Can Single people with low wages afford a mortgage?

Angilion · 15 Jul 2013 at 23:37

Freakbro said:
On minimum wage? Depends where you are living in the country I guess, but going on 'average' house prices....no not a chance tbh, since min wage for a 37.5hr / week job is gross £12,187.50 (then less Tax and NI) a year.

Banks have gone back to lending, what, 4 times salary? so if you are looking for a house in the £50k range, then needing a minimum £5k deposit with monthly payments of I would guess ~£300, then it's just about doable.

The problem there is that a person on minimum wage will not be able to save £5K. Also, it's £295 a month at 5%...but what would they do if the interest rate went up? 6% would make it £325 a month, and if you're on low wages £30 a month is a significant amount. By 8% at most, you're losing your home.

I'm a single person on low wages (£14K) and I can afford a mortgage, but only because I bought my house 16 years ago for £28K and a friend loaned me £2800 for a deposit. I was even able to afford to take the loss resulting from taking out an endowment mortgage (as I was advised to do at the time because endowment mortgages looked like a good deal).

Nitefly · 15 Jul 2013 at 23:37

Biohazard said:
£6k?

12k

And yes, it does get you further than less I suppose

cm1179 · 15 Jul 2013 at 23:42

Angilion said:
The problem there is that a person on minimum wage will not be able to save £5K. Also, it's £295 a month at 5%...but what would they do if the interest rate went up? 6% would make it £325 a month, and if you're on low wages £30 a month is a significant amount. By 8% at most, you're losing your home.

.

this is a very important factor. ftr. my fixed 4yr deal moves to a tracker next month, giving me an instant saving of £140pm due to the base rate being low. i'm no financial analyst but i can't see it moving for a good few years so i will overpay.

if i get a sniff of a rise, i will fix. however, i am a little concerned that a big rise could cause me a problem. i don't know if you can go straight onto a tracker as a first time applicant, i certainly wasn't offered it. i fixed for 4 years. 2 years later, the base rate dropped, i would've paid less had i only fixed for 2 and then moved onto a tracker but i wanted the security of knowing my payments.

Johno please? · 15 Jul 2013 at 23:45

TommyV said:
This!

I can easily afford mortgage payments and running a house in the local area at just under a third of my net monthly wage with plenty of disposable left over, however...the long slog saving up the 20k I'm aiming to put down as a deposit is a different matter!!!

Yea I've no idea when il be able to afford a deposit on a house, maybe by the time im 40 o lol.

Johnnytoxic said:
I'm single and only a few quid above minimum wage..... I'm on about 22k...

huh? What planet are some of you people on?

The_Abyss · 16 Jul 2013 at 06:28

=XDC=FluphyBunny said:
£22K and you think you are on minimum wage? Guessing your job does not involve numbers in any form

Surely he means several pounds per hour above minimum wage?

Which is equally silly as it is like saying he's on twice the minimum wage!

The_Abyss · 16 Jul 2013 at 06:31

cm1179 said:
this is a very important factor. ftr. my fixed 4yr deal moves to a tracker next month, giving me an instant saving of £140pm due to the base rate being low. i'm no financial analyst but i can't see it moving for a good few years so i will overpay.

if i get a sniff of a rise, i will fix. however, i am a little concerned that a big rise could cause me a problem. i don't know if you can go straight onto a tracker as a first time applicant, i certainly wasn't offered it. i fixed for 4 years. 2 years later, the base rate dropped, i would've paid less had i only fixed for 2 and then moved onto a tracker but i wanted the security of knowing my payments.

Interest rate shock is likely to be a significant cause of mortgage distress when rates start to rise again, second only to unforeseen changes in circumstances (partners leaving, lost jobs, poor health etc).

If you get a sniff of a rate rise, the chances are the markets will have already priced it in and the available fixed rates will already be higher.

Trackers are available to anyone, but many choose the security of fixed rates these days.

yhack · 16 Jul 2013 at 07:24

Quit while you're ahead, live in a cheaper country.

oldbag · 16 Jul 2013 at 07:36

On 30k in the south east you may be able to get something outside of London, but good luck getting a mortgage. The gap between the so called middle class and the rich is huge now. Therefore unless you're born into a family with money, there's not much opportunity.

Back in the day when for 3 times his salary, on 10k a year, my father could get a 3 bed house and the mortgage wasn't up to his neck worrying.

