Youngsters Have Found A Way To Fight Intergenerational Wealth Transfer

[iLegallyBlonde]

Is that a FTB mortgage?

You wouldn't want to know how much castle you'd get for that much outside of London.

That would buy a 4 bed detached 12 miles from Liverpool, if i could earn London wages I'd be delighted to pay £400k for house, unfortunately the prices are the same up here without the earning power.

[dipstick]

Well 3x sounds alright 10% deposit will give you some slack as well.

How many people are there like this in the country?

On the Abbey news, why stick at 3x, when you could have bought a house for 550k.

For all those on salaries like this they will have even more buying power.

If people on these kind of salaries are the reason for HPI then I think this will continue for a while still with this kind of lending happening.

Maybe we should start to rethink this a bit and start to say this kind of borrowing

I must admit I'm starting to lose sympathy with people who max themselves out. Yes, I know there are some that have to, but a lot of this price hiking is due to wants and not needs.

OK it's not a real world I know, but in the real world when do people start to think "hang on, I'm pushing it a bit here"

I do know that on the other thread, Nicko said he could have bought cheaper but it was a 20 minute walk to the station - ???? Dear oh dear, how troublesome. Think how much he could have saved in gym fees as well.

There used to be a reason that lenders only did 2.5x multiples - because they knew it was the maximum people could afford.

Edited November 1, 2006 by dipstick

[eric pebble]

it would have been cheaper to rent, and save up if you say you make 100k, it's 60k per year then in 4 years you could have saved about £150k, this would give you cheaper rates,and save you money in the long run. It shows people rush in with out thinking.

SPOT ON! Well said crash2006.

But aside from anything else, the fact that ABbey Nat and all the rest are now lending 5x salary (or even more) just shows one thing: They are absolutely desperate to keep the whole Pyramid Selling Scam going.... Just imagine if they were sensible [!!] and STUCK RIGIDLY to the absolute max 3.5x salary..... This would mean the end of the Pyramid Selling Scam!!! i.e. The music would stop playing.... no more houses would be affordable..... finito!!

SO - the Moneylenders keep the music playing/scam running.... and just up the multiple!!

This guy in Surbiton: The mind boggles as to what the house is like! But - I suspect it is 2-3 bedrooms max, semi, small poxy garden, not particulalry nice etc etc. And to think he paid £345k or whatever it is...over a third of a million.... It is pretty sad really.

What is he going to do when his girlfriend is pregnant, needs to stop work - THEREFORE STOP EARNING & go to hospital, have a baby, have to look after it.... we're talking years!!!

It is just so sad. The glaring obvious fact is - House Prices are being dictated and set by the Moneylenders who - when things sag a bit for them and the market slows/stops - Solution? - They just up the multiples!!.... Am I imagining it or is this not price and MARKET MANIPULATION which - in any other sphere/market - would land you in Jail!!?? It is sick. Just sick.

Edited November 1, 2006 by eric pebble

[iLegallyBlonde]

SPOT ON! Well said crash2006.

But aside from anything else, the fact that ABbey Nat and all the rest are now lending 5x salary (or even more) just shows one thing: They are absolutely desperate to keep the whole Pyramid Selling Scam going.... Just imagine if they were sensible [!!] and STUCK RIGIDLY to the absolute max 3.5x salary..... This would mean the end of the Pyramid Selling Scam!!! i.e. The music would stop playing.... no more houses would be affordable..... finito!!

SO - the Moneylenders keep the music playing/scam running.... and just up the multiple!!

This guy in Surbiton: The mind boggles as to what the house is like! But - I suspect it is 2-3 bedrooms max, semi, small poxy garden, not particulalry nice etc etc. And to think he paid £345k or whatever it is...over a third of a million.... It is pretty sad really.

What is he going to do when his girlfriend is pregnant, needs to stop work - THEREFORE STOP EARNING & go to hospital, have a baby, have to look after it.... we're talking years!!!

It is just so sad. The glaring obvious fact is - House Prices are being dictated and set by the Moneylenders who - when things sag a bit for them and the market slows/stops - Solution? - They just up the multiples!!.... Am I imagining it or is this not price and MARKET MANIPULATION which - in any other sphere/market - would land you in Jail!!?? It is sick. Just sick.

She won't stop earning though, they'll put it in the baby factory until it goes to school and then send it off to Uni at 18. Not much parental imput required after you've pushed it out it these days and plenty don't even do that much.

[SCUMBAG]

hmm... a bit to matter of fact there mate.

You have just moved to Surbiton, we have been renting in Surbiton for the last 12 months, prior to that I spent the previous 9 years renting in Wimbledon, Fulham & Clapham so I have an idea of whats going on in SW London.

