Jump to content
House Price Crash Forum
Sign in to follow this  
maxdiver

A Question For Older Member (I.e. 35+)

Recommended Posts

I've had this thought a while back - watching property porn repeats, the people buying always seem to have a budget of £Xk and nearly always spend all of that - or more buying their dream home - packed full of period features and family bathrooms.

Anyway - from my experience of friends buying somewhere - most people in the last 6 years have borrowed as much as they could to buy the place they wanted.

Selling shares and borrowing on CCs to get the deposit and going to the bank that will loan them the most.

For the most part - people borrowed the absolute most they could afford to.

I on the otherhand (28) bought a place for about two thirds of what I could have been lent by the Nationwide.

The Question is this:

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

Did people also consider savings (pensions, ISAs, shares, insurance etc...) - for nowadays, most young people are not in this position.

I'd be interested in knowing how borrowing has changed from the 60's, 70's, 80's 90's.

Your thoughts please. :)

Share this post


Link to post
Share on other sites

I did borrow as much as I could in the 80'sbut the thing was that meant a multiple of salary, backed up by payslips. It meant that although I got burned on my 1st house (bought in '89 - ouch!) I put it behind me.

Further back, in the days of MIRAS you were considered retarded not to borrow at least £30k, as the interest on that amount was tax deductible.

Share this post


Link to post
Share on other sites

Yes.

One thing I noticed was people seem to prepare to borrow as much as they needed, based on guessing what sort of house the wanted. They then viewed the 'ideal' house and realised they wanted something better, usually because they saw it in the viewings but it was just over their budget. So they went back and borrowed more.

Very common from the experiences I have had.

Don't know if it's like the going shopping or buying a car experience, where you are tempted to just find a little bit more and get that item that's just a little nicer but you didn't really want from the outset.

Share this post


Link to post
Share on other sites

I've had this thought a while back - watching property porn repeats, the people buying always seem to have a budget of £Xk and nearly always spend all of that - or more buying their dream home - packed full of period features and family bathrooms.

Anyway - from my experience of friends buying somewhere - most people in the last 6 years have borrowed as much as they could to buy the place they wanted.

Selling shares and borrowing on CCs to get the deposit and going to the bank that will loan them the most.

For the most part - people borrowed the absolute most they could afford to.

I on the otherhand (28) bought a place for about two thirds of what I could have been lent by the Nationwide.

The Question is this:

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

Did people also consider savings (pensions, ISAs, shares, insurance etc...) - for nowadays, most young people are not in this position.

I'd be interested in knowing how borrowing has changed from the 60's, 70's, 80's 90's.

Your thoughts please. :)

From my own personal experience looking at those in my peer group those who borrowed the maximum have done far better out of property than those who borrowed what they could afford - whilst this is true moreso in the bubble it was equally true in pre-bubble times.

Huge risk though but it seems to have paid off for many I know.

When I was in my 20s and 30s I stupidly started pouring money into a shares pension as I believed all he guff about the importance of putting my money into a pension. People of my same age who had more business-aware parents told them to buy and pay the house off first and then worry about a pension. Those who did that have done a lot better than myself also.

I think there are some lessons here :blink:

Share this post


Link to post
Share on other sites

I've had this thought a while back - watching property porn repeats, the people buying always seem to have a budget of £Xk and nearly always spend all of that - or more buying their dream home - packed full of period features and family bathrooms.

Anyway - from my experience of friends buying somewhere - most people in the last 6 years have borrowed as much as they could to buy the place they wanted.

Selling shares and borrowing on CCs to get the deposit and going to the bank that will loan them the most.

For the most part - people borrowed the absolute most they could afford to.

I on the otherhand (28) bought a place for about two thirds of what I could have been lent by the Nationwide.

The Question is this:

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

Did people also consider savings (pensions, ISAs, shares, insurance etc...) - for nowadays, most young people are not in this position.

I'd be interested in knowing how borrowing has changed from the 60's, 70's, 80's 90's.

Your thoughts please. :)

For my first house 1996 I borrowed 83,000 on a 95% mortgage and it was 1.5 times my salary at the time age 30.

The interest repayment (no IO then) was 863 pounds a month.

I was in London during the 1990/91 crash and this change my views on property ownership until the mortgage repayments were less than the rent I was paying.

Edit: that first house was a 4 bed terrace in the south east.

Edited by ralphmalph

Share this post


Link to post
Share on other sites

36 so only just in your age bracket.

Maxed out to buy my first house in '96, I was earning about 13k and the ex wife about 8k. We got a mortgage for 50k to buy a house worth 55k, we had a choice of mortgage multiples back then of 3.25 single wage, 3 x main + 1 x second wage or 2.5 joint. We went with a 2.5 joint IO mortgage with endowment policy. Split endowment policy with both of us paying 1/2 on separate policies.

