[Closed] How do people afford large houses?

Inheritance, family money.

Both my brothers had help from my parents buying their homes (I was old enough for houses to be cheap enough not to need any help).

I moved to Scotland 🙂

If I still lived down south there's no way I'd be living in a 4 bedroom house with a garden that's too big for us just 100m from the sea like we do up here.

Kids is the thing that I can't understand, how do people afford that??

i try not to worry about stuff like that

Good advice from howsyourdad1.

Never underestimate how much money some people have.

They bought one 20 odd years and made money from it.

they're probably drug dealers.

Why are you bothered?

If you're happy with your house and your plans then crack on with what you're doing and let them get on with theirs?

I think right purchases, right time, right moves, plays a massive factor in these things.

I've been unfortunate on housing stuff over the years and only in the last 5 years have got any real equity behind me in the housing context.

They drive modest cars

people live hand to mouth because they want the 'better' things.

keeping up with the jones'

Other cliches are available on request. As long as you're happy with what you've got, why worry?

Mortgaged to the Max. Happens a lot. Even on good salary folk will mortgage /loan to the max. Result = big house, nice car, almost crippling monthly repayments...

I live in Hong Kong, how do people afford really small apartments let alone big houses?

Can't afford a one bedroom apartment here but have a 3 bedroom house back in the UK, its all relative but I believe the standard property saying applies, location, location, location or they are drug dealers.

I'm with How's my dad too ,although my missus has had a moan that our house isn't as lovely as others - I told her she better get another job. Ha.

"they’re probably drug dealers."
or in witness protection
or secret Russian sleeper agents.

Uber driver gives it away.

Ferrying prostitutes/Drugs/Weapons around London is very lucrative and no tax to pay.

and some banks have fixed rates at 1.6% these days fingers crossed for a no deal and 17% interest again!

Inheritance, family money.

That's exactly why we have a 4 bed detached with a large garden and en-suite in Harrogate. We could have stayed in our 2 bed terrace and paid off the mortgage but we felt that our growing family (they were 4 years old at the time) would benefit from having a bedroom each, a nice garden to play in and us some privacy when they reach their teens. We currently have a LTV of around 35% although I will be paying it up to normal retirement age (another 15 years to go).

We'll downsize again once they have flown the nest and hopefully I will be able to retire before 67.

Cheap car?

No Carribean Holidays?

No kids?

No expensive hobbies?

Lots of options of what to spend money on. Choose your own and  be happy.

Harsh Scotroutes 😉

For us we managed to sell our house at three times the price that we bought it. We bought it in 2006 when the property market was really struggling over here and have taken on another mortgage of about the same as we originally paid for our old house so the new mortgage payments are slightly bigger than the old and we have a newer bigger house in a better (for us) location.

Harsh Scotroutes

Not at all. Over on BigHouseWorld, someone has just started a thread asking how their current neighbours are driving around in a flash motor, go on expensive holidays, and "have you seen how much he spends on bikes" ?  Perspective and choice, innit?

If one keeps it in ones pants, one has more money and less need for a large dwelling

Why are you bothered?

If you’re happy with your house and your plans then crack on with what you’re doing and let them get on with theirs?

I'm not.   I'm just inquisitive.  Its not prompting me to change what we have / our goals.

I’m not. I’m just inquisitive.

I have the same thing with shops / businesses, I also wonder what their costs are / how profitable they are etc...

I'd agree with the inheritance thing + getting lucky with the housing market. My brother doesn't work and his wife is a teacher, they have 4 kids and live in a £500k+ house in London. They got 'lucky' with a big inheritance from his wife's side that allowed them to move into their current house almost mortgage free (also helped in part by having a huge amount of equity from their previous house that they'd bought at the bottom of the market).

I've worked all my life, have no kids and live in a 1 bed flat. I have a mortgage and way less savings than my brother - I'm still not sure where it all went wrong :p

Massive mortgage probably.
when bought ours about 6 years ago the companies were willing to offer us 4 times what we wanted.
would have made it so one of our salaries was going on the mortgage each month.
bloody silly idea to me, but works for some

There seems to be some fairly combative, borderline bullying, answers to a reasonable question above.
I sometimes wonder myself, looking at folk you know and their spending. It doesn't bother me, I'm doing okay thanks.

I reckon a lot of it comes down to simply spending everything that comes in, with nothing being put aside for a rainy, high interest rate, day. I'm just not wired that way, some people are.

There seems to be some fairly combative, borderline bullying, answers to a reasonable question above.

