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.

Now not know.

I also think that people need to buy if able to, before having children.

And there are loads of houses in the south east in the £200 to £300k budget. I spent last two years looking and there was still thousands and in not bad areas.

However my budget was less than this after divorce so I moved to the midlands from the south east. Lovely area for £150k.

But I know the southeast is doable with local stations and amenities in decent areas for £200k to £300k.

The villages outside Bedford, Luton and Milton Keynes or on the Northampton border are lovely. As are the villages outside Hitchin.

House prices are definitely falling in the surrounding areas. The problem is how low will they go. You don’t want to buy and then get into negative equity.
I live about 5 miles from you and the houses in my road have dropped by about £50K.
How about Chessington? That has always been a bit cheaper and not too far from your family.
My friend is selling a decent sized three bed house in Reigate for about £425K. Again, a pretty big drop from what is was worth not that long ago.

We're in SE, we have joint income of 50k and bought a 3 bed end of terrace for 237k. You need to look further out and there is lot of affordable housing

Believe me I am not looking to move into our forever home, just a basic three bed house that wouldn't need any major structural work (as we prob couldn't afford that for a while) quite happy for it to be an old fashioned house that needs a new bathroom or kitchen as DH is very handy and I would repaint etc probably anyway! Like I said had we have started off without kids we wouldn't need a 3 bed but the fact is we do have the kids and that's a decision we made and have to live with. Most of our friends now (just all turning 30) are starting to be able to buy now - most in 2 bed flats and many with parental support! We didn't have a choice to stay at home and save for a mortgage with parents. My mother moved 400 miles away when I was 18 and I moved into rented accommodation.

We had thought about buying a 2 bed flat to rent out now, then once the kids get their own places we could live or sell. But as first time buyers it's very hard to get a buy to let mortgage and you need a higher despair also so kind of defeats the point!

Just frustrating we can't afford to buy what we live in now despite the payments would be the same and we do just fine now! Our landlord brought the house in 2009 for half the price it is worth now (£250k!) the million pound houses were brought for £400k ten years ago by the school and one of DS friends recently sold for £950k having put on a rear extension only and have paid off their mortgage and brought somewhere else to do up! I am hoping prices will go down but don't hold much hope!

Chessington is where family live - realistically we would consider anywhere within about a 30 minute drive but the prices don't go down by that much even in redhill and Reigate and that would severely effect the help we get with the children and balance out with childcare costs etc when I go back to work!

Buy to rent it out isn't a bad idea, to gain appreciation. I had bought my first house before meeting my DH, later on we both had to move to different area for jobs so was forced to rent the house out for quite a long time until we decided it time to sell. In hindsight, not for the decision to buy early, we would not be able to afford our house now.
You will need to declare with the mortgage provider as "consent to let" or else hectic fine. (I'm lucky that I rent it out to a close relative, who just happened to want to live there)
Read through about the "consent to let" before you decide on which mortgage company you will go with (some mortgage provider won't accept you to rent out your home at all and/or time limit for how long until you have to convert your mortgage to BTL, which would requires higher deposit). Also there are fees and higher interest rate if you rent out your house vs. standard mortgage.
With Help to Buy mortgage, you won't be able to rent out your house either, if I remember correctly.
Any option for inheritance from parents, and use this money for buying house later on? You won't need to worry about retirement home then.

In my area
A not so nice studio bed sit is £500 per month and costs 50k to buy

A decent 1 bed flat is £650 per month and costs 150k to buy

A 3 bedroom terraced/smaller home is £800 per month and costs 250k to buy

A lovely nice area large 3 bed is £1000 per month and costs 400k to buy

A 5 bedroom detached in one of the nicest areas is £1500 per month and 1 million to buy.

An amazing football player style 6 bed detached is £2000 per month and costs 2 million to buy

And a absolute craphole of a 9 bed student HMO run by of of the many roguish landlords of my city is £2500 per month for whole lot and 500k to buy

As you can see rent has little relation to purchase price... plenty of nice houses for 300k in the southeast

Further to my last post then - when you say South East, you actually mean Chessington or Surrey? Probably 2 of the more expensive places?

Of course you are not going to be able to afford to buy what you rent. Unfortunately that's not the way the housing market works if you don't have a big deposit.

You essentially have two choices -

1. continue to rent. You already have your three bedrooms in the area you want, no hassle of moving and all the associated costs (at £500k the stamp duty along will be £10k).

2. you lower your expectations of what you can afford in the area you are in - this May mean moving to a 2 bedroom or less desirable area.

3. you move out of the area to take advantage of lower prices. Unfortunately for you, that will mean a major move as anywhere in the commuter belt for London suffers from high pricing.

Of course factors will change over the years, salaries will go up, house prices will change etc. However remember that whilst you are lamenting about the great deals people got 10 years ago, the next generation are going to say the same about the here and now.