Share this post


Link to post
Share on other sites

From my own personal experience looking at those in my peer group those who borrowed the maximum have done far better out of property than those who borrowed what they could afford - whilst this is true moreso in the bubble it was equally true in pre-bubble times.

Huge risk though but it seems to have paid off for many I know.

When I was in my 20s and 30s I stupidly started pouring money into a shares pension as I believed all he guff about the importance of putting my money into a pension. People of my same age who had more business-aware parents told them to buy and pay the house off first and then worry about a pension. Those who did that have done a lot better than myself also.

I think there are some lessons here :blink:

Don't listen to you, since your planning sucks?? ;)

Share this post


Link to post
Share on other sites

I've had this thought a while back - watching property porn repeats, the people buying always seem to have a budget of £Xk and nearly always spend all of that - or more buying their dream home - packed full of period features and family bathrooms.

Anyway - from my experience of friends buying somewhere - most people in the last 6 years have borrowed as much as they could to buy the place they wanted.

Selling shares and borrowing on CCs to get the deposit and going to the bank that will loan them the most.

For the most part - people borrowed the absolute most they could afford to.

I on the otherhand (28) bought a place for about two thirds of what I could have been lent by the Nationwide.

The Question is this:

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

Did people also consider savings (pensions, ISAs, shares, insurance etc...) - for nowadays, most young people are not in this position.

I'd be interested in knowing how borrowing has changed from the 60's, 70's, 80's 90's.

Your thoughts please. :)

Nothing wrong with borrowing the most you can afford, what people were doing was borrowing as much as they could but couldn't afford it...they will afford it even less when prices fall or their circumstances change.

..bigger risks does not always mean bigger reward. ;)

Share this post


Link to post
Share on other sites

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

No, I borrowed 1.5x my salary, had 40% deposit in 1994. (House was £257k)

I think the interest rate was 9% and I had to pay £950 a month (repayment)

Edited by exiges

Share this post


Link to post
Share on other sites

I bought my first house in 1981. I put down a 10% deposit and borrowed about 2.8 times my salary. I could have borrowed three times my salary and one times my wifes. The amount I did borrow seemed scary enough to me at the time. I never borrowed anything like that kind of income multiple again. I have always overpaid my mortgage every month. I was debt free at 49 years of age. Would have been sooner but I had a divorce to pay for along the way.

Share this post


Link to post
Share on other sites

For my first house 1996 I borrowed 83,000 on a 95% mortgage and it was 1.5 times my salary at the time age 30.

The interest repayment (no IO then) was 863 pounds a month.

I was in London during the 1990/91 crash and this change my views on property ownership until the mortgage repayments were less than the rent I was paying.

Edit: that first house was a 4 bed terrace in the south east.

While there wasn't IO with no repayment vehicle there were endowment mortgages that were an IO mortgage and backed up with an endowment insurance policy.

Share this post


Link to post
Share on other sites

Nothing wrong with borrowing the most you can afford, what people were doing was borrowing as much as they could but couldn't afford it...they will afford it even less when prices fall or their circumstances change.

..bigger risks does not always mean bigger reward. ;)

I should have probably said "allowed to" rather than afford.

One friend of mine is paying 2/3 of his after tax salary fixed for 5 years - and yes, it's interest only!

(nice flat though :) )

Share this post


Link to post
Share on other sites

Saved as much as poss. (about 40% deposit - mostly through not having a life, something today's yoof don't seem to thing applies to them for some unfathomable reason - but there was no such thing as credit card debt and bank manager's wanted to personally approve your choice of car for a loan if you were lucky), borrowed as much as poss. - 1983, depths of the recession and pretty reasonable price to earnings ratio. But remember we'd had the recent experience of high inflation and rapidly rising wages. Turned out not so bad. Did a similar thing in 96. Big deposit, big loan. No brainer really.

Today I have no desire to own another house again due to the systemically deflationary glow ball environment we're in. If it ever changes I'll reconsider, perhaps, but doubt it.

Share this post


Link to post
Share on other sites

Bought in 1996. Put down a 25% deposit and borrowed slightly less than a years salary (I was on a good crack at the time - the good old days).

With hindsight I should've done what some of my collegues did and get huge mortgages on a load of properties.

Saying that I bought a house I love (still in it) and it's been all bought and paid for, for sometime now .

I never did get into property because by the time I was in a position to start "investing" in 2003 i'd already decided prices were too high and was prediciting a crash.

B u g g e r.

Share this post


Link to post
Share on other sites

Bought my first place in 1984 in a UB4 postcode 3 bedroom semi £43,500.

Mortgage to the tune of £30,000 the other £14,000 is + buying costs we had saved hard for as a deposit.