Then

I reckon a lot of it comes down to simply spending everything that comes in, with nothing being put aside for a rainy, high interest rate, day

?

the best ways to own a large house are:
Earn a 6 figure salary
dont have kids
drive a 15 year old car
buy a big old wreck of a place and renovate it. Do this right and the value you add to the house will be greater than the cost of the renovations.
borrow more money over a longer time frame.

Massive mortgage.
Interest only mortgage.
Other income streams that aren't mentioned.
Inheritance
Medical insurance payout
Good timing

Could be any number of things, or a combination of things.

A lot of people do a good job though of hiding just how near to being absolutely skint they are.
A friend of my brother's appears outwardly successful; nice car, well dressed, good social life, living in one property with another rental property.
But chatting with my brother, it turns out that she could barely afford the second rental property, was constantly living at the limits of her overdraft and relatively frequently went without eating properly as there was no money left for food. Sounded like she was on a constant financial knife edge & was close to a nervous breakdown.
But you would have absolutely no idea about any of that from just chatting with her.

Maybe they dont go Mountain Biking

Well firstly you have no idea what he/they did for a living before they moved to where they are no... and just because he's an Uber driver doesn't mean he's always been an Uber driver.

Example:

I know someone who used to be an Investment Banker in the early 90's. He made about £5m thereabouts before he burned out and his wife took him to the cleaners and got the house.. and a decent pay off..

Yet now, and for the last 18years, has been pootling around Chichester Harbour in a massive Rib providing rescue cover for all manner of sailing craft 365 days a year, winter/summer whatever the weather. He sleeps in an Army bivi and Army sleeping bag in the back of his Rib 365 days a year and eats cheese and drinks Gold Top Milk..

And is still a millionaire.

So, whilst you may feel "how the hell" I'd start to consider the back story before making any judgements about others ability to buy/live the way they do.

Keep your own nose clean, live within your means and live a happy life.

just because he’s an Uber driver doesn’t mean he’s always been an Uber driver.

This is true - on a recent trip to Australia I got chatting to a driver and he was an ex-accountant and wanted out. His wife works as a special needs teacher (so very vocational) and he had children at university. However it made him happy and he could afford to have that lifestyle.

On another note, a very good friend recently came into a very large sum of money (properly life-changing, but not quite 'lottery jackpot' stuff). They paid off their mortgage and now rent the house along with a couple more they have bought then bought a new family home for themselves in full. They both have brand new Jags (he's got an F-Type just for the weekends as he also has a company car). Although I wish it could be us, I don't begrudge him it as he borrowed a substantial sum to buy into a company and that has paid off after the company was sold on to an investment company.

However they have already said they are getting lots of snidey remarks from their 'friends' in the village they live in, along with direct questions about how they can afford all this and it's really upsetting her (he's a 'water off a duck's back type of guy and doesn't care). So basically what I am saying is that it doesn't necessarily matter if you have lots of money or not as it won't always make you happy.

My sister has a huge mortgage, and a huge house. No real equity as her flat didn't appreciate in 10 years, and husband didn't own anything when they got married. Both earn good salaries, but everything is borrowed. Also, no expensive hobbies or kids. We have kids and two 'expensive hobbies', and a static caravan, which eats £4k a year in ground rent/insurances.

before making any judgements about others ability to buy/live the way they do

He wasn't making judgements... he was asking a question.

Simply by asking, he was making a judgement.

"how can they?" "he's an Uber driver" implies a judgement.

Most of us couldn't care less what others earn, how they live their life or make an judgements on how others spend their own money.

I moved to Scotland

This^^ *

*just to be clear, I don't live with phil5556 😉

many routes available -

few round our way earn exactly(ish) what we do, but, that big old 5 bed detached house is bought on a shared ownership mortgage with them paying interest only, proper knife edge live for today spending

inherited land and houses and farm, also somewhat common (its farming country round here), farmers get to build their own place with less restrictions

a few were individual house owners before marriage from exactly the right time in the property market - sold up and pooled resources and bought a single big house

others are exec band earners

others have two decent incomes, so about double our resource

a few more "do property renovation" and have done since when it was easy to get into pre- house price boom, so their savings are all sunk into the latest project which they're living in

or maybe, have little savings, everything but everything goes on the house, downsize at retirement "the house is the pension", but all the time and money and effort is going on keeping the place maintained on a shoestring

I’m still not sure where it all went wrong :p

Should have married an heiress!

