750 in rent to afford this payment we needed to earn 30x rent a year so £52k roughly. We are trying to save for a house but for a 3 bed the same as we rent the houses are £500k. We can't raise a mortgage high enough to facilitate this, I have been told we could probably borrow £300k at most (5x wage) so we need £200k deposit plus fees! Does this sound right? How does anyone buy in the south east?

I know people buy smaller to start with but not an option for us as we have children already.

How many children do you have?

We live in Surrey, could possibly get a doerupper for £400-450ish but would be a lot of work we wouldn't have money for! Believe me we are in the cheaper part of our town - some 3 beds are closer to 1 million by the kids school!! Ideally want to stay here as jobs are here and family whom we have a lot of support from.

Have 3 children so no chance to move smaller! Rent is average for area (Surbiton) don't really want to be paying this much believe me but there's no way we could move into a 2 bed flat! We have a dog and also eldest child is now 9 so need more space if anything! Would rather stay renting then move to Kent/Luton etc atm as like I said too far from family support.

£60k is quite low I guess but not too bad - I am part time atm so in a few years time potential to increase my wage by another £10-20k possibly but at the moment I have to work round school hours as two eldest need extra support with illness.

We were thinking perhaps we will have to rent and in 10-15 years buy a small flat once the kids have moved out/ or we can move further out or possibly just upheave our whole lives and move much further out but would have to be quite far to make a difference if that makes sense as even 1 hour away houses are still quite expensive! The prices have doubled since we started renting 10 years ago but unfortunately when we first got together we weren't in a place to think about buying!

We are in SE too (zone 6 of London) btw.

In that case you’ve answered your own question - you want to stay in the area you’re in even if it means renting. Nothing wrong with that!

What happened in the past was you bought a flat sold it for a lot more & probs earnt a bit more & moved up to the next step. Problem is the bottom rung is very high now & in most areas you will not see anything like the historic growth if you buy now or did in the last few yrs. Hence why the market is stalling in many areas. Affordability is stretched & why banks are now returning to 5x & interest only. Wherever you buy I would recommend it’s something that’s future proof. I would be very wary of help to buy & shared ownership in the current climate & potentially interest rate rises in the future.

You're squeezed four ways. It's quite interesting.

Prices are sky-high, becuase house prices are related to cost of credit, which is very low. But then you need a huge deposit, becuase lenders are nervous of loan-to-values above 90%. And you need a huge income, becuase the Bank of England discourages loan-to-income ratios of more than 4.5. And you need low expenses, because the FCA makes lenders aggressively assess "affordability", and you get penalised for costs like childcare.

So it's rigged in favour of people with rich parents or people who bought before 2011-ish. It's not designed for you or me.

A vauguely OK forever home where we need to buy is £750k - we need to manufacture a £150k household income and £110k in the bank - it's not fun.

A vauguely OK forever home where we need to buy is £750k - we need to manufacture a £150k household income and £110k in the bank - it's not fun.

So, you just don’t buy your ‘forever’ home yet if you can’t afford it. You might also have to rethink the area you ‘need’ to buy in.

nightwearson I dont see how it’s sustainable & I say this as a homeowner with plenty of equity. 3 of my friends have left London because despite masses of equity & high incomes they just don’t want to spend 1m plus on a terrace with postage stamp garden & no off street parking. It’s worth me staying for the time being as DH & I are Londoners so my mum is around the corner & helps with kids. However when my 1k childcare bill reduces I’m sure as hell not spending it on an extra bedroom so will be off.

Well you want too much and haven't been particularly smart with it all. 3 dc and a dog AND you want to live in Surbiton. Well you made your bed and you really are happy enough with it or you would be taking on some of the advice here.

And that is perfectly ok! But you can't be all woe is me. We bought 2 bed and if terrace in zone 3. Lived there for 7years and have now moved closer to family. And are mortgage free.

We have a combined income of £160k. 2 children. The most we ever paid as rent was around £1450. For around 6 months and then moved to a more affordable area.

We would not be able to afford to buy in Surbiton. Period. We could barely afford a 3 bed in Reigate. You cannot spend so much on rent and expect to buy in a place that is overpriced and based on your combined income. It just isnt going to happen unless you have someone willing to gift you the deposit or a large chunk of it.

Your problems are:
You have three children so need a bigger house than most.
You want to live in one of the most over rated/over priced areas in the SE.
You dont seem willing to compromise on location or house size.
You just dont earn enough to afford what you want. Sorry, but that is the reality.

I diagree with a previous poster. Reigate and Kingston are still very overpriced areas to live in. As is Guildford. Redhill is not too bad price wise and the town centre is undergoing a major facelift.

