- How do people afford large houses?
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+.
Only the top 10%?
£1300 as a mortgage repayment is probably 3-bed semi detached in a not too rough area of Reading! Average in a very non aspirational kind of way.Posted 4 months agosiwhiteSubscriber
A good deal can be made on the right house in the right location in need of renovation. We sold our first house for £220k and stretched ourselves like mad to buy a seriously run down cottage in North Hampshire. Six years of DIY renovation, combined with Crossrail being announced 20 minutes north of us, mean we have just sold the house and have made a good deal more than the first place cost – the house has earned more in six years than my (moderately well paid) day job.
Just stretching again to buy another fixer-upper – but this time it’ll be our forever home.Posted 4 months agocookeaaSubscriber
I reckon they have gone for an interest only mortgage. I know a couple of people with those and I’m amazed that they don’t admit to having any real idea of how that’s going to get resolved (except in both cases they will one day inherit from parents).
What exactly do they need to “admit”?
They’re riding the property value escalator, ride it long enough and they’ll probably make a tidy sum as well as getting to live in a nicer house…
Makes me feel like a bit of a mug for having a repayment mortgage.
TBH the British have an unusual attitude to housing. We don’t build enough and yet we all want to buy instead of rent as an investment (that grows in value due to scarcity of supply) and then we gat all judgemental about the way people fund this odd behaviour…Posted 4 months agoRich_sSubscriber
We have developed a huge liquidity issue in the UK as part of our obsession with buying houses “because property always makes money”.
Does anyone really believe we’re not building sufficient numbers of new houses? Given the number of empty properties in city centres, I’d say we’re building plenty (have you looked at the share price of the major homebuilders?) but they aren’t necessarily in the right locations or funded in the right way.
If you buy a new build investment property, which you do with a mortgage based on its theoretical let-out value, but never actually let it out, you can then get further borrowing based on your existing property portfolio. As your portfolio grows, based on house price inflation, your loan to value improves, and you can borrow more and buy more. All without actually populating your properties, which might be being offered at “market” rates for rent set by the local estate agents NOT the market itself.
So the bubble exists, people become paper millionaires and the apartments never get filled lest the market discovers that it ain’t worth the rent being charged. The savvy investors must have a vehicle that services the debt, I guess, and I bet that’s used to offset gains made elsewhere. And that’s easy to set up because we’ve made creating companies simple, with very little accountability (see the failure of the FRC).
In 2007-08 in Liverpool this was southern Irish investors buying in places like Liverpool on tick. When their economy went south, they apparently just disappeared. Is the UK housing market based on foreign money? Ask anyone in the South East.Posted 4 months agoMosesMember
If you believe that having an interest only mortgage for 20+ years is in any way risky and less likely to waste money than renting you are a fool.
Mmm. Yet someone might have been paying interest for 20 years then at the end of it, find that they now owe the bank several hundred K to buy it. Unless they’ve saved hard, they’re stuffed.Posted 4 months agocokieMember
Hundred and one ways of them being able to get into the house.
We had a friend who was born into old money family- you’d never know. He rented a small flat and drove a shed. Didn’t do big holidays. Lived very humbly. His parents and brother died in a helicopter crash and everything was left to him. He stopped working and moved into a caravan in Cornwall and bought a new RS6 and a nice watch. He would have preferred his parents were still around.
A chap I worked with owned a niche accounting software company as a 90% shareholder. He lived modestly in a 3 bed semi with 2 kids and drove an old Passat. He sold the business after 6 years to one of the largest accounting companies in the world for a high 8 figure sum. He carried on living the same way, but sat on millions. He could have bought anything!Posted 4 months ago
Mmm. Yet someone might have been paying interest for 20 years then at the end of it, find that they now owe the bank several hundred K to buy it. Unless they’ve saved hard, they’re stuffed.
But they will only owe what they borrowed so they would be pretty hard-pressed (historically) to have bought a house that hasn’t increased in value in 20 years. And if (for example) they bought a house for £200k and it is now worth £400k they could sell it and have £200k profit to put into a new house (smaller and bought outright) or perhaps just put it towards a rental.Posted 4 months agotakisawa2Subscriber
We bought a bigger house, later in life (just turned 50). No plans to retire yet, I actually enjoy my work. Both have decent pensions building up.Posted 4 months ago
Would have been mortgage free, in a modest 3 bed semi. With a lot of spare cash we’d just not have saved though, certainly not to match the mortgage we’ve taken on. But it’s a calculated move that will see us down size st the point our boys will be buying, with a 50% deposit on something decent each.
We did the same when they were born, going interest only for a period, that allowed them to enjoy a parent at home full time for a few years.
Life’s too short to miss that kind of stuff. If we’d not have taken on this new place we’d probably have brand new cars each, foreign trips a few times a year, but we don’t miss it. Wife has a new motor but I’m happy doing the bangernomics thing.
But remember though, that bigger house comes with substantially bigger bloody Council tax bills. !!!
I bought a property 10 years ago for £125k.
It’s still only worth £125k.
You still have 10 years to go and looks like you are a bit of an outlier (made a really bad choice in your purchase/overpaid). And even given that, you are still actually no worse off than renting.