However they have already said they are getting lots of snidey remarks from their ‘friends’ in the village

Are they asking about why they have a posh car and a modest house?

“how can they?” “he’s an Uber driver” implies a judgement.

Or just curiosity...

I defy anyone to honestly say they've never wondered about someone else's finances. It's perfectly normal and perfectly harmless (in most cases). It's really not a big deal...

By living in a town where you can buy a flat for less than the the cost of a Ford Focus.

#teamshithole

There seems to be some fairly combative, borderline bullying, answers to a reasonable question above.

With respect to those making the comments, I have a fairly materialistic past upon which they are making their own judgement.  I don't blame them, I have myself to blame.   I'm not getting involved in an argument because...

Or just curiosity…

That.   It doesn't affect or change me and I'm not hand wringing about the topic or the comments.   Knock yourselves out.

Simply by asking, he was making a judgement.

“how can they?” “he’s an Uber driver” implies a judgement.

Most of us couldn’t care less what others earn, how they live their life or make an judgements on how others spend their own money.

Ah, but now you're making a judgement about the OP, aren't you? 😀

 

I am calling you out perchy.
You once posted a photo of a view from your house.
It did not look like #teamshithole* ,it looked lovely.

* unless that view is from the backdoor,in which case 😉

Are they asking about why they have a posh car and a modest house?

I didn't say it was modest, I said a new family home 😉

Interest only mortgage

Hope it sells when kids leave home and they downsize?

Even shitholes have nice streets with big houses.

I live in one of those.

move out of London!

we sold our tiny 2 up 2 down terrace in brentford for way more than we paid for it and waaay more than it was worth- we did get lucky buying just after the crash and did a fair bit of work on it

we now live in a much bigger house in a nice part of Milton keynes

Cheap car?

No Carribean Holidays?

No kids?

No expensive hobbies?

Harsh Scotroutes

I thought he was talking about me 🙂 There are lots of things people don't really realise they're spending money on that others aren't. Just from that list of headings I haven't had a proper 2 week holiday of any sort since 2005. Since then once in every 2 or 3 years we might have a one to two night break - last one was some free Eurostar tickets 2 nights in an IBIS and a three days walking around Paris from dawn til dusk occasionally having a coffee. We don't even take whole weekends off for most of the year. We buy cheap, cheap to run cars and keep them for a long time. Her car is 15 years old (she's had it for 10 of those) mine is 10 years old was given to me for free. We don't have kids. I ride an expensive bike that I bought 6 years ago and don't fanny about with serial upgrading.

We don't go to restraunts or pubs or the cinema or theatres, don't have sky packages or other subscriptions, seem to have a lot less in our trolley than anyone else in the supermarket queue because we don't buy ready meals, desserts or snacks or drinks.

Its not some frugal, belt-tightening ascetic drive. It just never really occurs to me to do any of those things, and I think its just as much the case most people do all those things and more and don't give it much thought, or consider it all to be necessary.

I am mortgaged to the max for my 3 bed house. its crippling. me and the missus have a career earning very average incomes.

however the guy behind me has 5 houses and drives a taxi.

my mate is living in a 600k house in cambs and looking to upsize. his theory is max everything out and then downsize when you retire. the increase in cost is corrently outweighing the market increase!

My mate has an interest only mortgage - massive house, wife works part time. She's happy with the 'situation' (i.e. not really owning or paying for the house) but she is awaiting his parent's to croak it as they are minted. One of those things.

We've managed to pay off the mortgage now, so time to save for some nice stuff - we've only a modest 3 bed semi.

We're part of the over mortgaged 40 something posse (we'll I'm 39 still).

The equity/value increase from our first house (we were there about 9 years) sale pretty much covered the deposit (about 1/3rd of the purchase price) and stamp duty on our new one which is much bigger, and hence pricier than our previous one, but we needed the space as we've two kids and now a MIL to accommodate.

The mortgage is fixed for five years (ats pretty silly low rate) and is affordable at just over 1/3rd of my monthly pay (but we both work) we are of course mortgaged until old age, but obviously the longer term plan is to overpay when we can and once the kids are gone (probably a decade away at least) we downsize and move somewhere more picturesque (missus liked Cumbria)

We moved in October and we love the new place, but I cannot face moving again this side of 2030, so hopefully we'll be able to ride the equity again and retire early (yeah right)... 😀

I've got 2 friends like this, I'd love to know how the hell they make it work! In at least one case I can rule out lottery wins and huge inheritances, as I've known them both since school! I can only assume it's happiness with a higher level of debt and not spending money on shit like I do!

