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Young Chap At Work, 22 Yo.....

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A young chap at work is just about to buy his first place. He's 22 yo and on (I guess) £20K max. I can't quite remember how much he'd offered for the place, but the other day I heard him telling one of the lads in the office how much the mortgage was going to be.........£647 pcm.

The scene would be comical if it wasn't so sad.....the other guys' mouth literally dropped open in astonishment when he heard the figure...the young bloke quickly interjected 'it's OK', 'I've got a lodger...one of my mates is moving in.....'

The thing I guess I'm coming onto here was the way that his collegues had virtually bullied him into the purchase...onto him every morning about it with the old 'when are you going to buy/you need to get on the ladder/my house has gone up £75K in 4 years' type remarks and surely it was they how persuaded him that the maths work IF he gets a lodger.

Being new to the office, I decided to keep my gob shut after the experience of my last office, being the only office bear - all the p**s taking and EVERYONE thnking that it's their duty to talk you round to buying a place.

I'm wondering if I should perhaps point out that he might be better renting ? I'd face the wrath of all his (my) collegues in doing this....what do you think ?

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A young chap at work is just about to buy his first place. He's 22 yo and on (I guess) £20K max. I can't quite remember how much he'd offered for the place, but the other day I heard him telling one of the lads in the office how much the mortgage was going to be.........£647 pcm.

The scene would be comical if it wasn't so sad.....the other guys' mouth literally dropped open in astonishment when he heard the figure...the young bloke quickly interjected 'it's OK', 'I've got a lodger...one of my mates is moving in.....'

The thing I guess I'm coming onto here was the way that his collegues had virtually bullied him into the purchase...onto him every morning about it with the old 'when are you going to buy/you need to get on the ladder/my house has gone up £75K in 4 years' type remarks and surely it was they how persuaded him that the maths work IF he gets a lodger.

Being new to the office, I decided to keep my gob shut after the experience of my last office, being the only office bear - all the p**s taking and EVERYONE thnking that it's their duty to talk you round to buying a place.

I'm wondering if I should perhaps point out that he might be better renting ? I'd face the wrath of all his (my) collegues in doing this....what do you think ?

No. Humans learn by their experience and mistakes. He wants to play grownup, so let him.

Yes. It's your moral duty to help him possibly avoid a big mistake. Steer him here and ask him to look and think, having more knowledge of the possible future.

Always a hard call.

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Depends what he has bought and where. Not too bad if it's not a shoebox and is in a reasonable part of town. Good if its repayment.

Got a quote for buying a small 2-bed about a year ago. Repayment was approx £1100.

The average rent around here is £650pcm for a 1-bed, I'm sure many people on 20K or less rent these properties. No 2-bed flats or houses for under £750pcm.

Doesn't mean I don't think he's a twit for buying just before the big plummet....

Edited by FedupTeddiBear

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A young chap at work is just about to buy his first place. He's 22 yo and on (I guess) £20K max. I can't quite remember how much he'd offered for the place, but the other day I heard him telling one of the lads in the office how much the mortgage was going to be.........£647 pcm.

The scene would be comical if it wasn't so sad.....the other guys' mouth literally dropped open in astonishment when he heard the figure...the young bloke quickly interjected 'it's OK', 'I've got a lodger...one of my mates is moving in.....'be better renting ? I'd face the wrath of all his (my) collegues in doing this....what do you think ?

£647 doesn't sound too bad to me. Affordable for someone on £20K p.a. If that is a repayment mortgage. He's wise to get his mate in to help pay the mortgage by renting.

Is it a good decision? Depends on the house price, location, town, what kind of house, etc. etc. But £650 pcm for someone taking home £1100 pcm (ish) isn't bad.

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Unfortunatly this guy has given in to the pressure and bought.

I too recieve the same pressure at work from older work colleagues, I am 23 years old, earning 30K a year and am an area supervisor with £35k in the bank ready and a girlfriend as a student teacher (with minimal loan debts as I have managed them!!)

I refuse to be drawn into the arguments of buying a house in the present climate with these idiots who say "you can never lose on property" rubbish, let them learn the hard way I say, I'm content holding on thankyou very much.

I simply say i'm not ready, have planned my future and stand my ground.

its a pity this guy has not done the same.

FAVRE

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60% of take home on paying the mortage sounds eye-watering to me, but as you say, this is soon slashed if he has a lodger, but it really would have to be full time for a long time, but there's no denying he'd be streched even with one.

