[Closed] Roughly what deposit would this hypothetical home buyer be asked for?

On a hypothetical 60k a year I reckon I'd be renting and saving a hypothetical £1500 a month

Really? I reckon you might not be. Possibly I'm lucky in that we bought when we did but for my house the mortgage is waaaay cheaper than the rental market for the same property. For a period of time the benfit of buying your own house was to have an asset for your investment. I guess to some extent i am bought into it as for me renting is dead money. I pay it out each month (so someone else can line their pockets) and I get nothing in return. Suddenly your £800 per month rental seems like a colossal waste of money. Sure, you have some flexibility in that you can more or less move when you want and don't have to wait for the house to sell but in the long run I prefer the option of having a tangible asset. As others have said though, you need to work out what you want in life and then manage accordingly. I fyou want to own a house then decide to what degree you want to commit. If you don't want to live in squeaky bottom land then move to an area where you can buy a suitably sized house for a price that you are comfortable paying the mortgage on. It may not be where you would ideally like to live but that's life - it's a compromise.

I pay it out each month (so someone else can line their pockets) and I get nothing in return. Suddenly your £800 per month rental seems like a colossal waste of money.

You should have a quick read at this table, quite interesting

[url= http://www.zoopla.co.uk/rentbuy/ ]Rent v Buying - cost ratios for UK locations[/url]

Housing prices and living costs in London are unsustainable and ultimately this will lead to a correction of some sort. The rest of the UK has seen falls and stagnant house prices while London keeps on inflating. There is a lot of foreign money in the London market at the moment which is maintaining the higher end of the market and is driven by fx rates which can change quickly.

This looks like a recipe for a disaster.

You should have a quick read at this table

[url= http://www.zoopla.co.uk/rentbuy/ ]Rent v Buying - cost rations for UK locations[/url]

Relevant for your day to day costs maybe.. but completely ignores the potential for capital accumulation (if not gain).

On a like-for-like (rent vs mortgage) monthly payment even if the value of your house depreciated 20% over the long term you would still end up with an accumulation of capital, assuming the mortgage was paid off.

With renting you end up with nothing. Even if your rent [i]was[/i] cheaper (than an equivalent mortgage) and you invested the difference you are unlikely to even get close to the value for buying.

Having said that.. money isn't everything - I rent because I'm unlikely to find a similar property in a similar location for anything like decent money..

Right, here we go

3 Bed house in Ascot, £350,000

Ascot is posh enough for a Corporate Lawyer

Train to Waterloo is 50 mins

Swinley is 5 miles away

Windsor Great Park is on the doorstep

http://www.rightmove.co.uk/property-for-sale/property-32876093.html

Housing prices and living costs in London are unsustainable and ultimately this will lead to a correction of some sort. The rest of the UK has seen falls and stagnant house prices while London keeps on inflating. There is a lot of foreign money in the London market at the moment which is maintaining the higher end of the market and is driven by fx rates which can change quickly.

This looks like a recipe for a disaster.

I disagree uwe-r. The rest of the UK caught up with London to some extent over the boom, London housing stock grew in value most in 2000/2001, the rest of the UK was much later. Price difference is nearer parity between London and the rest of the UK than its ever been. IIRC something like 1.6 times to 1.3 now

now purely from an anecdotal point of view houses in my neighbourhood in Zone 3 continue to sell very quickly. Starting at £450K for a 2 bed and up to about £675 for a 4, so there are clearly enough people earning good money with capital. These are not foreign people, but people earning £50K to £100K working in professional jobs, judging the ones that I know and the others that I see walking about.

My brother lives in Leeds and has't been able to sell his house. At the same time I've been looking to move back to Leeds and the stock just isn't shifting and is often being reduced in price, and what you get for your money isn't that much better than in decent London Suburbs.

So I'd suggest the problem will continue to manifest itself in exactly the opposite way to which you describe.

Rent v Buying - cost ratios for UK locations

According to that table there are only 10 cities in the UK where you are better off renting. Sorry make that 8 cities, number 9 & 10 are equal.

According to that table there are only 10 cities in the UK where you are better off renting. Sorry make that 8 cities, number 9 & 10 are equal.

I was just trying to highlight that it's hardly a "colossal" waste of money. Especially when you consider that in many of the areas on the other side of the ratio are still close to 1.0, so hardly a huge benefit.

I rent and have a mortgage, so I've got no axe to grind. Just saying that the percevied "money down the drain" issue with renting is less true these days, particularly if you bought a house 2008/2009.

i think they're comparing an interest only mortgage to renting. There are a load of other costs inherant in owning that aren't there (replacing appliances, building repairs etc). Not saying that renting is *better* (what suits a person depends very much on their circumstances) but the figures will head more towards the renting side of things, if you compared all costs for living somewhere for, say, 5 years (ignoring capital appreciation/depreciation).