More than the bullying responses the thing that annoys me with threads like this is the insinuation that there's anything wrong with taking on loads of debt and having a huge house/nice car whatever. If that's what makes people happy WGAS? I'm not fussed about paying off my mortgage, it'll happen at some point. Never understand the sanctimony from some.

I have a tip: Don't get divorced.

I've plenty of friends who don't appear monied but are loaded & plenty the opposite too....

One of my mates worked for a former utility company and retired at 50 and bought a large house. Cashed in shares of about 750k. I’m back from abroad and haven’t bought yet. Gulp, I’m in trouble.

https://getyarn.io/yarn-clip/f85c07fe-0831-48f3-9e40-b13695ac00d9

https://getyarn.io/yarn-clip/601762b7-21d4-48eb-afd8-4a01020df564

Its true about making savings

I lived & worked in London for 10 years b4 we bought our 1st house there and I was earning the national rather than london average wage!

but pretty much every day for 10 years I cycled to work rain or shine & made my own sarnies for lunch, doesnt sound like much, but thats a grand saved a year on lunch, even getting the tube now & again and maintaining a bike to commute saves £2k a year compared to a travelcard., for the 1st 5 years I lived 10 miles from the centre, in a room in a house that was dirt cheap, but also probably ilegal in so many ways!.....
I never bought a new bike, never bought any kit that wasnt on sale or off ebay, no Sky or any of that.

I know Im sounding sanctimonius but do get frustrated when I hear friends & colleagues complain about not being able to afford a house, but would never sacrifice what Id consider luxuries

* What did they do before they became an uber
* Inheritance
* Old enough to luck out with housing
* Earn lots and you don't know it (proper big house needs 200k in SE nowadays - more in london - if doing it with salary alone)

What did they do before they became an uber

sometime its what they didn't do. A lot of people go to college on the basis that it'll get them a better paid job in the future. But it means that people who didn't go to college start earning, saving, getting on property ladders a lot younger. They have a 5 year head start and don't begin their career with a debt to pay off.

Or you can do what I did and get a degree that on average yields a career with earnings of less than they would be if I hadn't had an education at all. 🙂

bullying responses

I don't know if that's supposed to be aimed at me but I'm just trying to highlight the choices folk make. Of course there is also financial/investment "gaming". I've a friend who is mortgaged to the max but has no kids and no one to leave an inheritance to. She'd rather be living in a nice house so is paying interest only in the knowledge that the mortgage will be paid off when she pops it. On the other hand, some folk don't really care much about the house they live in as long as they can live the lifestyle they want, eating well, going abroad regularly etc. These are all valid choices (as long as they don't involve criminality I guess 😉  )

Maxed ourselves out 30 years ago with 100% mortgage at 3x earnings to buy our first property, a 2 bed semi. Filled it with junk shop furniture / hand-me-downs. Drove around in a £500 2CV for a few years and never went on holiday. Mortgage rates were 9% and payments were about 2/3 of our income. Starter home prices locally are now £250K+ plus so you need a couple of above-average earnings and £50k cash to buy. We moved 4 years later to a detached house 2 streets away but staying put since and now have no mortgage. There's a huge amount of development in this area - mainly £500k detached houses, clearly to house all those "immigrants" LOL. We'll probably cash-in in the next 5-10 years by downsizing / moving to Scotland. Housing market and Govt policy in the UK clearly in favour of existing home owners / developers in order to artificially sustain the economy. Lack of investment in social / affordable housing along with Brexit will lead to the detriment of the country - increasingly ageing, 'entitled' population living in empty houses with no-one to wipe their ar$es

due to inflation, buying the biggest house you can get on an interest only mortgage is often the most financially profitable (albeit risky) thing you get do. for example

borrow 300k over 25 years on a 3.5% interest rate (probably average over a 25 year period), costs £1500/month

the same monthly payment\interest rate on interest only would get you £515k - 71% more to spend (and thus 71% 'better' or bigger house).

If, over that 25 year period, houses go up by 4% a year on average, at the end the small house is worth £770k, and the big house worth £1.32m. You can sell the big house, pay off the £515k mortgage, and be left with £805k - enough to buy the small house, and pocket £35k (which probably pays for the extra running costs of having twice the house for the last 25 years).

effectively, you've got to live in a house thats 71% bigger (so a large 5 bed at 1700sqft vs a small 3 bed at 1000sqft) for 25 years, for free. Its a gamble, if prices rise by less than 4%, you lose out at a time in your life you might be ill-prepared to afford to do so, but if they go up by more, you're massively in profit.