Sourced our mortgage at the Ideal Home Exhibition at Earls Ct thru was was at that time the Canadian Bank of Commerce (later taken over by the Abbey). Cannot recall what we were earning at the time but I don't think we were completely maxed out on lending multiples. In those days they gave you an absolute figure you could buy up to I think ours was £45,000. In those days it was a strict x3 and x1 for the partner.

Seems like peanuts today but I can remember paying the first mortgage payment and thinking how I was ever going to settle all the debt. At that time the mortgage was interest only endowment linked. Of course the endowments in those years were blistering along.

I split from that wife in 1993 all my fault so I settled for a straight £10,000 and signed everything over to her. I can recall at that time that the endowments were worth circa 75% of the mortgage value. For the first few years the wife never worked so I paid down the mortgage and continued to pay for another year after I moved out right up to the time we settled on divorce. I went on to buy another house for £85,000 in the same town with another partner and managed to clear that mortgage in 2005 becoming debt free.

Kept in touch with my ex wife who sold the original house in 2004 and moved back to her home time in Folkestone. Bought 1984 £43,500, sold 2004 £204,000.

Share this post


Link to post
Share on other sites

I should have probably said "allowed to" rather than afford.

One friend of mine is paying 2/3 of his after tax salary fixed for 5 years - and yes, it's interest only!

(nice flat though :) )

They say 35% of salary for a repayment mortgage for most is affordable....... depends what your friends other commitments are and how much they earn 1/3 of a good salary might be the same as the whole of someone elses salary, sometimes we have to sacrifice certain things if we want something badly enough (a nice flat) a large IO loan is not something to take on lightly unless you have a good future plan to repay and/or many years of working life left.

Share this post


Link to post
Share on other sites

Yip.

Maxed out in '98.

Sold up and relocated '04.

Bought outright '05.

I consider myself to be very, very lucky.

Share this post


Link to post
Share on other sites

I bought my first house for £65K in 1994, just after I finished a higher degree and was starting my first (low paid) academic job. It was a 3 bed end of terrace in a small market town 10 miles from the university. I borrowed 3x salary (£30K) and another £30K from the bank of Mum & Dad. The extra 5K was money I had scraped together in savings from intermittent jobs whilst a student. I had a lodger (Uni friend) whose rent covered almost all of the Mortgage payments for the first 3 years there. I recall having to budget very carefully with my take home - most months I had between £10 and £50 left in the bank at the end of the month. The lodger moved out to buy his own place just as I had my first promotion, so losing his rent wasn't too bad a hit. My original rationale for buying was that I was fed up of living in low-quality shared houses with landlords who didn't maintain/repair the houses. Being flooded out twice one winter by sewage was the final straw, so despite family's advice to stay in rented until I had a 'permanent' job (I was on a fixed term contract) I was determined to buy as soon as I had a salary and a shot at getting a mortgage. £30K of debt terrified me at the time. I have always been very debt averse.

I sold the house for just under £130K 5 years later, when I moved to a different Uni on the other side of the country. The bank of Mum & Dad got their money back with interest, and I bought a detatched house after a short stay in rented with the remains of the house sale and a £45K mortgage. I've followed the pattern of sell house when my job moves between Unis since, and STR'd each time so that I could move quickly when I found the right place.

I've always scrutinised mortgage deals carefully and ensured I had ones that could be overpaid/paid off early without penalty. I actively overpaid the mortgage whenever I could over the last 16 years and finally paid off the last mortgage when I sold my last house (I'd been paying effectively 0% interest on an offset-deal for 3 years by that point).

I bought the current place last year with cash, am mortgage free, and pretty much determined to only leave this place in a wooden box, so I'm one of the people who have decided that whilst I may feel gut-clenchingly sick for a few years when the inevitable house price crash comes, that's better than the misery of living in grotty rented property in a crappy bit of town waiting for the fall. Hopefully in 10 years time I will not care what the house might be worth, I'll just have somewhere to live that is 100% mine.

Share this post


Link to post
Share on other sites

I bought my first house for £65K in 1994, just after I finished a higher degree and was starting my first (low paid) academic job. It was a 3 bed end of terrace in a small market town 10 miles from the university. I borrowed 3x salary (£30K) and another £30K from the bank of Mum & Dad. The extra 5K was money I had scraped together in savings from intermittent jobs whilst a student. I had a lodger (Uni friend) whose rent covered almost all of the Mortgage payments for the first 3 years there. I recall having to budget very carefully with my take home - most months I had between £10 and £50 left in the bank at the end of the month. The lodger moved out to buy his own place just as I had my first promotion, so losing his rent wasn't too bad a hit. My original rationale for buying was that I was fed up of living in low-quality shared houses with landlords who didn't maintain/repair the houses. Being flooded out twice one winter by sewage was the final straw, so despite family's advice to stay in rented until I had a 'permanent' job (I was on a fixed term contract) I was determined to buy as soon as I had a salary and a shot at getting a mortgage. £30K of debt terrified me at the time. I have always been very debt averse.