Its also worth nothing that average rent doesn't get you the same place as average buying does. Renting is naturally focused towards the lower end of the market - the market for renting a £1m house is very small (not many people can stomach £5k/month on rent)

either way, renting is as much 'dead money' as paying interest on 200k to a bank is. both renting and buying have their own advantages and disadvantages.

I live somewhere where renting is more expensive than buying. Even assuming the unlikely scenario that my rent remains the same, with a mortgage after 25 years I would own a house, with renting I would have nothing and would have paid out more. I'm not sure you can say there isn't much benefit to buying

Edit: looking at the figures for my area they're based on repayment not interest only mortgages

What it dosn't mention is the size of the deposit needed and the effect that has on repayments. Or maybe it was assuming for a 100% mortgage.

I'd actually be more interested to see the other end of the scale.

DJ,

You suggest it works in London because people earning up to £100k are living in houses with values at £450 to £675. But the OT highlights the problem, even at £100k a year you can only borrow £350k so need a £100k deposit to get to the lower end of your range. It doesn’t work.

Even assuming the unlikely scenario that my rent remains the same, with a mortgage after 25 years I would own a house, with renting I would have nothing and would have paid out more. I'm not sure you can say there isn't much benefit to buying

Well yes, obviously if you decided to rent for 25 years then it's a slightly different situation!

But for many people, renting is a transitional phase in their lives (the first 5 years after leaving university for example), and in those circumstances where the timescale is limited, there are few cost benefits to buying. Unless of course you picked up a house just before the market decided to rocket.

To be honest I could only base my view on where I live, and when I have looked at it my mortgage on an extended 4 bed semi is around the same as the rental for a 2 bed flat / semi. But that is partly the result of when I bought and the size of my mortgage. I appreciate that those starting out may not have any choice at all and that renting is a transitional phase. Yes, there are costs for buying that you may not have for renting but I can't see that there are that many. Replacing appliances will not affect those who are renting a fully furnished place - not all rentals are fully furnished. Also, you are then tied to whatever cheap appliance the landlord wants to put in place which may not be your preferred choice. You still have to pay community charge, fuel bills, phone bills etc. Where it seems a bit bonkers is that it is harder to get a mortgage than it is to rent, even though in manyh cases the rental cost (in a like for like) will be more.

Honestly @ £60k you are still in the 2 bed flat in not an awful are, but not an amazing price range. Or a house out of town.

Not to mention, moving fairly frequently due to landlord selling up or similar, tenancy fees, check in fees, check out fees, reference fees, removal fees, holding fees etc etc.

Private renting in this country is definitely crap. I don't think everyone has the right to own a house, but I think it's a bit shit to live your life at the mercy of private landlords. If the government are so keen on propping up house prices it would be nice if they reformed the system so that renting worked more like it does in most of continental Europe.

ebagomm- you mean like it used to be inthe 80s befoer Thatcher removed allthe protection for tenents? Set rents, protection from eviction and so on

Before my time ... 🙂

You suggest it works in London because people earning up to £100k are living in houses with values at £450 to £675. But the OT highlights the problem, even at £100k a year you can only borrow £350k so need a £100k deposit to get to the lower end of your range. It doesn’t work.

you're assuming people only buy one house, once. What typically happens is someone will buy a small, cheap home, own that for 5-10 years, then get a bigger place, then finally move onto the pricey suburb house (I don't think 2-3 houses owned is unusual - in fact thats probably a small number). on 100k a year you can probably borrow 400k, so you're left needing to find £250k - lets say you take on your last mortgauge at the age of 40 - that's given you 20 years of earning, capital appreciation on smaller houses, inheritance (which needs to be figured in - as house prices rise, so does the average amount inherited, conviniently in an almost directly proportional manner) and so on.

prices are high, and its a struggle to get a really nice house. but its always been that way. even if prices were dropped 20% from where they are today, that £675k house would still be 540k - still too pricey for most.

some smart folk updates this graph monthly. it shows inflation-adjusted house prices, comparing now to the mid 90s. right now we're nearly 30% down from peak, so things should be cheap 🙂

[img] [/img]

You suggest it works in London because people earning up to £100k are living in houses with values at £450 to £675. But the OT highlights the problem, even at £100k a year you can only borrow £350k so need a £100k deposit to get to the lower end of your range. It doesn’t work.

Most of them are probably on house 2 or 3 like 5lab says. I bought my first house at the turn of the century with credit card cash back as the 5% deposit, I was lucky, thats never going to happen anytime soon for most people.

