How do people afford large houses?

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  • How do people afford large houses?
  • Premier Icon molgrips
    Subscriber

    Borrow £100k, buy £120k house, sell 20 years later at £360k, assuming paying back double the mortgage amount profit = £120k.

    Borrow £300k, buy £360k house, sell 20 years later at £1.08m, profit £360k.

    Borrowing more isn’t necessarily bad when it pays off more than it costs you.

    NOTE this is not advice, house prices can go down as well as up – just an illustration of how borrowing more COULD be a good investment. This is how companies grow also.

    nickfrog
    Member

    The “just curious” thing is a sure sign of a massive chip on shoulder thing.

    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.

    Fine if you live in posh house and are willing and able to move to something cheaper. Not so fine if you live in a shit hole and ran your debt up on fast cars, flash bikes and foreign holidays.

    (I know this thread is about posh houses but I think NJee20 was talking about ANY debt)

    johndoh
    Member

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

    This is my view – I could be mortgage-free and get a decent 3 bed detached in the same area as I am now but I think I would rather enjoy being in the larger house whist we have a growing family + dog + rabbits at home…

    Premier Icon cookeaa
    Subscriber

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

    Better yet if you are willing and able to move to a smaller house in a different (cheaper) area those proceeds will go further still.

    We’re in the SE, so transplant our house to certain parts of the NW or Scotland (very pretty parts IMO) and it would be about half the price!

    Which to me seems insane but as long as that there London insists on unbalancing the housing market, people like us will want to up sticks and use potentially stupid housing equity to retire to a nice little cottage by the sea, probably pissing off the locals in the process…

    Premier Icon Kryton57
    Subscriber

    The “just curious” thing is a sure sign of a massive chip on shoulder thing.

    It really isn’t, you should see the shit piece of a car he drives….  😉

    poly
    Member

    The “just curious” thing is a sure sign of a massive chip on shoulder thing.

    Or perhaps he thinks he is missing a trick. And possibly he is – it sounds like he may not have considered bumping off the MIL

    johndoh
    Member

    Better yet if you are willing and able to move to a smaller house in a different (cheaper) area those proceeds will go further still.

    Yeah I have considered buying a smaller house with holiday lets within the grounds (which we could do if we moved towards the east coast – Whitby area, but inland slightly) and for the price of a 3 bed detached in Harrogate we could get something pretty decent and get an income from the letting. I wouldn’t do this whilst our girls are at school though, so that’s one for a few years down the line.

    Premier Icon Kryton57
    Subscriber

    Or perhaps he thinks he is missing a trick. And possibly he is – it sounds like he may not have considered bumping off the MIL

    MIL owns three houses one of which is in Barbados all mortgage free.  I decided a while ago being nice to her and her daughter was a better strategy .

    However I’m not one to rely on others, hence yes I wondered if I was missing a trick within my financial and moral means.

    Premier Icon bikebouy
    Subscriber

    I doubt it. You seem like a decent head screwed on type IMO with a propensity for a bit of “what am I missing out on” in your veins.

    If it was a healthy balance, then I’d think nothing more of it. However there have been many posts written by you that always seem to steer towards the “why can’t I? Etc.

    I dont think that’s healthy, I don’t mind telling you that because over the years I think you’ve done more than most to combat those slightly errr on the negative side of life thoughts.

    And, I honestly treat you like a freind. So happy to pick up on some of your comments.

    Like them or not, the less you think about others situations or lifestyles the better. You’ve got a lovely family, you work hard, you ride hard, you’ve combatted some inner demons and I for one applaud very loudly for you.

    Enjoy the weekend.

    🥳

    damascus
    Member

    Wife doesn’t work and partner works for uber and have just bought a 500k house……….

    ………If you suspect that someone you know is committing Benefit fraud please <b>telephone National Benefit Fraud Hotline on 0800 854 4400 </b>

    Premier Icon Kryton57
    Subscriber

    why can’t I

    Yet I didn’t ask that, here and not for a long time elsewhere.

    You’ve got a lovely family, you work hard, you ride hard, you’ve combatted some inner demons and I for one applaud very loudly for you.

