Your chances of owning your own home?

[PiKe]

I'm 27 and still living with my parents, trying to save up for a deposit on a house but I really can't see myself being able to, even if I had the 20% deposit against the property I think the monthly repayments on a mortgage wouldn't be manageable along with needing to pay bills, run a car, eat, and the the other essentials.

I set myself a target to not still be living with my parents at the age of 30, I refuse to rent as I consider it to be 'dead money' and it's just further impeding me from actually owning a property. I'd be in the situation where I was living hand to mouth, all my wage would be used up on living and I wouldn't be saving any.

I saw an article the other day that said that an entire generation may well be without home ownership, which in the current climate is looking like it might just happen.

Is anyone in a similar situation to me?

 

[PiKe]

I don't think Hackney and Leigh take payment in human organs.

 

[PiKe]

How much do you earn and how much is property in your area?

Just over a £1000 after tax and and semi around here (10 miles from work) is about £140k.

 

[PiKe]

The attitude that rent is "dead money" is quite strange. Do you consider that paying for food is dead money? How about paying for electricity or water or gas? After all, you don't end up with assets paying for those, yet you need those to live, exactly the same as paying rent.

Stop thinking of somewhere to live as an asset and more like a service, renting soon starts to make a lot more sense.

I only have a mortgage because I bought at a good time (2000) and I am now paying considerably less than I would be if I were renting. If I had to get somewhere to live now, I wouldn't chuck my deposit away on a mortgage, I'd rather rent.

My thinking is the money that goes towards rent could go towards mortgage repayments, that way you'd have something to show for it when all is said and done.

 

[PiKe]

So you're saying find a wealthy, successful girlfriend? My current one won't think much to that.

 

[PiKe]

Interest won't be £729 because you wouldn't be mortgaging the full value of the house.

And savings are pathetic at the moment, 2 and 3%, hardly going to get rich quick on those rates are we?

 

[PiKe]

The maths doesn't stack like that though.

When you pay a mortgage, assuming it's repayment, you'll have a chunk going to interest and then a smaller chunk going to repayment. The rent payments is just as dead as the interest component on a mortgage isn't it?

But you have the option of selling whilst still repaying the mortgage, if house prices climb again, you could stand to make money?

 

[PiKe]

Are you at the stage where you could conceivably save up for a house together?

No.

I love how the new builds around here are local occupancy only and 'affordable' housing, but the wages in this area are nowhere near enough to being able to afford them.

 

[PiKe]

It sounds like the OP doesn't have much of a deposit saved, so might end up having to go for a 95% mortgage, they seem to be around 7% interest? Seems like a reasonable example to me.

My savings are £46k if I include my ISA too.

Besides, do banks even give 95% mortgages now? Haven't they learnt their lesson?

 

[PiKe]

You currently take home 15k per year and at the age of 27 have managed to save 46k, without wanting to sound rude how have you managed this, unless you've not lived in the last 4 years.

Saying you have 46k in saving is going at odds with your opening post, unless you actually mean £46.....

My 'rent' is £20 a week and half the electric/gas bills for living at home.

I haven't done anything else special.

Also I still need a 'buffer' so the whole lot can't really go on a deposit, because of unexpected repairs that might need doing, also council tax and water bills. Generally it'll cost me a lot more to live in my own home than it currently does.

And this still doesn't change the problem of not earning enough so overall my net income would be minus at the end of the month.

 

[PiKe]

So in which case please run it past me why you can't save enough money for a deposit again, just do the same again for the next 2 years?

Because the deposit is one thing, affording the repayments is another.

 

[PiKe]

It's hardly dead money, just a lame excuse not to move out and spend the money on beer/gadgets/whatever other vices you have instead.

What do you have to show for it after 25 years?

 

[PiKe]

But if you can put 60k down on a 100 - 110k house then repayments shouldn't be an issue it's onlly 40 - 50k you need to borrow.

2 years is a long time, then we have the unknown of what house prices are actually going to do.

 

[PiKe]

How much is your house earning you? Really depends in what area, in some you get negative rates atm.

It's pretty sure fire that as the population increases the land and therefore house prices will appreciate.

 

[PiKe]

But as the prices increase, no one will have the money to buy them and demand will go down?

There's always someone with money.

 

[PiKe]

A 10% drop is massive, imagine if you had saving account that gave you a 10% drop...

I'd be paying the bank then

 

[PiKe]

I don't feel as if renting is secure, say you're happy with your rented house, done all the improvements you want then the landlord decides to stick it on the market, all that for nothing?

 

[PiKe]

Not sure what government schemes they are running now but may be worth a look.
http://www.homebuy.co.uk/

Homebuy website > Cumbria > Sorry this page doesn't exist.

Fabulous.

 

[PiKe]

Yeah if I rented our house out, going rate round here for a 3 bed semi is £750pm and the mortgage is only £650 so I'd make £100 profit on covering the mortgage payment with rental.

Surely you'd just pay off £750 each month instead