Even living in London, if you're earning 60k a year, it should be pretty easy to save money. I lived in London for five years on 25-35k, and managed perfectly comfortably to save 30k, just by putting a standing order from my main account to my savings each month. On 60k a year, you could probably save 20k a year and still have a decent London lifestyle.

I can recommend being a much less well paid professional person outside London by the way - our house, 3 decent double bedrooms, 1790s worker's cottage on a cobbled street in a conservation area / world heritage site etc. , bought just after it had a new roof, wiring etc. 190k. Oh and riding from the door obviously. Costs fifty quid each time I want to go to London for a weekend, but I was spending more money getting out of London to go walking, riding etc than I do on going back to London now for visits.

Thanks.

Saving £23K per annum by living on a diet of lentils and onions, as it happens, but the inference from all the above is that this still isn't enough is it? I mean really: who earns more than 100K under the age of 35? You can earn that much at certain firms, true, but by definition those places are not stable enough to found a mortgage upon.

It has to be somewhere in London, not a suburb unfortunately, but thanks for the helpful suggestions. That's no aspersion on the suburbs. It's just London is where all my peers and prospects are, I pretty much need to be reasonably close in in order to er, "network", and basically, er, build a life. Little early to leave. Single man and all that.

All the "man up" posts above really pi$$ me off. YOU man up, and take a look around you. It is objectively inexcusable that the system be such that you can be earning in the top 0.00001% for someone in your demographic and still not be able to afford somewhere alright in London. It is a blunt, blunt way of keeping everyone out except the middle-aged, the married professional couples and inherited wealth, and something really needs to be done about it. There is nothing more I could have done to have been able to make the cut (including being blessed with luck: I have been). It sounds poncy, but basically if I can't afford somewhere, the only people who can are the categories mentioned above. That's basically cutting out everyone under 30 who doesn't want to work in the most hard-core parts of the financial services industry.

It's equally not on that nurses, etc., can't afford somewhere in London but if even the lawyers, accountants, and insurers can't (only the bankers - when they're not being fired), something's got to give.

I think part of the problem too is 2 income families / DINKYs are pushing up prices. me and the wife earn about what you do each and that puts us in a much better position to buy than a single guy (assuming you are buying on your own)

All the "man up" posts above really pi$$ me off. YOU man up, and take a look around you. It is objectively inexcusable that the system be such that you can be earning in the top 0.00001% for someone in your demographic and still not be able to afford somewhere alright in London. It is a blunt, blunt way of keeping everyone out except the middle-aged, the married professional couples and inherited wealth, and something really needs to be done about it. There is nothing more I could have done to have been able to make the cut (including being blessed with luck): if I can't afford somewhere, the only people who can are the categories mentioned above. That's not on.

You do realise that come the revolution, the proles are likely to regard you in the same category as said bankers what with you earning so much so you'll be up against the wall too?

Who earns more than 100K under the age of 35?

Oh and I did for a couple of years, but fortunately I neither work nor live anywhere near London.

for a couple of years

That's exactly the point, there are no sustainable jobs paying that much if you're under 30, unless you're a complete nutter. Nobody sticks with them. You can't found a mortgage on that level of income.

Bloody married couples. They marry to be able to afford a place - perpetuating the system and forcing everyone else to do the same.

But there won't be a revolution, just enough of a change for people like me to get back on the ladder and then pull it up right back up again as soon as possible thereafter. That's how "revolutions" work in Britain, no?

I can't get this bloody bin to light.

I think part of the problem too is 2 income families

All the "man up" posts above really pi$$ me off. YOU man up, and take a look around you. It is objectively inexcusable that the system be such that you can be earning in the top 0.00001% for someone in your demographic and still not be able to afford somewhere alright in London.

but you can, [url= http://www.rightmove.co.uk/property-for-sale/property-28928368.html ]this[/url] is in London and well within your budget, or am I missing something.

OP

Please look at

HACKNEY
BETHNAL GREEN
OVAL
ELEPHANT AND CASTLE

All CLOSE to london. Nice "stock". Relatively cheap. Not too many
Tarquins. Decent bars.

Oh. Why a house? If its city living then surely a flat is just as good?

Or come and join me in Sunny SE7, just one road outside of both Blackheath and greenwich boroughs so same amenities just 200K discount on the same house 20 meters away (yep 20 meters!).

to the OP you chose to live in one of the most expensive cities in the world and you are determined to stay central, i think somewhere you have to compromise

you are sounding a little petulant about it all!

[url= http://www.24dash.com/news/housing/2011-04-13-Lib-Dem-MP-cannot-afford-home-in-Cornwall-constituency ]to be fair its not just london though[/url]

edit and if its just you surely you only need a flat, leave the houses for us breeders 😉

so your problem is that people aged under 30 can't afford big family homes in london? Perhaps thats a good thing, that big family homes in london go to people with big families in london, and under 30s without the need for space etc live in smaller places?