All I am trying to add is some perspective. Its not just me - as I say, the 4 friends I refer to recently have bought on similar terms in Wimbledon (x2), Raynes Park & St Albans. I am just trying to explain rationally where the demand is coming from without the usual "mental people mortgaging their grandmother and eating beans on toast to pay the interest" scenario.

Neither I am some City whizz, I'm just an Accountant working for BP in Sunbury on Thames (so I have driven thru Hampton Wick many a time....)

Accountant jokes

An architect, an artist and an accountant were discussing whether it was

better to spend time with the wife or a mistress. The architect said he

enjoyed time with his wife, building a solid foundation for an enduring

relationship. The artist said he enjoyed time with his mistress, because of

the passion and mystery he found there. The accountant said, "I like both."

"Both?"

The accountant replied "Yeah. If you have a wife and a mistress, they will

each assume you are spending time with the other woman, and you can go to

the office and get some work done."

To the optimist, the glass is half full. To the pessimist, the glass is half

empty. To the accountant, the glass is twice as big as it needs to be.

What's the definition of an accountant?

- Someone who solves a problem you didn't know you had in a way you don't

understand.

What's the definition of a good tax accountant?

- Someone who has a loophole named after him.

What's an extroverted accountant?

- One who looks at your shoes while he's talking to you instead of his own.

What's an auditor?

- Someone who arrives after the battle and bayonets all the wounded.

How do you drive an accountant completely insane?

- Tie him to a chair, stand in front of him and fold up a roadmap the wrong

way.

What do accountants suffer from that ordinary people don't?

Depreciation.

[bob monkhouse]

Fair do's Nicko. If i could get somewhere reasonable for 3 times our income, I would. Let each man bear their own risk, and reap their own profits.

[crashvilleboomtown]

I think this poster has overstretched themselves . They must be doctors to be so sure of their job position or something to take up a £375k mortagage u p to the hilt like that.

[Als]

...just trying to provide a bit of balance....

In other words you're just trying to persuade others to buy a house so that the value of your expensive house doesn't fall. Also, I fail to see what is so twisted about Evictees post.

[UnwittingAccomplice]

Yeah it's a lot of money to borrow but as the guy says, he's 30 and it is time for him to buy. It might work out, it might not but at least he TRIED rather than sitting on the sidelines for 5 years moaning about how things are too expensive. If you can buy a house on 3.5 X joint earnings in a nice area that you want to live in for years to come then why not??

And as for the whole "what if one income disapeers when you have kids" argument, well it is isn't permanent you know. I'm sure an accountant will be smart enough to make a provision for those years and live a bit leaner just like everybody else does. His salary is pretty secure in London to be honest!

[munimula]

Good grief there are a lot of rather bitter and frankly quite nasty people on this board!

The Guy bought a house he can afford "Shock Horror!!", get over it.

This forum used to have some quite lively and interesting debate when it first started, now it is much more name calling and has frankly lost a good deal of credibilty in my eyes.

They guy has taken on a mortgage that he can afford - Now but will he always be able to afford it? It's the stupidity of taking on such a large mortgage.

£100K joint income sounds like a lot but when your mortgage interest wipes out £1500+ of that income every month it ain't that much. The equivalent salary required just to pay for the mortgage (repayment - assuming payments are £2000 plus) would be around £40K pre tax. What was wrong with buying a 2-bed flat, paying off the mortgage earlier and moving up when you needed to and had saved more? You are just like my friend. Exactly the same position. Materialistic and very sad. And you will be a lot worse off over your lifetime for your decision. You are enslaved by your mortgage.

And he and his gf have to maintain that income for the next 15-25 years, both working.

It's pure stupidity.

Edited November 1, 2006 by munimula

[dipstick]

'erm, I think you'll find it was a flat, although again I may be wrong.

Thing is, BM and others, this kind of thinking is just pushing people like you out of buying a reasonable property yourself.

If folk stuck to the old multiples and told lenders to stuff it, even for a couple of months, how long do you think they would buck losses before things started to return to a bit of normality.

Nice to see you are supporting him though, even if it is affecting your own position.

[evictee]

In other words you're just trying to persuade others to buy a house so that the value of your expensive house doesn't fall. Also, I fail to see what is so twisted about Evictees post.

Thank you Als! I was beginning to think I was on my own. May I remind anyone who's still interested that when this thread started it was supposedly about people having their debts written off while being allowed to keep the proceeds, and this was recounted with a strong hint of good-for-them.

So may I please ask why so many posters are queuing up to sling around terms like nasty, bitter, twisted and warped, just because some people are angry to have their attempts at saving for a deposit made a mockery of?

