How do you get onto the property ladder??

[wooliemam]

I don't mean to sound stupid or thick here.

But we are a family of 4/5 (step daughter comes here also) with an annual income of around £50 (I am not working but will be next year so this will rise to around £75k.

Our outgoings are high- rent alone is £1750pm.

We have around £20k in savings.

We find it hard to save if I'm honest!

Around where we live; even if we moved a little further, a 4 bed on average is around £500k. Even if we saved £50k for a 10% deposit, the mortgage calculations are stating our monthly repayments would be £3,500pm!

How is this possible? How can anyone do this? Even with me back at work after tax and outgoings we couldn't do this.

Am I just being naive or stupid here?

We bought a one-bed in our mid-20s, then upgraded to a fixer-upper 3 bed a few years later (pre-DC). Still got some renovations to do - cosmetic stuff though- but no funds now due to childcare costs. Outskirts of London so appreciate how expensive it is!

Could shared ownership be an option? It would allow you to buy a stake in a property, have more security than (most) private rentals, & you should build some equity. If DH & I split I'd look at S/O as I couldn't afford the mortgage here but also wouldn't want to uproot DS miles away from his dad & grandparents.

I agree with the other posters that the reality is you need to have bought before children. By the time you have children, you need to have enough equality, or combined equality with your partner to move to a family home. You can't start at the middle of the housing ladder.

Children share rooms, privacy screen can go between them. Toddler with stepdaughter. That way you can get a 3 bed.

I bought run down houses and did them up. I couldn't afford a decent place so I compromised. Im not sure why people don't see that compromise is essential unless you're loaded (I'm not)

This may not be ideal but it much better than throwing £1750 on rent every month - you're paying that down every single month

@wooliemam Interesting you say the south coast and not south east. I'm on the south coast and as young adults, we lived in house shares and later one bedroom maisonettes. That's what people meant by having lower rents without children. You can't rent a room or a studio flat with a family of 4/5.

It's pretty hard once you have a fully fledged family. You may have to relocate to an area in the country that is much cheaper. Easier said than done though.

The property ladder concept works on the assumption that you will live very cheaply (room in a shared house) with no kids while you save up initial deposit and buy a 1-2 bedroom home where you live for at least 5 years.

During that 5 years maybe a baby or two arrives, but you work hard at increasing your income, overpay your mortgage as much as possible, and after the 5 years with house price inflation having increased your equity share and your increased salary from your promotions/career development, you should be able to sell the 1-2 bed place and buy a 3 bed place - because all the increase in house price belongs to you not the bank, and your overpayments reduced your debt, your initial 5-10% deposit should be more like 20% of the value of the house you sell and that should mean the banks are willing to lend you more on your 2nd-time-buyer house.

Over the next 5 years you repeat the above, and then you get to buy your 4-bed forever home because the equity you get back on selling the 3 bed place is enough to secure a big enough loan for the 4 bed - and of course you have been promoted again and are now better paid.

The concept is shot to hell because the way life and work and jobs go at the moment, and you are in the position where only the top-rung of the ladder will suit your family needs, but you can't get there via the lower rungs of the ladder because that process starts a decade ago. I'm not saying that to get at you OP, but just to emphaise that the whole concept is basically irrelevant to your situation.

So really, unless one of my parents die, we won't be able to buy 😅 not that I'd want either of my parents to die haha but i did say that to my partner the other day light heartedly.

Obviously we can't move into a two bed property; it just wouldn't work. Also partner works from home so would need some sort of small space. It's rubbish really! We both had kids very young- unplanned.

Do you mean buy a BTL property, op? Remember that the interest rate will be higher, the deposit required may be larger, and there will be tax to pay. Say you get somewhere half the size of your rented house, but nearby so you can manage it yourself, that you can rent out for £1k a month: you have to pay insurance, maintenance, allow for voids / damage / non-payment by tenants, are taxed on that income at a minimum of 20%, and pay the mortgage every month no matter what. Frankly, unless you have a large deposit, I’d be surprised if you’d be covering the mortgage with the rent payments after all that. It would be an investment, but a risky one.

Could you look at a 2.5 bed, so two bed plus box room, with the girls sharing for now? Or even a 2 bed where the loft is tall enough to be relatively easily converted into a third bedroom / two additional single bedrooms? Would the cost of a conversion be less than the cost of the additional bedroom where you are?