I think you will find most people who bought a house in 1999 now have a house which is worth many times what they paid. I bought mine in 2001 and the value has increased by over £300K.Posted 4 months ago
I can’t read all this, but I love people’s made-up fantasy life story explanations. The bottom line is that people live in large houses because for whatever reason, they can afford to. You can go nuts creating fantasy background, secret Lottery winner, retired drug dealer, invented the internet / pork pies / tubeless tyre technology / put 1p in a jug every time they swore hypotheticals, but whatever you come up, there’s always another option. The bottom line though, is that they have more money than you, sort of.Posted 4 months agooldgitMember
So many ways people manage it. People in my age group are usually mortgage free, but a good few I know aren’t. They blag it and have no idea how they’ll pay their debts off, and basically they don’t care and have a very good life and sleep well at night. I’d be cacking my pants.
IME if its’ not been down to sheer hard work, good jobs, canny investing or inheritance. It’s been down to lying about income with the help of your company, and hiding your debts.
Basically just don’t judge a book by it’s cover, people lives are just too weird. I for example have been divorced twice. It’s cost me the shirt off my back, literally had nothing left. Now I’ve got one year left on my own place. We’re in a position to take on a house down south with no mortgage, and keep mine to rent. She has a nice Merc AMG line, I drive a £200 Renault. I work two days a week, she retires next year aged 52. Absolutely **** knows how that happened, when four years ago I was going to top myself because I lost everything.Posted 4 months ago
A bloke my age has a gernormous house a 100k car on the drive, and we’ve had to give him money for food and heating, yet he’s still doing the same work he did when he bought the house and car?toby1Member
I have a couple of friends who have similar patterns, i.e. buy house in Cambridge about 15 years back, one did a LOT of work to theirs, the other had housemates to help with the mortgage.
10 years on both sell up at decent profits, one moves to a house in the country that needs a LOT of work, the other moves to a house in Yorkshire that needs a LOT of work. Both do all this work, one sells on at a decent profit once again and how has a big house, 4 acres, and no needs to move again. The other completed work on the house, then renovated the barn that came with it, that is now a holiday let that has about 85% occupancy for the year and pays for itself plus a bit more too.
Essentially they are both in really nice places to live, have manageable mortgages and comfortable lives. Some people just do things differently to others.Posted 4 months agooldgitMember
Just been talking about ‘that bloke’. Just goes to confirm that you can’t judge a book by it’s cover.Posted 4 months ago
Got parents to release equity so he could keep his house. That ran out.
Got parents to then sell their house and move into his. Parents handed over everything.
Strange enough that’s when a BMW M6 appeared on his drive.
Hasn’t worked for two years.
Went on holiday for a month this year…..Three trips to Twickers the last few weekends stayed in hotels every time.
So where there’s a will there’s a way. That said apparently his topping himself when the debt it hits a million.scaledSubscriber
My mate has a lovely house, then asked if i could come round and help him sort out his old one. I presumed that he’d sold it to buy his new house… No, he had a few hundred bitcoin that he’d mined back in the days when you could do it with a PC for a bit of a laugh.Posted 4 months agon0b0dy0ftheg0atMember
If you and/or your parents were in the right place at the right time from ~1985-2005, there was a killing to be made on getting rich through buying/selling property; buying to rent; crazy good pension deals; computers; internet; both partners in a couple working; stocks and shares; bitcoin; lottery wins etc. and then having plenty to pass on to your future generations.
Not quite on a Mansa Musa scale, but more than enough to live very comfortably!Posted 4 months agohammy7272Member
I knew a guy that used a carrier bag that looked about five years old same tracksuit bottoms all the time. Turns out he has hundreds of thousands of investments providing income and travels round the world following the England cricket team. As above never judge a book. The opposite is also true with illusions being created with crippling debt.Posted 4 months agomolgripsSubscriber
We have developed a huge liquidity issue in the UK as part of our obsession with buying houses “because property always makes money”.
**** sake. I can’t stand the way people on here criticise people who want to buy houses. Like we’re all mercenary materialistic middle class bastards or something.
The reason for buying a house is that your monthly accommodation payments go towards YOUR OWN ASSET instead of someone else’s. Is this somehow a bad thing? I was desperate to get on the property ladder, cos I was sick of lining someone else’s pockets and ending up with nothing.
And over a 20-30 year time span, houses nearly always do make money and lots of it. I know someone who bought his first house for £70k in ooh, 2000, with a little help. If they’d put their gift in the bank and continued renting they’d have enough now to buy a reasonable car. They put it into a house, prices rocketed, they released equity in it to buy another (modest) house, then they sold the first one at big profit, invested that money in a company, now they’re loaded. They’re secure for life and so are their kids.
Buying houses is nothing to do with ‘obsession’ it’s just bloody good sense.Posted 4 months agoTiRedMember
Interest only: borrow 400k at 2-3% on an asset growing at 5-7% means 3-4% growth on money that you don’t own. Sell house and downsize to repay debt. What’s not to like? That’s a net gain of £130-140k over 10 years. You could buy a house somewhere (cheaper) with that. Google financial gearing.Posted 4 months agotjagainMember
Our proportion of owner occupiers to rented is far higher than in many other European countries. Many folk in Germany for example prefer to rent. why? somone else has to pay for all the upkeep and maintenance, moving is easy but then they also have a much more regulated rental market with much stronger renters rights.
Property making money is a function of the deliberate housing shortage in the UK – done deliberately to keep prices rising to keep the middle classes happy. Most people will never see this money anyway as they can’t sell the house as they need to live in it.
Our obsession with owning property is pretty weird when seen from others viewpoints.Posted 4 months agonealgloverMember
Our obsession with owning property is pretty weird when seen from others viewpoints.
Why though ?
I’ve paid less in Mortgage payments since 1999 than I would have paid to rent similar properties. Moved a few times (whenever I needed to)
Now I have a £250k+ Asset
Would be weird to deliberately not want to do that really.Posted 4 months ago
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