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spyguy

North South Divide ... Or Borrowing 12X Income

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http://www.dailymail.co.uk/femail/article-2013278/The-new-north-south-divide-Two-families-300-miles-apart-earn-50k-struggles-lives-luxury.html

I earn 50K yadah yadah. why is my life so bad yadah yadah

Hmm lets try that house worth 600k - try 300k - with a 50K mortgage.

At the sky high IR rates of .... 0.5 his mortgage takes 40^ of their income. What happens when rates go up.

She cannot afford dentists and has cut back her haircuts to every few months - nice, ginga with a trim and no teeth.

They are scr*wed.

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'But despite everything, I don’t want to have to move. We have a big mortgage, but I see our home as an investment: a house in Surrey will always be in demand, and anyway I think house prices will rise in future.

‘We may not be able to rely on a pension when the time comes, but at least we should have the option of downsizing with some money to spare that we can then live on.’

And there we have it.The delusion is still there.

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The difference between the two is that the southern couple have got themselves into huge debt whereas the northern family are living within their means.

Spending 40% of your income on a mortgage while interest rates are so low is madness! This just shows why banks should lend not more than 3.5X earnings not 5X. They only have themselves to blame for this. They want what they can't afford.

‘But despite everything, I don’t want to have to move. We have a big mortgage, but I see our home as an investment: a house in Surrey will always be in demand, and anyway I think house prices will rise in future.

They are taking a massive £600,000 gamble on the housing Market. With money they have borrowed! And even if they win the bet, there will be no downsizing and taking profit because their children will still be living there as they won't be able to afford to buy!! Foolish people, taking the same risks that the banks did that got us into this mess!

This ones a gauranteed repo :D

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Through the rose tinted lens of my own views, I actually saw this is quite a positive article :

- Large mortgages destroy quality of life

- Our problem is that house prices are too high rather than that incomes are too low

I am not sure that most readers of the article or politicians of any stripe would reach the same conclusion.

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‘We work hard — Andrew often puts in a 60-hour week — and we have looked after our money so, on the face of it, we have an enviable lifestyle, but our belts have been tightened to the extent we have to think twice about every penny we spend,’ she says.

‘The heating doesn’t go on unless it’s absolutely freezing and extra layers won’t suffice.

About 40 per cent of the Sewells’ income goes on their mortgage

'But despite everything, I don’t want to have to move. We have a big mortgage, but I see our home as an investment: a house in Surrey will always be in demand, and anyway I think house prices will rise in future.

‘We may not be able to rely on a pension when the time comes, but at least we should have the option of downsizing with some money to spare that we can then live on.’

Sounds like it wasn't a great idea taking on that 600k mortgage then. It's not living down south that's the problem it's insane HPI of course. When will this become part of our national consciousness? We still believe high house prices will make us rich when they are SO obviously making us poor. I despair of my fellow Englanders.

The Salloway family live in a £200,000 house near Newcastle but it would be worth at least £600,000 in the south

i bet most people reading that will have a problem not thinking that the salloway family would be better off if their house was in the south. And in that respect this could be a good article, though confusing for the poor lambs

Edited by athom

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Sounds like it wasn't a great idea taking on that 600k mortgage then. It's not living down south that's the problem it's insane HPI of course. When will this become part of our national consciousness? We still believe high house prices will make us rich when they are SO obviously making us poor. I despair of my fellow Englanders.

But she still believes that house prices will carry on rising - her house is a good investment

It's like she thinks that HPI is a natural law, like gravity

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But she still believes that house prices will carry on rising - her house is a good investment

It's like she thinks that HPI is a natural law, like gravity

That'll be because she sucked this up from every media outlet for over a decade and very little has been said to dispute this, HPC, nah just a little blip on the way to the moon :rolleyes:

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Reading this in the comments "And what happens if one of them loses their job?" i'm reminded of Mr Sewells job - "41-year-old Andrew Sewell is an area sales manager in the construction industry" Nah, what could be a more secure job than that at a time like this :unsure:

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from the comments

Most people in Cornwall have houses so expensive in comparison to their incomes, that their mortgages, like mine are 45% of a joint income! if we all moved to the north, where it's cheap, then it wouldn't be cheap any more! As houses are expensive here, then so are services - i haven't had my hair cut for years, even the village hair dressers charge £25 for a dry hair cut here!

Finally getting it. This whole economy is going to come to a grinding halt at some point soon.

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If you can't afford your own home, you are going to cut down on things that involves paying for others' unaffordable properties....like haircuts.

exactly, haircuts at prices set high enough to allow the hairdresser to pay his/her inflated house price, etc. We are all banking of everyone else paying off our mortgages, but the money sloshing around is drying up. At some point there will be a knock on effect which will spread throughout our economy. Isn't this the great fear the economists have of raising interest rates.

Edited by athom

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The article doesn't say how much their mortgage is. It just says how much they think the house is 'worth'. So, £50k a year is £2800 take home per month for one person. Over two incomes, a very rough estimate is £3500 take home as there is less tax to pay than a single person. So 40% of that is £1400 a month. So, a very rough guess is that they have a mortgage somewhere between £300k and £400k.