You seem to think that because people earn more than you, and in the constricted london market, are able to pay more than you for a place, the world is unfair. People being more successful than you is a fact of life I'm afraid, if its taken you nearly 30 years to figure that out, I'm surprised you've found a job paying 60k.

Oh. Hackney's alright. It's more when I do a search and see nothing but bloody EDMONTON WALTHAMSTOW WOOLWICH CHINGFORD "COSY BUT CHARACTERFUL!!!11!" etc. that I see a bit red. No aspersion on those places btw. I dated someone from Chingford.

It had not occurred to me that the issue was less to do with Tarquins inheriting places, and more to do with the fact that at some point people began only buying places as married couples. No doubt that transition occurred because of the underlying social inequalities (there must have been a problem to begin with, for people to need to get married to afford somewhere), but it made it 1000% worse to the point where now there's literally no other option.

Except those mentioned above.

Friend's just been bought a nice place in Ladbroke Grove by the parents, outright. Having had rent covered for 4 years before that. Great!

OP - the system allows people with more money than you to buy the property in the prime locations.

It's always been that way.

Either earn more money or look elsewhere

Or move out of London altogether?

If you are in the top 0.00000000000001% or whatever then finding alternative employment in the provinces should be a piece of piss no?

If you are in the top 0.00000000000001% or whatever then finding alternative employment in the provinces should be a piece of piss no?

Nah the industry's pretty much concentrated in London. If I could leave, I would.

All interesting to read btw, ta, including the various libel/slander

What do you do then?

LOL @ jhw

Ahhh diddums, you can't afford a house where you want to buy. I'd love to buy a house in the middle of Ambleside (and I'm sure many on here would too - middle of the Lakes, beautiful countryside, awesome riding...). Only I don't have £400k to spare, so I can't buy one.

What shall I do?

What do you do then?

All interesting to read btw, ta, including the various libel/slander

I'm guessing it's nothing in the legal professions.

Cry whilst you **** into a sock?

Lol

Who earns more than 100K under the age of 35?

A little internet research shows that 300,000 people earn over £100k in London and 68% are under 45.

I know of at least 8 people under 35 earning over £80k, 3 of them over £100k - it is very doable if you invest your time in the right work.

jhw - if you are saving £23k a year, I would hold on for a bit get a bigger deposit together and you will be on to a winner, also if you meet a lucky lady you may find the burbs are the place you want to be as you get that space everyone in London craves after a while.

there must have been a problem to begin with, for people to need to get married to afford somewhere

I think it was the other way around. As in the traditional stay-at-home wife type family changed to both parents working. This forced house prices up as people could afford more. Rather than house prices rising forcing the second parent into work.

We are now in the position where it is hard to afford a home on one income.

You seem to think you have a right to a big house in a nice area. Plenty of houses in London for less than you are on about plenty of flats for far less. You can't expect to have the same style and size house in London as you could in a medium sized town even counting for the cost difference do to the fact you are in a large world city, let alone for your first property. Try Westcombe park, (zone 3) nice area, close to Greenwich and Blackheath, quick train or ride into the city. Other good suggestions above.

I've lived with my girlfriend in a shit part of London (zone 3 / boarder so further out than any of your suggestions) for the past few years so that she could afford to buy a flat as a teacher, (I have an unstable income so pay her a small rent) we scarified were we wanted to live for a first step. If she can do it on a teachers wage you can do it on your wage with £80k deposit. Your expectation is just unrealistic to beable to afford a house straight off in posh area of a world city.

Thank yourself lucky you are in such a good job. Like you I've worked all though my 20s sacrificed going travelling or buying nice bikes, studding hard at some of the best institution in the world and I've been put into a awkward situation where I have been unable to get a full time job for over a year. Even when I do get a full time job I would be pleased with £30k even if I moved back into London.

You have so many options open to you to buy a property within inner London (Zone 3 or less) and I don't just mean in some really horrible area, you just seem to want it all straight away.

Ta for the helpful comments immediately above: these are useful.

I bet you £8 that whoever put "baseless sense of entitlement" at the top of this thread is a Sc*t or a Nor****ner. Joking aside, the comment misunderstands the point I'm making in this thread. You're damned right I've got a sense of entitlement, and it's not "baseless". Or rather if it is, then the only people who can buy at my age are inheriteds and marrieds, which indicates something fundamentally wrong with the system.

So come on jhw, what's your profession???

You said earlier that you would move out of London if you could. Maybe you can.

london tour guide?

Legal...but acting for a London-centric type of client

Beefeater?