Endlessly impossible expectations.

[PessimisticDreamer]

Hello all,

I am only really here to rant about the ridiculousness of buying a home for the first time. My husband and I are in a lucky position to have been gifted a deposit which is incredible however even with a 10% deposit mortgage repayments are insane. We have two children and both work full time jobs that pay more than minimum wage. We don’t spend lavishly, there are no holidays, no fancy cars. Just getting by and monitoring every penny and still to get a mortgage we would have to increase our monthly outgoings but at least £250. I just don’t know what I’m missing, how are people managing it? What am I not seeing? Just feel like things are always a struggle and it’s so disheartening. Sorry to rant to anyone who does read this.

What do you mean by jobs which pay more than minimum wage? If only slightly above, is there scope for one or both of you to earn more? Promotion, different sector or industry etc? Or, do you really need the size or type of house you’re currently considering? Would something smaller work for the medium term, with a view to upsizing in a few years when your incomes are higher and / or you don’t have childcare costs?

Taking on a mortgage involves sacrifices for most people on lower incomes - but you balance it against having housing security, and the longer term prospect of it being paid off at some point and not having to worry about affording rent when you retire, or when you reach a point where you want to start taking a step back at work due to age or health.

More than just minimum wage can still be a relatively low income so it’s difficult to advise really

The trick is to buy first, then have kids.

is it doable? even with the mortgage being £250 more than your rent?

Ask for a 40 year term into retirement

Terrible advice.

Borrowing 200k over 25 years will cost you 426k
borrowing it over 40 years will cost you 560k

Thats in interest alone, that doesn't include paying back the principle.

How old are your children?

We bought first but the childcare years were hard, DD was in nursery full time from 9 months, so until the 3yr old subsidised hrs came in our childcare bill was over double our mortgage payment every month.

It depends when in life you do it, I took a 35 year term when I bought my first flat by myself at 25, by the time the fixed term came to an end and I was looking to fix again I'd had a promotion so shortened the term. I never intended to take 35 years to pay it back but it made it more affordable at the start

I think it’s particularly hard to buy at a stage in life when you have the most outgoings with childcare fees.

Paying the mortgage is always hard at first then gets easier over time with inflation plus one or both of you may get wage increases or childcare fees decrease. The difference with renting is that you will own the property at the end of the 30 years or whatever term you choose so it’s still worth doing if you can afford the repayments. But you may need to make compromises regarding the size of the property or moving to a slightly cheaper area than you would ideally choose.

You are either rich or on benefits, the middle class is being crushed.

What is your rent like and is what you want comparable to what you are renting? Are you looking at a price point too high for a first time buyer?

Exactly. Op wants to get a mortgage so the only way to reduce costs initially is to take a longer term. Op will pay as much inerest as rent for renting for 40 years but presumably prefers pay off of having an asset and effectively a secure "rental" albeit from a bank and having responsibility for maintenance. And in 5 or 10 years Can remortgage differently if able to ....or at 60 get pension lump sum to pay off mortgage

Some people have higher paid jobs, some people have a bigger deposit. That’s how people are affording it.

You need to assess your situation and see if you can really afford to buy.

I do not know anyone 'on benefits' that has got a mortgage, non of my friend from growing up in a very poor town (the kind channel 4 loved to show) own a property... not one single one of them, non own cars or have ever been abroad either.

Not saying no one out there has ended up with some benefit help at some point etc... but 'on benefits' is in no place a way to buy a house. The idea that the 'middle class' is being crushed while 'people on benefits' are walking this is so unbelievably out of touch.

As someone disabled and myself on benefits I am the only one of my friends to be able to buy a home and that is purely through inheritance because I do not qualify to get a mortgage even with a MASSIVE deposit.

I'm curious about the calculations here. Are you saying that having a mortgage is working out more expensive than renting? I'm really surprised if that's the case because in my area rental prices are absolutely horrifying! Maybe you live in an area where property prices are really high, so you're needing to get a massive mortgage?

I don't personally agree that getting a longer mortgage term is terrible advice. The argument that you pay more interest in the end, would also imply that getting a mortgage at all is a terrible idea because it's cheaper to buy outright! You have to do what is necessary for you. Often people will start with a longer term mortgage and then when they are in a better position (maybe increased salary, past the childcare costs years, better LTV giving access to better interest rates) they will reduce the term to speed up paying it off.

I also know people who initially bought on interest-only deals which kept payments low at the start and then they rolled onto repayment mortgages a bit later. This isn't allowed now because of the risk of people never starting to repay the balance and ending up in trouble, but when you are disciplined some of these options are helpful to get people started.

If you haven't already talk to a free mortgage broker who might be able to talk through some options to try and find ways of approaching mortgages to make it more affordable.

Yes, I know people who have done this - one took a 30 year mortgage but paid it off in about 22. The earlier expensive years with childcare were manageable and they later overpaid regularly and also paid off a chunk from separately saving above what was the permitted 10 per cent overpayment when they later remortgaged.

Well obviously it depends on what you earn and what you are looking for. It’s not all about the deposit, if you can’t afford the repayments you obviously need a cheaper house.

Its impossible to say without understanding where you are in the country, what price property you're talking about, what type of property, how much your income is.

You might be looking at a 5 bed detached in the SE or you might be talking about a 2 bed maisonette in the midlands

You might earn 60k between you, or you might earn 90k between you

It’s so obviously very different with so many life choices. I paid my own way through University. Prices were a bit better when I bought but this is how I did it.

Started saving when I was in sixth form.
Lived in shared housing after leaving home till I was 30.
Walked six miles round trip to work.
Had subsidised lunches at work for a few years which was great.
Paid nursery through salary sacrifice.

Most couples buy the largest house they can afford before they have kids and then use equity to upsize until the LTV goes to a manageable level. By the time you have kids you should already be in a sufficiently sized house so your new lifestyle can be moulded around the mortgage.

Once you have kids it becomes very difficult because you've already developed a lifestyle and so upsizing will mean sacrificing it to an extent.

The only reason we were able to buy was down to a gift which allowed us to put down a very good deposit and gave us a low LTV which meant we could get a lower interest rate. We also seemed to buy at the right time so the interest rates were low and when we have to renew our mortgage it was low again.
If we didn't have the gift for the deposit we would still be in rented, and struggling.

This might make sense if you're in an area where houses aren't that expensive. But when a two bed flat costs £500k and a house £1.0m then it's not as straightforward as that.

Well it is as straightforward as that. They can’t afford to live there.

I think we need more info from the OP here if we are to advise. Where are they looking? What is their income?