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£647 doesn't sound too bad to me. Affordable for someone on £20K p.a. If that is a repayment mortgage. He's wise to get his mate in to help pay the mortgage by renting.

Is it a good decision? Depends on the house price, location, town, what kind of house, etc. etc. But £650 pcm for someone taking home £1100 pcm (ish) isn't bad.

I think he wil find it tough without a lodger.

£650 with a take home pay of £1100(ish) leaves £450 a month for insurance, council tax, gas, electric, water, food, work travel expenses etc and that's before he starts on things like furnishing the place, going out (even once a month), Xmas, Birthdays, clothes etc.

I wouldn't take that situation on in today's economic climate :(

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I think he wil find it tough without a lodger.

£650 with a take home pay of £1100(ish) leaves £450 a month for insurance, council tax, gas, electric, water, food, work travel expenses etc and that's before he starts on things like furnishing the place, going out (even once a month), Xmas, Birthdays, clothes etc.

I wouldn't take that situation on in today's economic climate :(

True - its a struggle. That seems to be the price of owning a house nowadays. Which is why I ain't going to bother buying one. But its not like it's impossible to survive. And if he has any sense his pay will increase.

The lodger is essential though, I agree. But with the lodger he'll be paying say £325pcm - very managable for him. Without the lodger he's shopping at LIDL for a few years to come!

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I think he wil find it tough without a lodger.

£650 with a take home pay of £1100(ish) leaves £450 a month for insurance, council tax, gas, electric, water, food, work travel expenses etc and that's before he starts on things like furnishing the place, going out (even once a month), Xmas, Birthdays, clothes etc.

I wouldn't take that situation on in today's economic climate :(

Welcome to the real world. I think there are many, many people on that sort of budget. If he were to rent his own place, (or share rent with a buddy) it would probably cost him the same as to pay a mortgage (or with lodger) each month. Little choice, really. Imagine how tough it must be for someone who earns 14K (common for new graduates) or someone on the same salary with a family to support!!!

Edited by FedupTeddiBear

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£647 doesn't sound too bad to me. Affordable for someone on £20K p.a. If that is a repayment mortgage. He's wise to get his mate in to help pay the mortgage by renting.

Is it a good decision? Depends on the house price, location, town, what kind of house, etc. etc. But £650 pcm for someone taking home £1100 pcm (ish) isn't bad.

£20,000

Thats about £1100 a month

£647 mortgage.

£100 council tax.

£75 other bills..

£50 for maintainence

£228 left a month..

now he has to eat.. and get to work..

hope he doesent have to commute far..

also beat hope interest rates don't go up..

Chances are he will need his mate in..

£20,000

Thats about £1100 a month

£647 mortgage.

£100 council tax.

£75 other bills..

£50 for maintainence

£228 left a month..

now he has to eat.. and get to work..

hope he doesent have to commute far..

also beat hope interest rates don't go up..

Chances are he will need his mate in..

because that is £52 a week left..

car insurance.. petrol... road tax.. house innsurance..

this is why you are meant to borrow 3.5 times your salary

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I thought that even when lending was based on affordability rather than multiples there were still some rules e.g 20/30% of income..after other debts.

How on earth did he manage to borrow this amount of money?

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self cert... you could borrow £500,000 tomorrow...

Plenty of lenders happy to do that..

Of course.. paying it back may be interesting..

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No. Humans learn by their experience and mistakes. He wants to play grownup, so let him.

Yes. It's your moral duty to help him possibly avoid a big mistake. Steer him here and ask him to look and think, having more knowledge of the possible future.

Always a hard call.

I would say it depends how you view office life.

Do you see the office as an extension of your personal life where you are allowed to say what you mean and make friends/enemies as you see fit?

Experience has told me that the office is a seperate proffessional life where maintainance of harmony is all important.

Will this 20 year old be comming upto you in 2 years time and saying to you: "Thanks for that great advice, you are a real dude" or is he more likely to say "Who the f**k is that new interfearing negative misery we've just recruited?"

If he was your friend then yes it may be your moral duty.....He is not, he is a work colleague, and you are new to the office.....learn from your mistake at your last place of work and keep you mouth shut.

If you really must influence your work collegues I find leaving printouts around on the printer the most effective annonomous way to do it :rolleyes:

Edited by BTLOptingOut

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A young chap at work is just about to buy his first place. He's 22 yo and on (I guess) £20K max. I can't quite remember how much he'd offered for the place, but the other day I heard him telling one of the lads in the office how much the mortgage was going to be.........£647 pcm.

