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Hullabaloo82

Overheard In The Supermarket

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Heard a young lady talking to a colleague whilst getting a sandwich on my lunch break today.

She said; "There's a house for sale in (not particularly attractive local village with relatively high crime and poorly performing schools). Just under £200k. We worked out that we can borrow £95k......."

at this point I was assuming she was going to say that they already had a massive deposit so only needed to borrow £95k to buy the place and have a cheap mortgage but instead she said .......

"but even with a deposit of £70k it's still not enough."

Based on an income multiple of 4.6 (which is low given the prospective LTV but about as low as is plausible) I worked out this couple must be earning about £20k between them. Dad on £14k pa working a 37.5 hr week and Mum about £6k doing 16 hrs around childcare, both earning just above minimum wage.

Didn't know what to make of this to be honest. I'm guessing they'd both just had a pay rise courtesy of Osborne and thought now might be the time to take the plunge. I can only assume the £70k came from inheritance/BOMAD or similar. Highlights the lunacy of it all really. Family from the same place in a position to put up £70k but their kids/grandkids can't get a job that pays more than minimum wage.

This person then said they were keen on this house as it was the only 3 bedroom place available in the area that 'wasn't terraced.'

Am I the only person that finds this mental? A. That it's that hard for young families to get even a half decent paying job in some areas let alone a well paid one (HPI is one thing but, certainly in my area, low wages are just as big a problem if not worse) B. That these people were even thinking of buying a house in these circumstances and C. that they wouldn't consider anything less than a 3 bed semi as a starter home.

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Agree on point A and point B However anyone who has stretched to buy in the last 2 years or more needs to understand as a starter home one needs to be looking at something that will be suitable for ten to twenty years. The chance of going into negative equity is so high coupled with the prohibitive cost of moving, your first house is also likely to be your last.

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Could be an element of MMR in that too. I know the amounts banks lend has dropped significantly. Throw kids in the mix... pre mmr bank was confident I'd get 5+times, when I visited after MMR the computer said 3 times.

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Agreed, I'm also taking the view that it's a 'one shot' deal with getting the right place with a (for me) 20 year view.

I am also generally receptive to the approach that as prices rise, expectations should also rise, not fall. Part of the problem with UK bubble mania is that people have been accepting of crap houses at prices that ought to offer a lot more, and the resultant damage it has done to the rest of us by pushing prices up.

Hopefully the couple will hold out for their semi, and get it at a decent price in future.

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Agreed, I'm also taking the view that it's a 'one shot' deal with getting the right place with a (for me) 20 year view.

I am also generally receptive to the approach that as prices rise, expectations should also rise, not fall. Part of the problem with UK bubble mania is that people have been accepting of crap houses at prices that ought to offer a lot more, and the resultant damage it has done to the rest of us by pushing prices up.

Hopefully the couple will hold out for their semi, and get it at a decent price in future.

Same here, in South East totally believe if I buy it will be a one shot deal, my daughter is 3 and any property needs to be family suitable for 20 years minimum.

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Agreed. When we bought our place it was based on the expectation we would be staying here 20 years at least - and possibly be seeing out our days here. I've no interest in going up and down any kind of ladder or ever interacting with another estate agent. Fortunately, ours is the kind of area where that seems to be a kind of norm. One of our neighbours has been living there for 50 years, the other is now multigenerational so longer than that.

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Is that right? I have no experience of the benefits and am told my wife and I won't receive anything when our new arrival comes along due to our earnings. £623 seems a hell of a lot though?

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Could be an element of MMR in that too. I know the amounts banks lend has dropped significantly. Throw kids in the mix... pre mmr bank was confident I'd get 5+times, when I visited after MMR the computer said 3 times.

I was surprised as you re the MMR bit. Dad died last year so Mum wants a flat near near us and so do we. Not keen on selling Mums place yet , handy for two of our 4 children when they are working at other offices other than their base and could do with a lick of paint etc.

So needed to add about 80k to my existing borrowing as said on here money cheap so why not ? takes total to less than 30% on a mortgage with 15 years to run.

The telephone appointment was three hours and bear in mind this with the existing lender, the strange thing was two years ago I had an offset with funds way beyond this in total.

So I think MMR will actually soften the market - A good thing

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