There is no ladder anymore. The whole concept rested on the fact that the market would increase 10% a year on the back of ever decreasing interest rate. One would see their house created equity at the same rate every year while the cost of servicing the debt would equally decrease. That’s how a house in London that traded at 250k in 1995 now sells for 3m. Original owner did not pull any magic trick or savvy investments, they had decent professions and were born at the right time in the right place.

Why do you need a four bed? You could manage with two, or three?

Many don't (non of my friend own property and we are all aged 35-50) and many people I do know that did manage to buy property did so in their means not their dreams.

Its nice to WANT to live in big cities and expensive areas but wants aren't guaranteed in life. If you can't afford it the only option is to move somewhere cheaper, if thats not the perfect location and a different area so be it.

I would love to live in the 500k house with its own private woodland that was for sale here not long ago, I can't though. Instead I'm buying a 90k house that needs work. I moved to one of the cheapest towns in the UK to do that.

I'm buying now with that 90k because my parents died... that is how many get a house (+ the cheaper area and being realistic).

Many don't even get that, most of my friends weren't left anything as their parents didn't have an estate to leave by the end.

@Tippexy I am not sure we could manage with 2! There's myself and my partner, 11 year old boy and 2 year old girl who live here and we also have 10 year old girl who is here just under 50% of the year too.

We can move; probably not hours away due to sons school, step daughter and also childcare from family which helps us save also.

But even if we move an hour around from where we are now- similar prices unfortunately.

We know we realistically can't move into our dream home straight away- we know we will have to work to that. I am just curious as to how others have done it LATER on in life when they have had children etc.

In a dream scenario I would have had a perfect picture life with my partner and had children later etc but this is my life and the same for plenty others too.

Perhaps you could look at buying a 2-bed or 3-bed that has two reception rooms downstairs and then convert one of those to a bedroom for your son.

Or a smaller house with a garage that could be fairly cheaply converted into a room.

Or a 2-bed with the girls sharing and you sleeping on a sofa-bed downstairs (friends did that whilst they saved for a bigger house).

Your rent is £1750pm - so unless your landlord is heavily subsidising you it must be possible to buy a house of the equivalent size/location to your current rental that has a monthly mortgage payment of £1650pm or less - your £3500pm estimate must be combining your aspiration of owning with also getting a bigger house in a nicer location - It's not realistic to do all three of those at the same time.

Could you approach your landlord and ask if they would sell to you? They may be prepared to do you a good deal as it's not a great time to be a landlord at the moment and it's way easier and cheaper to sell to existing tenants than it would be for you to buy elsewhere and them then have to either sell or recruit new tenants.

I’m breaking the mould a little bit here, but the first house I bought with my partner was a 5 bed. BUT, and this is a big but, I moved to a totally different area to the one I called home to be able to do this. Bristol (very expensive) to South Wales valleys (not expensive). Not in a million years would I have got the equivalent house in Bristol. Im fortunate that work pays for my commute which was half way between anyway, so it literally made no difference. If you were to consider Wales or the North of England, it’s much more achievable.

I know our landlord is very young, mid twenties and has a few properties. This house that we rent from him was an elderly man's home before dying and he's completely renovated it (he has family who are all in the building trade) so I can imagine that helps.

The house opposite us is on the market currently for £380k I think it was but it needs gutting totally.

Could you look at shared ownership? I know a few people who have done that and staircases up to full ownership

I mean realistically, your parents will die one day very likely before you so maybe you won't be able to move until you do get that inheritance I don't know.

It is really tough for people in your situation, I sympathise.

We live in the north and our first house was only 2 bedrooms and a complete renovation. We saved the deposit and renovation costs in about a year in 2015. We were 25 so didn’t have many other costs and our rent was only about 800.

Most people start small and build up. I got my first small flat almost 20 years ago, as did my H. So when we got together we had 2 properties. Then we bought our first family home. Now we’re in our ‘forever’ home. It’s taken time and luck tbh.

It’s really hard to start looking to buy when you need to start somewhere larger. I really don’t envy you. But interest rates won’t be this high forever and there’s bound so be something of a price correction even if it’s not a slump. So I’d keep saving and be ready to strike when the time is right.