    Thanks.  But how do you know my family? 🧐 😉

    Or you could just get your buying/selling timing right, along with the right investment amount with each one.
    My mates last mortgaged house was bought for about 450K, did a bit to it & sold it for 625K. Moved in with the in laws for a while then bought his current house outright for 350K & It’s now worth about 450-475K. It’s simple!
    Oh & him & his Mrs are sensible. No kids, just a new motorhome they paid cash for & 4 renty houses.

    Premier Icon duncancallum
    Subscriber

    Buy a repo….

    I’ve one terrace that’s got coming up to 50 equity and my 3bed detached with the same. I could sell n move into the tterrace mortgage free and that’s been possiblefor 6 years I’m 36btw. Took me a lot of work…

    Plan is sell terrace buy house in Scotland holiday let it for 4 years sell big house and move north.boom no mortgage and work part time

    Doable on Low wages but we don’t do finance
    A new corsa is 200 a month so 2 newish card is a mortgage payment…

    Premier Icon Trailrider Jim
    Subscriber

    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.

    If this is what your precious offspring – that you’ve slaved half your life to give them the best you can – will think of you, you’ve got to ask yourself, is it worth it?

    Premier Icon eddiebaby
    Subscriber

    I worked in a manual skilled job that in the late 70s early 80’s paid £25ph and £50ph after 6.00pm. When that crashed due to the rise o the machines I was ahead of the game and capitalised on that.
    I don’t have a huge house after assorted incidents. I do have some great memories of things your children will never do, and and if I could do things different, well being honest I wouldn’t.

    I saw a 6 bedroomed lochside house on Knoydart last year with 150 acres of land.
    650K. The blue one near Inverie?

    Or you could pay 1M & live on a new build estate in Harrogate, with a garden about the size of my ex council house one in Durham.

    Merak
    Member

    OP they are considerably richer than you.

    johndoh
    Member

    Or you could pay 1M & live on a new build estate in Harrogate, with a garden about the size of my ex council house one in Durham.

    I’ll bite – show me such a £1m house in Harrogate.

    Premier Icon timbog160
    Subscriber

    Yes you could live in Knoydart but remember you can’t eat scenery!

    A lot of it is just fortunate timing when entering the housing market.
    Out of my friends the value of there houses are all related to when they purchased their first house. I was the last to and concequently have the lowest value one but comparable mortgage payments. It’s just one of those things.
    I entered 15 years ago, I have no idea how millennials do it without family help.

    djglover
    Member

    How I managed it.

    It was a series of half chance, right place at right time decisions..

    alpin
    Member

    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.

    You forgot the designer Italian sunglasses 😎

    but remember you can’t eat scenery!

    Try telling Nicolas Cage that.

    I’ll bite – show me such a £1m house in Harrogate.

    https://www.fineandcountry.com/uk/property-for-sale/north-yorkshire/hg2-0jp/1342291

    And it’s not even detached! 1.4M for a terrace. Sheesh.

    And here’s a new build stuck right on a busy main road.

    https://www.myringsestateagents.com/propertys/details/28584300 🙂

    irelanst
    Member

    All of the people we know that are ‘rich’ have inherited property. We know one couple who between them inherited 6 houses before they were both 25, they’re doing OK!!!

    How expensive is expensive though?

    Getting an ‘average’ house in the SE might take some serious sacrifices. Getting the same value of house out of town anywhere north of Birmingham and you’d be the subject of this thread. Not anymore of a compromise than anyone in the SE makes but suddenly you’re not normal.

    It’s all about your attitude to risk and reward, we all have different degrees of what we.ll risk but as others have said
    the more you risk the greater (potential) reward (or loss)

    Easiest example in early 2000 you are earning £20k and have £5k deposit

    Do you (A) buy a 2 bed terrace at £40k and live comfortably and pay over on the mortgage or (B) push the boat out and get a £100k 5 bed and struggle to pay the bills..
    10 years later house prices have doubled/ trebled. Only one winner and it’s not the risk averse ‘sensible’ bloke

    So many other factors; inheritance, lottery wins, luck, or foresight to buy in an up and coming location etc, kids, divorce, career aspirations. Low interest rates, inflation etc, easy access to credit.

    kerley
    Member

    I know this thread is about posh houses but I think NJee20 was talking about ANY debt

    My answer of “Sell house, pay off mortage, buy smaller new house with proceeds.” only really applies to houses. Other debt caused by buying an expensive new car, buying a bike, buying holidays etc,. is clearly money that is being thrown away. Not many things have such a high chance of making money as houses unless you have the foresight to buy the right classic cars at the right time which is much harder to get right.