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The article doesn't say how much their mortgage is. It just says how much they think the house is 'worth'. So, £50k a year is £2800 take home per month for one person. Over two incomes, a very rough estimate is £3500 take home as there is less tax to pay than a single person. So 40% of that is £1400 a month. So, a very rough guess is that they have a mortgage somewhere between £300k and £400k.

Probably a 100% IO mortage taken out 3 or 4 years ago. Obviously the house must must have risen in value since then hence the inflated 'estimate' of current value.

Anyone got the time to investigate where it is and look up the price they paid? And work out a proper current value using land registry? That would be good to put in the comments :)

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Shouldn't this lead to an economic boost for the north? We often harp on about how lower mortgage costs would give people more disposable income and this article nails that point. Are geographical house price ratios going to do more to end the north / south economic divide than any govt policy?

The couple down south are going to be in deep trouble soon. Even after a repo, I'm guessing they will still have no idea why things didn't work out for them.

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Shouldn't this lead to an economic boost for the north? We often harp on about how lower mortgage costs would give people more disposable income and this article nails that point. Are geographical house price ratios going to do more to end the north / south economic divide than any govt policy?

The couple down south are going to be in deep trouble soon. Even after a repo, I'm guessing they will still have no idea why things didn't work out for them.

Just look at the northern familys spending, Lower house price do boost the economy.

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Just look at the northern familys spending, Lower house price do boost the economy.

One of the things that I noticed was that actually the northern family were sensibly frugal about stuff... 'Regular family treats - a night ten-pin bowling and a meal out' - long mountain bike rides in the country - 'only' running one car - and that a Seat Altea rather than a BMW X5 or what have you. It seems to me that aside from the mortgage, there are other differences as well that would make some difference...

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If things are that bad for the southern couple, why doesnt she get a job, instead of doing nothing all the time and then wailing to the paper about how her husband is not earning enough to support her and her two children from a previous relationship.

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Just look at the northern familys spending, Lower house price do boost the economy.

Of course they do - so does lower inflation (when your popualtion is screwed down to the floor with global wage arbitrage).

Still, none of that benefits the banksters, or first users of freshly printed money.

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The Sewells — mum, dad and two children — live in a four-bedroom detached house worth an estimated £600,000

‘But despite everything, I don’t want to have to move. We have a big mortgage, but I see our home as an investment: a house in Surrey will always be in demand, and anyway I think house prices will rise in future.

More easy converts for the HPC Education Committee.

They hate you. They don't even look towards when their kids will want to move out and buy a place of their own, unless they expect to MEW a deposit for them, thinking their house will be worth £1m by then.

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My recommendation is to repay your high south east mortgage debt to at least 50% of valuation or even better in full, become debt free then move to a new and better place for a far better quality of life, less stress, more time, less congested roads, better countryside, lots to do, places to go and new people to meet...then start to really live a life. ;)

Edited by winkie

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They have had to resign their gym membership because they can no longer afford the subscription and last year, for the first time, they went without their traditional family holiday abroad so they could buy a new living room carpet instead.

May I suggest the following website (someone posted it here a while back, sorry I forget who) - seems somehow appropriate..

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exactly, haircuts at prices set high enough to allow the hairdresser to pay his/her inflated house price, etc. We are all banking of everyone else paying off our mortgages, but the money sloshing around is drying up. At some point there will be a knock on effect which will spread throughout our economy. Isn't this the great fear the economists have of raising interest rates.

Haircuts are a very good example....in London once on a mad spur of the regretful moment paid £60 for a wash and cut...ok the chair I was sitting in was fancy, so were the mirrors and the wash was a wash come head massage with smelly hair products that were supposed to be something extra special, but the only thing special about them was the price imo.......now I can get a perfectly good haircut, with good friendly service that when I walk away I do not feel ripped off and cheated for £13.....I of course leave a tip. ;)

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Steetview link of the Surrey house. Current records show a Ms Sewell living there.

No house price info on it at nethouseprices.

Ash'S House, Blackheath Lane, Wonersh, Guildford GU5 0PN

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Steetview link of the Surrey house. Current records show a Ms Sewell living there.

No house price info on it at nethouseprices.

Ash'S House, Blackheath Lane, Wonersh, Guildford GU5 0PN

Try Zoopla :

http://www.zoopla.co.uk/home-values/wonersh/blackheath-lane/gu5-0pn/?q=GU5%200PN

Ash's House, Blackheath Lane, Wonersh, Guildford GU5 0PN

Detached, Freehold, -- Beds, -- Baths, -- Receps - Edit

Last sale: £200,000 Sale date: 6th Feb 1998

Zoopla Estimate

£542,258

It looks like a bit of MEWing and an overestimate of how much the house is worth.

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Steetview link of the Surrey house. Current records show a Ms Sewell living there.

No house price info on it at nethouseprices.

Ash'S House, Blackheath Lane, Wonersh, Guildford GU5 0PN

AS you did the detective work, I think that you could have a field day in the comments section at the DM .....

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  • 311 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%



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