House prices in the last 25 years have risen by an average of 7%, so if you'd followed the above technique in 1994, you'd have ended up with £575k profit from living in a bigger house for free.

I am no way reccomending the above approach but the sneering at interest-only is amusing when it could be the smartest financial decision you make in your life

I am no way reccomending the above approach but the sneering at interest-only is amusing when it could be the smartest financial decision you make in your life

Yep, it is what I did.] to good effect.

They don't spend £15 on shower gel.

insinuation that there’s anything wrong with taking on loads of debt and having a huge house/nice car whatever. If that’s what makes people happy WGAS? I’m not fussed about paying off my mortgage, it’ll happen at some point. Never understand the sanctimony from some.

Speaking for myself, I didn't state there was anything wrong, I'm just curious as was asking "how".

When I lived in Walthamstow from 1981 to 85 I considered buying a maisonette in a nice square for £75,000 but thought it was a bit too much. Now those same maisonettes are selling for £750,000. Maybe the OP's acquaintance made a similarly good investment.

Plus, there's never been a cheaper time to have a mortgage. And brokers are still breaking the rules when selling mortgages.

I agree with a lot of posters above about inheritance, lucky or smart property moves earlier in life and just plain old hard work and saving.

However, I think there's a lot of illusion going on as well. A lot of folk are just renting their lifestyle and there's just a big pile of debt they will address "one day".

We’re part of the over mortgaged 40 something posse

Yep, same here - 46 and have a mortgage that runs until i'm 67.
We've done quite a lot of work to the house, and it is now worth double what we paid for it.
Neither me or the Mrs are in line for any inheritance, so at some point we'll need to decide if we stick or twist.

Speaking for myself, I didn’t state there was anything wrong, I’m just curious as was asking “how”.

Yes sorry, my comment wasn't aimed at you, or anyone in particular actually, there's just an undertone that taking on lots of debt is bad, and living in a 1-bedroom studio in Sunderland so you can clear your mortgage is vastly better. If you (meaning 'one', not Kryton) wants a big house, and is happy to take on that debt, who cares?

I'd rather have debt and nice things.

If one keeps it in ones pants, one has more money and less need for a large dwelling

LOL!

We're certainly not going to get any inheritance - just about getting ready to pay through the nose for Nursing Care costs for the MIL, that will soon burn through the value of her property.

It was a bit of a shock to hear my mate with their interest only mortgage - no wonder they can afford regular overseas holidays - but relying upon an inheritance at 'some point' - I know his father is terminal, but his mum is in good health.

nick1962

Member
They don’t spend £15 on shower gel.

Yes

If you (meaning ‘one’, not Kryton) wants a big house, and is happy to take on that debt, who cares?

I’d rather have debt and nice things.

Thing is, you can't service that debt forever so you need a pretty good plan for what to do when your income runs out.

They don’t spend £15 on shower gel.

If only that's all it took. I don't spend £15 on shower gel either, and yet I still don't have a big house. I think perhaps that's what the OP was talking about rather than asking for meaningless platitudes.

And in any case, I'm willing to bet that a large proportion of people in big houses also buy £15 shower gel, £150 jeans and £30k cars.

£150 jeans

Not more guerilla marketing for HEBTROCO 😉

i try not to worry about stuff like that

So much this. ^^^

Luck can play a part in it I guess.......6 years ago I bought a small 3 bed semi in Stoke with my ex wife, our combined income was well below the national average.

Now, I'm divorced, own a little terrace that I'm doing up and will, live with my girlfriend whom also owns her own house and we're doing a barn conversion on an 8 acre farm in Cheshire too.....lucky for me her family is well off and own a large old farm!

Her grandad original afforded it by being a very good business man.....he grew up in a council house and went on to be very successful.

It's all just luck really though isn't it.....I'm not doing much different now than I was 6 years ago but have had a very lucky upturn in fortunes I guess.

Thing is, you can’t service that debt forever so you need a pretty good plan for what to do when your income runs out.

Sell house, pay off mortage, buy smaller new house with proceeds.

 there’s just an undertone that taking on lots of debt is bad,

Some of us (and I include me) are certainly wired that way. In my case it was due to my mother's experiences when she was a child and then her passing that on to me. I see all the arguments about debt being OK if you've a means of clearing it at some point but it's hard to overcome so many years of conditioning. It would also play havoc with my already chronic anxiety...