[zag2me]

Just read this entire thread and the jealously here is incredible.

The guy was asked to state his earnings and property details, so he did, he was in no way showing it off.

I'm in a similar situation, albeit at the bottom of the scale

I bought my flat 1 year ago on 2.5 x earnings and everyone on this board called me a lunatic for buying at the "peak" of the boom.

I was apparently destined to loose my job, have a devalued currency, stock market crash and interest rates where to be 7%, and my flat was to be worth 30% less by now.

My only regret was that I was far too prudent and didnt go for the biggest and best thing I could afford.

[munimula]

Just read this entire thread and the jealously here is incredible.

The guy was asked to state his earnings and property details, so he did, he was in no way showing it off.

I think you are very mistaken

Who would be jealous of having to take out a £346K mortgage?

Both of them having to work to pay their mortgage and living costs, handing over £1500 a month to a bank in interest alone. No chance of his gf taking leave to have kids.

I fail to understand your interpretation.

[Doom Lord]

I think you are very mistaken

Who would be jealous of having to take out a £346K mortgage?

Both of them having to work to pay their mortgage and living costs, handing over £1500 a month to a bank in interest alone. No chance of his gf taking leave to have kids.

I fail to understand your interpretation.

After Mortgage Payments I rekon there is about £3500 a month left. Thats more than alot of people earn before everything else is deducted. If they plan carfully I'm sure they can take time to have a baby. Alot of families have both parents working and that is something that is true for both the poor and the wealthy. I Don't think they are overstreched 'payment wise'. Not say they wont loose out equity wise in a crash. However I don't think he appreciates that they are in a priviled position salary wise and this does not reflect your regular Joe Bloggs in any way what so ever. This is why something will happen eventually whether its a crash in real or nominal terms is yet to be seen.

[dipstick]

After Mortgage Payments I rekon there is about £3500 a month left. Thats more than alot of people earn before everything else is deducted. If they plan carfully I'm sure they can take time to have a baby. Alot of families have both parents working and that is something that is true for both the poor and the wealthy. I Don't think they are overstreched 'payment wise'. Not say they wont loose out equity wise in a crash. However I don't think he appreciates that they are in a priviled position salary wise and this does not reflect your regular Joe Bloggs in any way what so ever. This is why something will happen eventually whether its a crash in real or nominal terms is yet to be seen.

How does that actually work out, DL?

Not being sarcastic.

I can certainly see how you could misinterpret some things said as jealousy, Zigzag. Especially considering that you bought last year and took a bit of hammer for it.

I also bought last year, and at the time, thought things couldn't get higher.

They did.

But I honestly thought I bought at the peak and paid a reasonable, but not ott price.

I just finalised on selling mine today and got 27k more, so I wasn't right.

But despite how things are looking now, you did the right thing at buying 2.5x, something, at some point will blow here and when it does it isn't going to be pretty.

It doesn't matter what you earn, if you max yourself out it doesn't leave a lot of room for manouvre, and common sense should tell you that you always need a contingency plan.

[Doom Lord]

How does that actually work out, DL?

Not being sarcastic.

I can certainly see how you could misinterpret some things said as jealousy, Zigzag. Especially considering that you bought last year and took a bit of hammer for it.

I also bought last year, and at the time, thought things couldn't get higher.

They did.

But I honestly thought I bought at the peak and paid a reasonable, but not ott price.

I just finalised on selling mine today and got 27k more, so I wasn't right.

But despite how things are looking now, you did the right thing at buying 2.5x, something, at some point will blow here and when it does it isn't going to be pretty.

It doesn't matter what you earn, if you max yourself out it doesn't leave a lot of room for manouvre, and common sense should tell you that you always need a contingency plan.

Er....£110000 / 12 months * 0.60 tax - Mortgage £2202.23 25years fixed at 5.75=3297.77. A rough guide.

[Rachman]

Alll that would bother me is living in Surbiton - horrible place - most people pretend they live in Kingston, the only people that aspire to it live in Tolworth...

The money he's earning is not outrageous, I am surprised that on that money they've only been able to save £40K between them though - they must have had some seriously expensive habits I hope they've got over - £110K joint income split like that is nearer £120K single income BTW.

Why is the multiple outrageous . they earn £6.3K a month and spend about £2K on their mortgage - their interest is probably a little more than rent, but if they are sensible, they can get that down rapidly. Indeed, if they want kids at 34/5, they can easily have got well over £120K of the capital shifted - by which time they could probably easily live on one £100K salary (which is likely for a 35 year old good accountant for an oilco in 5 years time....).