The scene would be comical if it wasn't so sad.....the other guys' mouth literally dropped open in astonishment when he heard the figure...the young bloke quickly interjected 'it's OK', 'I've got a lodger...one of my mates is moving in.....'

The thing I guess I'm coming onto here was the way that his collegues had virtually bullied him into the purchase...onto him every morning about it with the old 'when are you going to buy/you need to get on the ladder/my house has gone up £75K in 4 years' type remarks and surely it was they how persuaded him that the maths work IF he gets a lodger.

Being new to the office, I decided to keep my gob shut after the experience of my last office, being the only office bear - all the p**s taking and EVERYONE thnking that it's their duty to talk you round to buying a place.

I'm wondering if I should perhaps point out that he might be better renting ? I'd face the wrath of all his (my) collegues in doing this....what do you think ?

Hi,

Oh dear. Oh really, really wrong it has all gone. I remember when I first bought a property, the idea of a mortgage was that beacuse you were making a very large purchase, you could spread the cost of that purchase over a long period of time into manageable monthly payments, to allow for the ups and downs of life, the economy, illness, etc., If we are living in a low inflation environment now, then that premium debt for that chap will still feel pretty heavy in 10 years time. So forget kids etc., redundancy, career changes,. And if a sharp external knock hits the economy - as they do at least once a decade - where is the fellow's ability to handle that going to come from. Given that wage level, those repayments, household budgeting, council tax, car insurance maybe, etc., where is savings and pension provisin going to come from.

Given the current demographics, in the abscence of increased immigration, there will be alot of population fall 20-30 years from now. Not all could possibly inherit so property supply could increase significantly, particularly away from main urbain centres. Renting cheaply and saving hard could be a far better method of securing a property for later in life as things stand. At the very least, there are enough visible price falls to at least wait and see. Personal bankruptcies and reposseions are marching upwards and there is a large supply of unsold houses, unemployment rising, the economy clearly in difficulties. Cheap interest rate deals from a few years ago are over and increasing repayment costs for those borrowers are coming into play, we are about to hit winter with record oil price highs. All the signs say now for the moment.

Boomer

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"A young chap at work is just about to buy his first place. He's 22 yo and on (I guess) £20K max."

The guy might have made some calcs and decided he could go with it (not that I agree with his decision whatsoever). He's young and depending on his job, his salary might rise 2-3K a year.

Anyway, now he bought that's over, you should not discourage him. He could be off with a few years on prozak in the near future, so let him happy in his ignorance.

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True - its a struggle. That seems to be the price of owning a house nowadays. Which is why I ain't going to bother buying one. But its not like it's impossible to survive. And if he has any sense his pay will increase.

The lodger is essential though, I agree. But with the lodger he'll be paying say £325pcm - very managable for him. Without the lodger he's shopping at LIDL for a few years to come!

This is the cost of owning a home nowadays..

This is the point ..

You cannot have everyone who buys a home left this skint after they have paid of their mortgage..

It doesent leave enough to support the economy..

He may be one man.. but if everyone had that level of debt then what is to be left for the eoconomy..

It has been said time and time againt that we are reliant on the high street for 2/3rds of the economy..

This chat has about £250 a month to eat and use to pay for his commute to work..

Tumbleweeds int he high street...?

well if prices stay where they are and people get into these levels of debt.. then the conomy tanks..

The economy is not only stopping house prices from rising.. it also means they cannot be sustained at present levels.

IT IS AN ECONOMIC IMPOSSIBILITY.

you might be able to afford your mortgage by tightening your belt,.... but do not kid yourself for one second that the economy can afford for you to be tightening your belt.. not when there are so many of you doing the same.

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This is typical of whats going around. Crazy.

What happens when he gets married, goes into negative, lodger moves out.

Im surprised that people think that giving £650.00 of an £1100.00 wage per month is ok. Its madness

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I think he wil find it tough without a lodger.

£650 with a take home pay of £1100(ish) leaves £450 a month for insurance, council tax, gas, electric, water, food, work travel expenses etc and that's before he starts on things like furnishing the place, going out (even once a month), Xmas, Birthdays, clothes etc.

I wouldn't take that situation on in today's economic climate :(

I agree, £650 is more than half his salary.