I sold the house for just under £130K 5 years later, when I moved to a different Uni on the other side of the country. The bank of Mum & Dad got their money back with interest, and I bought a detatched house after a short stay in rented with the remains of the house sale and a £45K mortgage. I've followed the pattern of sell house when my job moves between Unis since, and STR'd each time so that I could move quickly when I found the right place.

I've always scrutinised mortgage deals carefully and ensured I had ones that could be overpaid/paid off early without penalty. I actively overpaid the mortgage whenever I could over the last 16 years and finally paid off the last mortgage when I sold my last house (I'd been paying effectively 0% interest on an offset-deal for 3 years by that point).

I bought the current place last year with cash, am mortgage free, and pretty much determined to only leave this place in a wooden box, so I'm one of the people who have decided that whilst I may feel gut-clenchingly sick for a few years when the inevitable house price crash comes, that's better than the misery of living in grotty rented property in a crappy bit of town waiting for the fall. Hopefully in 10 years time I will not care what the house might be worth, I'll just have somewhere to live that is 100% mine.

Interesting read. It's like house purchases and moves are the yardstick to measure a man's life. I notice alot of the other posts involve divorce!

Share this post


Link to post
Share on other sites

I bought in 1971. My wage was 18 quid a week (900 a year) and the wife's was 750 a year. The house cost us 2,400 quid (lovely little cottage) and we got a grant to do it up (90% if I remember). The grant was 400 quid. We got an 80% mortgage from the Burnley BS but we had to save ten quid a month (bloody hard as I remember) for 12 friggin months before they would give us it. I remember that the manager geezer was a right twonk and reminded me of Leonard Rossiter (sp?) as Rigsby (but with a suit so more like Reggie Perrin). His last words before he told us we would have to save with them was "this doesn't guarantee you a mortgage, you understand". Happy days eh?

PS Without wanting to open the old "boomers took it all" debate we honestly never really went out much for the three years we were engaged. Every penny went in the "bottom draw". Went to Anglesey for the honeymoon, came back and we had two pounds twelve and fourpence (still remember the exact amount) to last us two weeks till payday. Ate at her Mums, then mine for the last week or so. "We were poor but by God we were miserable"-Billy Connolly-not really.

Edited by tomwatkins

Share this post


Link to post
Share on other sites

Interesting read. It's like house purchases and moves are the yardstick to measure a man's life. I notice alot of the other posts involve divorce!

I disagree, because the change of house came when it was a requirement, new job in different part of country. I think this post is similiar to my experience. We could buy house at that time that we wanted to live in and enjoyed living in as opposed to the first rung on the ladder stuff.

I have only owned two homes both the same as above change of location required for job, as opposed to keeping up with the Joneses.

Share this post


Link to post
Share on other sites

Interesting read. It's like house purchases and moves are the yardstick to measure a man's life. I notice alot of the other posts involve divorce!

Yeah. No kids, no partner and just a cat make life much simpler, and in a lot of ways I have a lot more flexibility than those with partners and kids.

Share this post


Link to post
Share on other sites

I've had this thought a while back - watching property porn repeats, the people buying always seem to have a budget of £Xk and nearly always spend all of that - or more buying their dream home - packed full of period features and family bathrooms.

Anyway - from my experience of friends buying somewhere - most people in the last 6 years have borrowed as much as they could to buy the place they wanted.

Selling shares and borrowing on CCs to get the deposit and going to the bank that will loan them the most.

For the most part - people borrowed the absolute most they could afford to.

I on the otherhand (28) bought a place for about two thirds of what I could have been lent by the Nationwide.

The Question is this:

Pre-2003/4 - did people typically borrow the absolute maximum that they could to buy a house?

Did people also consider savings (pensions, ISAs, shares, insurance etc...) - for nowadays, most young people are not in this position.

I'd be interested in knowing how borrowing has changed from the 60's, 70's, 80's 90's.

Your thoughts please. :)

Although my wife and I both worked we borrowed the most we could afford to pay back on one income because my wife intended to give up work to look after the kids.

As I explained on another thread - high interest rates were a good thing for house buyers in the 80's because they kept house prices affordable and if you can afford to pay back a mortgage when rates are 12-15% then you can afford to pay it for the foreseeable future.

:)

Share this post


Link to post
Share on other sites

No, I borrowed 1.5x my salary, had 40% deposit in 1994. (House was £257k)

I think the interest rate was 9% and I had to pay £950 a month (repayment)

So you were earning 100K a year in 1994?

I earned 93k on year around then, contracting.

Didn't buy anything. Invested in my current business. I have a pretty well paid job, work from home and hopefully can sell it for a few million.

But maybe not. Honestly, I should have simply invested in property and I'd have millions by now. At least I've never been in property debt.

Edited by Peter Hun

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 153 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.