Him and his wife were renting a 4/5 bed farmhouse with a large garden in a lovely quiet spot for £600 a month - the type of house they think they could never afford to buy. It was about 2 miles from his 4 kid's school, had good broadband and he works from home using the internet. I kept telling him he had a superb deal. He had just spread the £70k cash from the house sale (@£130k) across a couple of saving accounts and a few shares and had no intention of buying another house for the foreseable future. Then his wife spotted a house for sale, suggested they view it and they finished up buying it.
The paid £166k for a 3 bed semi in Moray. It took every penny they had to such an extent that the £2k arrangement fee was added to the mortgage. This was at 5 times his real salary (he included other things on the mortgage application). Now he is disappointed with the size of the house they bought compared to where they were renting. At least one of the two Moray airbases are closing so he thinks house prices will drop in the area - negative equity is beckoning. He is on a 2.89% mortgage for 2 years. He is hoping interest rates aren't rising in 2012....
These figures look odd to me. He had 70k in the bank and bought a house for 166K with a mortgage of about 100k. The 100k is 5times his salary which is therefore 20k and on that 20k he is supporting a wife and 4 kids. Previously they were paying 600 per month to a rent a place now they are 2,890 per year in mortgage interest (about 240 per month). Even assuming another £60 per month in insurance and maintenance on average then his interest repayments are 1/2 what he was paying in rent. Once you figure in capital repayments his mortgage (100k over 25 years) repayments are about £470. So his monthly outgoings on the most basic level have gone down by about £100 per month. He may have had other new expenses but the shift from renting to paying a mortgage has seen him swap from paying £600 per month to a landlord to 240 per month to the bank.
Obviously, house prices may fall significantly in which case he would have been better off waiting and he's lost the interest and/or any return on his shares. But on the figures in front of me, he seems to have smaller monthly outgoings now than he did while renting.