A few years ago (when I had a mortgage) my monthly repayments were £450 per month and I was on well over £30,000 pa. This was comfortable for me, I probably could have managed more, but I would have struggled at £650 pcm.

I'm starting to find the best way of getting people to take a look at what they're doing is to ask carefully worded questions. The desired effect is to get them to question themselves as to whether it is a good move.

E.g. What are the monthly interest payments on your mortgage? (They usually haven't considered this)

How much rent would you pay for the place?

What rent are you charging your lodger? Could he/she get a better deal elsewhere?

How much would the bills be with two of you living there?

However, having said all this, there's always some bright spark who tells them that property always increases in value.

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Hope he got a bargain though (i.e. less than what houses in the area previously sold for).

We need mugs like this to drive the market down.

60% of take home on a mortgage is stupidity!

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Give the guy a break! At least he has put some thought into it.

1) He is getting a lodger to help with the mortgage and bills.

2) He may have gone for a fixed rate mortgage thus shielding him from any IR rises for the next few years.

3) He is young and as someone mentioned his wage is likely to rise substantially over the next few years.

4) Even if he loses his lodger he may get himself a girlfriend/boyfriend who will move in with him.

5) Renting will cost him the same or even more and he'll never own the house or benefit from any HPI.

Life is too short to stand on the sidelines for ever. I know people who did a similar thing back in '88-'90 and we (who were too poor to buy) thought they were mental. Yes they found it tough, yes they made sacrifices but they came through. Now, who is it that is living in a big house in the country now? Me and the naysayers? I think not.

Sounds like the guy has made a perfectly rational decision to me.

All this refusing to buy a house in case somethings goes wrong just confirms the observation from the investment world that people will take extraordinary risks to avoid a loss and yet will minimise risk in order to grab a tiny profit.

Face it, life is uncertain. All we can do is learn to live with that uncertainty.

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Give the guy a break! At least he has put some thought into it.

1) He is getting a lodger to help with the mortgage and bills.

2) He may have gone for a fixed rate mortgage thus shielding him from any IR rises for the next few years.

3) He is young and as someone mentioned his wage is likely to rise substantially over the next few years.

4) Even if he loses his lodger he may get himself a girlfriend/boyfriend who will move in with him.

5) Renting will cost him the same or even more and he'll never own the house or benefit from any HPI.

Life is too short to stand on the sidelines for ever. I know people who did a similar thing back in '88-'90 and we (who were too poor to buy) thought they were mental. Yes they found it tough, yes they made sacrifices but they came through. Now, who is it that is living in a big house in the country now? Me and the naysayers? I think not.

Sounds like the guy has made a perfectly rational decision to me.

All this refusing to buy a house in case somethings goes wrong just confirms the observation from the investment world that people will take extraordinary risks to avoid a loss and yet will minimise risk in order to grab a tiny profit.

Face it, life is uncertain. All we can do is learn to live with that uncertainty.

Negative equity wiped out quite a few people in the 90s. I worked with one guy who was still bankrupt 10 years later because of this and he then flipped and walked out on his job.

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" He's young and depending on his job, his salary might rise 2-3K a year.

...or salaries may stagnate and start falling as more jobs go overseas .... or a salary may drop to zero due to unemployment etc.

Give the guy a break! At least he has put some thought into it.

1) He is getting a lodger to help with the mortgage and bills.

2) He may have gone for a fixed rate mortgage thus shielding him from any IR rises for the next few years.

3) He is young and as someone mentioned his wage is likely to rise substantially over the next few years.

4) Even if he loses his lodger he may get himself a girlfriend/boyfriend who will move in with him.

5) Renting will cost him the same or even more and he'll never own the house or benefit from any HPI.

Life is too short to stand on the sidelines for ever. I know people who did a similar thing back in '88-'90 and we (who were too poor to buy) thought they were mental. Yes they found it tough, yes they made sacrifices but they came through. Now, who is it that is living in a big house in the country now? Me and the naysayers? I think not.

Sounds like the guy has made a perfectly rational decision to me.

All this refusing to buy a house in case somethings goes wrong just confirms the observation from the investment world that people will take extraordinary risks to avoid a loss and yet will minimise risk in order to grab a tiny profit.

Face it, life is uncertain. All we can do is learn to live with that uncertainty.

I know people who earn more than twice what is being stated for him, and they have a monthly mortgage repayment smaller than that, and they think that is quite large enough. And this is people who bought less than 5 years ago.

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  • 302 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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