I suggest keep renting for now. Cut back on everything you can and try and put away at 1k away each month (No touch direct debit) then empty EVERYTHING you have left into a savings account at the end of each month and really try hard for that 200k. Alternatively keep renting till you retire (still putting away as much as you can) then you could buy somewhere bigger elsewhere (as commute wouldn't be an issue).

3 children in a 3 bed in the South east here. Started in shared ownership in a 2 bed and then moved out of shared ownership into a 3 bed.

We moved to an area that wasn't the main area we wanted to live in and go a house which although has 3 bedrooms, is small. In fact our house is tiny. We rely heavily on good storage and decluttering. On the flip side we live next door to the most expensive area in the south east and we pay £200-300 less a month that those who rent comparable houses. Moving to another area would see a big drop in our income as DH can only get the income he gets here (until he obtains more qualifications).

Since we first bought we have always played the long game. Our aim is to move to a lager property in 5 - 10 years and in that time need to increase our income but will also hopefully have some more equity (currently £50k) and savings to aid us. We don't earn much and so we've always had to be strategic in every choice we have made and have made many sacrifices, but we're happy with our lot.

I have a friend who moved about 20 miles from here and has bought a house about £30k more than we paid and it is huge. She has 4 bedrooms, a living room, dining room, utlity, study etc etc downstairs. We have a kitchen and small open plan living room/diner. Location can make all the difference.

OP, if Surbiton is what you are after, worth looking into Basingstoke and Southampton Central. You can find 3 beds, within walking to the station under £300K, your monthly mortgage will be a lot less than what you are paying for rent now. I would personally sacrifice being very near to the family for 3-5 years, in order to get into the property ladder, building more equity while not paying rent. You can move back later on. Just my thought. Most of people in London and SE (and us), don't buy our forever home 1st time.

Earn the same and bought for £300k 2 years ago in Hertfordshire, mortgage of £260k, deposit £40k plus £20k ok renovations

starzig there is noway anyone can save while paying rent £1.7k/mth, joint income £60K, 3 kids and a dog, in the SE. The rent must be more than half of monthly income already? Sorry OP, but it's a hard reality, and the rent I suspect will be keep on rising. With current climate, it's a good time for 1st time buyer and get into property ladder, bargain hard & stamp duty exempt as well will help massively. Avoid shared ownership or Help to buy (unless you can be certain to pay back the 5% equity in less than 5 years, and still can afford for your ideal home), and high minimum mortgage payment.

I'd like to live in a good size house in the big town near me, but there's no chance, life is all about compromise.

You're not alone

Many posters have said that you should keep renting.

The trouble is that tenants have absolutely terrible protection in the UK, and you can never properly treat a rental as a "home" because it's too easy for the landlord to kick you out.

So we're all put in a position where the only way to have a stable home is by getting a mortgage, but the rules say we can't afford a mortgage, even though we can... while most of the people who own identical homes would never be able to afford them if they had to start from scratch today.

We were in a similar position in a different area. For us it was mainly about staying close to family. The issue was forced as our landlord sold the property we were renting. We went for shared ownership rather than moving away. Not a perfect scheme but has worked well for us so far. Lovely house in our desired area.

You won't be able to buy in as 'premium' an area as you rent in; it just doesn't work like that.

We had to move from one of the poshest areas in London to one of the least so to buy a house with household income nearly double yours. 100% worth it in my opinion for our quality of life but that's a choice we made and it didn't affect our support networks fortunately.

Renting in London or London fringes has become exorbitant over the past ten years as well unfortunately.

Also agree about not going for the forever home idea. Our first step on the property ladder (cheap 2bed flat) was everything we said we didn't want for our tastes but it was a good investment in an area seeing amazing growth due to Crossrail(!)

It enabled us to 'trade up' to a house with garden which probably isn't a forever home either but offers stability for the next 5-10 years.

I was terrified of renting with a baby and the uncertainty so we decided to buy even if it wasn't amazing compared to lovely places we had rented in the past.

I don’t know anyone who when they bought their first home, it was their ‘forever’ home!

I don’t think you are being very realistic!

Borrowing £450,000 at 2.34% gives you a monthly repayment of £1,753 for a 30 year mortgage, same as your rent.

For your rent to be "affordable", you need £52K income, as you say. But for a mortgage to be "affordable", you'd need £100K income. Same property, same monthly payment.

Your landlord's mortgage is still "affordable" though, because your rent covers his mortgage!

Interesting, isn't it? If you wanted to design a system to stop young people becoming homeowners, you'd probably design it like this.

Perpetuates the problem but a few people I know have bought elsewhere & rent that out. Then they carry on renting in a more convenient area.

I was just about to say buy somewhere else and rent it out so you can enjoy the capital appreciation.
If you had done that 10 years ago, you may have had enough equity (with the capital appreciation) to get your 500k mortgage as the equity would provide a deposit. It's still worth doing know.