    With brexit and the issues it’s causing at customs, maybe is a good time to buy a shed load of GX eagles spares from crc, a couple of containers held up at customs for months on end could mean a right short supply in the U.K. ;0)
    365 days to return if it doesn’t work out

    hammy7272
    Member

    Never judge a book by its cover.

    A lot are relying on houses for future income/capital. I just hope they don’t all sell at once.

    Lifestyle inflation is difficult to curb sometime, especially with cheap cash around. Not that it is a bad thing.

    Premier Icon Trailrider Jim
    Subscriber

    Being “lucky”, “right time, right place” can be a misnomer. Ever heard of the 18 year property cycle? Many here have probably felt they timed it right but have been in the game for a long time. Property is a very long-term investment. Yes, you can make some money from flipping, but only a profit margin and not capital growth.

    Premier Icon matt_outandabout
    Subscriber

    And here is me trying to get out of being a property magnate.*
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    *Ok, sell up a tiny Highland buy to let flat.

    Premier Icon matt_outandabout
    Subscriber

    I also remember reading something, I think on moneysavingexpert, that over 20% of mortgages are on interest only and that the average mortgage is £600+ but the top 10% of mortgages average £1300+.

    whitestone
    Member

    A lot does depend on house prices continuing to rise at more than the rate of inflation and even in “good” times that isn’t certain or consistent across the country. I reckon our house has increased in value by between 50-60% in 17 years, we either bought at the end of a local bubble or the area has stagnated.

    In contrast: I bought a terraced house as a mid-week stopover for work (with a large deposit the mortgage was 1/3 the cost of rented accommodation), when I came to sell it the estate agent asked what I had bought it for, his response was: “I sold this property five years ago, that’s less than what it went for then!”. His valuation was nearly double what I’d paid for it, my eventual profit was 70% in two years! That sale went through about six months before the 2008 financial crash, so luck played a part.

    I think there’s a case for there being an unholy alliance between government and home owners. We keep getting told that X thousand houses need to be built a year to solve the housing crisis but that there’s been a shortfall for many years. A shortfall in a product leads to higher prices, conversely an adequate supply or over-supply leads to lower prices so NIMBYism is as much about protecting the future growth in house prices as much as “the field next door”.

    Bunnyhop
    Member

    My job takes me into many large properties and some of them are mini mansions.
    The owners are:
    Business owners,
    Dentists,
    Surgeons,
    People who inherited huge amounts of money
    and last but not least, people who bought at the right time, did up houses, sold well and didn’t lead an extravagant lifestyle.
    Oh and one lottery winner back in the late 1990’s (they were a fabulous couple).

    kerley
    Member

    Property is a very long-term investment.

    .

    Yes, and it is impossible to lose when using it as long term. 50 years ago my parents house cost them £2,800 which proves the point well. They don’t live in a great area but I can’t see the current value of £250,000 ever dropping to close to £2,800…

    Marin
    Member

    Sometimes just hard work. My brother started as a Saturday boy in a high street shop and went on to be a world wide head of a department for an online retailer named after a famous river. Retired at 50 and now travels the world in a luxurious way. He got all the brains of the family but I am rather proud of him. Luckily he never rides bikes so won’t read this.

    Premier Icon tonyg2003
    Subscriber

    As people have said, you either have made a lot of money, currently earn a lot of money, inherit a lot of money, win a lot of money, trade up carefully or have a pile of debt. Down here in deepest Surrey (Mole Valley has one of highest average house prices outside central London in UK) it seems like its mostly a combination of high earners, high debt and big inheritance.

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