Either you get on the ladder now and accept that it's not going to be exactly what you want to start or you resign yourself to renting for the foreseeable.

Joint income here of 57k. We are buying a 3 bed in the SE for £260k and are in the process right now. Where are you looking?

My dd earns 61k and has got a mip of 270k with a 50k deposit, looking in South East London she has the choice of 2 bed terraces or 2 bed flats.... you simply don't earn enough for the house you want, there is nothing wrong with renting, and for you in the area you want and the size of house you want is your only option

Alexalee is that a 270k mortgage plus deposit or 270k minus deposit.

320 with deposit... stretching to the max at 4.75 x income

Sorry I think that is at 4.5 x earnings... If she gets to a 15% deposit they will lend her 4.75 times which is nearly 290k mortgage.... which is very close to being doable with the 50k deposit but then it would be a 340k property and she would need another 5k for stamp duty etc... so maybe in 3 months she will be able to afford it.

That’s what I assumed, personally I think that’s quite a high multiple for one person but good for her.

I don’t know anyone in the south east who owns their own property and had any children under thirty.

It really is as simple as that. In order to buy anything in the south east, in particular Surrey and surrounding, you need to spend your twenties saving. Then buy a flat.

Then in about ten years manage to upgrade to a small house.

You have chosen to prioritise having children relatively early. So you don’t want to buy a small flat and then upgrade. That’s your choice and unless you make different choices going forward, locations size , changing career etc you are not going to be able to afford to buy . That’s not a major societal failure just a feature of your life choices.

On the other hand your children are likely to have left home when you are in late forties/ early fifties so you will have twenty years of working to save at that point. Assuming projected retirement age of seventy for current thirty year old

@SEsofty what age people do you mean?

I don’t know anyone in the south east who owns their own property and had any children under thirty

All my age (40) and older friends and family that I can think of own their own property (well mortgaged) and has children under thirty but we first bought in the late 1990s.

House prices are very different now!

Ironically I thought the same as you when we bought in 2004. Friends who'd got on the ladder 2-3 years ahead of us had paid a tiny percentage of what we then had to pay for our first home, and it felt like we had a mountain to climb in comparison. But really, you just dig in where you can and as the years tick by, it gets easier. There will always be people better off than you, and less well off. Don't compare yourself to friend X who is lucky enough to "only need" a 2 bed flat. If you want to be home-owners, accept it'll involve compromise, or stick with renting.

We felt we "needed" our first house to be a 3 bed too, because house prices had risen so much I was terrified of negative equity. We found literally the cheapest 3 bed in Woking and bought it. It had dozens of compromises. The location wasn't the best, the smallest room was 6' X 7' and one wall was made of dodgy 60s glass. You cut your cloth to what you can afford and over time you work back to where you'd rather live. For us we were massively priced out of anywhere near the station, so we sucked up bus journeys and long walks for several years. We could have bought a 2 bed closer in, which in retrospect might have been more sensible, but the 3rd bedroom won out for us.

It sounds to me like you're not prepared to make the compromises you'd need to, to buy a house in your budget. That's fine, you can stick with renting, but I don't think you're in an unusual position. Compromising (a lot) is part and parcel of buying their first home for an awful lot of people, not just today but in the past too. Buying in their first, second or even third choice location, or going straight into a 3 bed house, is a pipe dream for a lot of FTBs. It's a bit more complicated as you have children already but it's still doable, you just have to compromise differently. Eg maybe look further afield in area, or more rurally, or look for a nice 2 bed flat with flexible layout where you could split one of the bedrooms or living room into 2 bedrooms. If you get your head round the fact that there WILL be compromises then you can make it work. But it's your choice. A cheaper BTL flat elsewhere is a plan B if it still works taxwise.

I know people under 30 who have children and who bought in the last few years.

As with anything, each area is different and there are cheaper places in the southeast.

Range from early thirties now to nearly fifty.

It’s really really expensive in Surrey so unless you have family money it’s not possible to buy a house and have children in your twenties

I live in Essex, hours commute from London. I searched for 3 bed houses on rightmove, there are 78 under £300k in my town.

I'm early 30's and all the people I met in my antenatal classes were having their second child under 30 and all had their own houses in south east.

It can be done.

They all had managerial or senior positions as did their partners, the big difference is none of them went to university so they started their careers early, worked up the racks quickly and had children early and all returned to same or improved jobs.

www.rightmove.co.uk/property-for-sale/property-76619807.html what about this. Can buy with a 5% deposit and get a 25% government loan. Say you got it at 15/20 grand under that would bring you within budget. In 5 years you then remortgage to pay the loaned amount or pay the interest until you can.

“They all had managerial or senior positions as did their partners, the big difference is none of them went to university so they started their careers early, worked up the racks quickly and had children early and all returned to same or improved job”

Yup. No student debt either. Reckon the rest of us have done it all wrong.