They have a grand a week net to spend/save/invest..... - not all of the country is on £5.25 an hour - so the numbers are big, but they don't matter if you have continued employment - and there's not likely to be mass redundancies at an oilco for a decade or two yet......

[dipstick]

Thanks DL, I can't work anything out that has more than a MW tax code!

I suppose Rachman you have inadvertantly picked up on what was niggling me. I too was wondering why so little saved towards a deposit with so much coming in.

Either the couple haven't been together and/or saving very long or they have expensive tastes.

Thing is, don't we all make the same mistake of excluding other outgoings and tend to 'round off' figures?

And, ultimately, isn't it this kind of attitude that is pushing prices up and excluding the very people who come on this board? Only in a broad sense, I realise, but we can't critisize lax lending if we condone lax borrowing.

I think it was your post on rentals earlier today? If it was, excellent job.

If not - sorry!

[nicko75]

They guy has taken on a mortgage that he can afford - Now but will he always be able to afford it? It's the stupidity of taking on such a large mortgage.

£100K joint income sounds like a lot but when your mortgage interest wipes out £1500+ of that income every month it ain't that much.

It's pure stupidity.

our interest (for the next 2 years anyway) is less than 1300 a month - which is about 100 more each than our rent was.

its interesting to read quite a lot of support on the board which is pleasantly surprising. I guess the main point I was trying to make (WITHOUT being smug) is that in the South East affordability is still viable for a lot of couples and that is what continues ot drive the market.

Looking outside of London I would tend to agree that with avg salary / house prices at 7 or 8, then this is probably unsustainable and a correction is due. there may well be some sort of correction in London but I just get the feeling the market in London is now operating on a different plane to everywhere else..

As for pretending to live in Kingston (cant remember who posted that), I'd rather live in Surbiton any day! Easy access to the shops and bars of Kingston but without legions of drunk students (yes i was one once) and underage drinkers all over the shop, plus the trains are better!

Thanks DL, I can't work anything out that has more than a MW tax code!

I suppose Rachman you have inadvertantly picked up on what was niggling me. I too was wondering why so little saved towards a deposit with so much coming in.

Either the couple haven't been together and/or saving very long or they have expensive tastes.

comedy, you're damned if you do and your damned if you dont. we havent earned that much between us for the last 10 years! (we have been together 5)

i would have thought saving up £38,500 was no mean feat but apparently it is "very little" and shows a complete lack of discipline!

on the back of repaying student debts (both) plus the early years in London earning less than £20k (not enough for a 22 year old "about town" in London ) i would have thought just short of 40 grand was a pretty good effort!

[dipstick]

Until I read your other thread I thought surbiton was a 'pretend' place - didn't the Goods of The Good Life live there?

I agree, it is this kind of wage that is sustaining prices, but how sensible it is for the market overall remains to be seen.

Don't get me wrong, I wish you luck in your choices. I guess I just remember the last crash too clearly - in fact I will never forget those 5 years of misery.

Plus I had a mother that would slap me round the head for being a 'bluddy fool,' whether I was 30 or not!

Sorry, only just read the other bit about your wages.

OK, saving for 3 years on a joint income of 80k - that's 40k out of 240k - We saved 5k in 2 years to buy in 1982 and were on really, really carp money (and in rented)

Edited November 1, 2006 by dipstick

[nicko75]

Until I read your other thread I thought surbiton was a 'pretend' place - didn't the Goods of The Good Life live there?

yes they did - well sort of. I think they actually lived in Berrylands which, like Tolworth, is another place where people pretend to live in Surbiton ...... who then pretend to live in Kingston - apparently

[dipstick]

Na, Kingston is in Jamaica - of this I am sure

Edited November 1, 2006 by dipstick

[Rachman]

yes they did - well sort of. I think they actually lived in Berrylands which, like Tolworth, is another place where people pretend to live in Surbiton ...... who then pretend to live in Kingston - apparently

Again, it was a Good Life thing - anway, as they said, if it gets rough there, you can always move to Cobham.....

[munimula]

i would have thought saving up £38,500 was no mean feat but apparently it is "very little" and shows a complete lack of discipline!

on the back of repaying student debts (both) plus the early years in London earning less than £20k (not enough for a 22 year old "about town" in London ) i would have thought just short of 40 grand was a pretty good effort!

I'm the same age as you and managed to save more than that on my own after paying off student debts etc, also living from my early 20's in London and not earning as much before I got out of London just a few months ago.

nicko - I'd be interested to know what your gf does for work?

Accountancy is probably quite safe.

And, just out of interest as I'm intrigued - do you have plans to start a family and how did this factor in your decision to take on such a big mortgage?