Lunatic Dreyfus · 16 Jul 2013 at 10:18

Up north you could probably buy a whole town. Down south, without some serious cash in the bank. Nah.

Essentially you missed the boat and the home owning class are long gone. It will only get worse I suspect, until the only people who can afford to buy a house actually already own one.

platypus · 16 Jul 2013 at 10:29

cm1179 said:
i don't want to sound disrespectful, as i don't know your personal circumstances but you've done something wrong. even if you'd saved £50 each pm over that 10 yrs, you'd have a nice deposit.

£6,000 is a nice deposit?

XeNoN89 · 16 Jul 2013 at 10:42

It's a joke. I'm 23 and still at home with the parents. I work full time and am trying to save as much as possible to build up a deposit & get a mortgage. I'm currently able to put away £500 a month into the savings account but other things occasionally eat out of this such as car repairs, insurance (I pay in one go as it's a lot cheaper than monthly) etc. And also a holiday each year. If i keep up saving at the rate I am now i might have enough for a decent deposit in about 3 years. That's as long as my car doesn't completely die before then and require me to buy a new one.

TommyV · 16 Jul 2013 at 11:05

XeNoN89 said:
It's a joke. I'm 23 and still at home with the parents. I work full time and am trying to save as much as possible to build up a deposit & get a mortgage. I'm currently able to put away £500 a month into the savings account but other things occasionally eat out of this such as car repairs, insurance (I pay in one go as it's a lot cheaper than monthly) etc. And also a holiday each year. If i keep up saving at the rate I am now i might have enough for a decent deposit in about 3 years. That's as long as my car doesn't completely die before then and require me to buy a new one.

If you were that serious, why blow money on a holiday? What is more important to you?

TommyV · 16 Jul 2013 at 11:17

do_ron_ron · 16 Jul 2013 at 11:18

bakes0310 said:
As long title, if someones on minimum wage or near to that, would it be possible to get a mortgage. I don't think it would be possible with all your bills and food etc. You probably couldn't get any goodies like have a cheap broadband even (not important just an example) or go out and live your life.

NO. That was the function of council housing. There will ALWAYS be people in society who are too poor to afford to buy a house and renting at the current levels is almost as bad as having a mortgage. Now people have come to realise the lunacy of the council house sales and not replacing them.

On minimum wage how much would the bank give you, would they even look at you. And how much of a deposit would be the minimum that you should save?

No, you would be too much of a risk. Unless we enter another period of mega cheap finance then forget it.

Hilly · 16 Jul 2013 at 11:22

Depends on what you'd class as low wages really.

I bought my first place on the Government scheme (shared equitity) on under 20k a year standard wage. If you'd class that as low wage then yes - I'd probably be able to afford it on less than 16k or so, but I like to live a bit

Now the wife finished Uni and works we split everything, so makes it easier.

I'd say it's doable.

PiKe · 16 Jul 2013 at 11:26

Only problem is the availability of those shared equity houses varies massively depending on where in the country you are.

Craigus · 16 Jul 2013 at 11:29

'Harry said:
Why would you want one on minium wage?! That's just retarded.

cjgardens said:
Why

Mortgage repayments can be a lot cheaper than rent

Not when you are on minimum wage. Unless someone in your family help you out it is a bit of a daft thing to aim for IMO.

The house is still not yours until you've paid it off anyway. You miss a couple of payments, bye bye house.

yhack · 16 Jul 2013 at 11:30

XeNoN89 said:
It's a joke. I'm 23 and still at home with the parents. I work full time and am trying to save as much as possible to build up a deposit & get a mortgage. I'm currently able to put away £500 a month into the savings account but other things occasionally eat out of this such as car repairs, insurance (I pay in one go as it's a lot cheaper than monthly) etc. And also a holiday each year. If i keep up saving at the rate I am now i might have enough for a decent deposit in about 3 years. That's as long as my car doesn't completely die before then and require me to buy a new one.

Why do you need a mortgage? I mean really.

At 23, shouldn't you be having fun rather than worrying about a house? Do that lame stuff when you're older. Go and see the world.

The Dread Pirate · 16 Jul 2013 at 11:32

if you put down at least 25K on the deposit then it should be ok but otherwise you will struggle.

XeNoN89 · 16 Jul 2013 at 12:01

TommyV said:
If you were that serious, why blow money on a holiday? What is more important to you?

See below quote

yhack said:
At 23, shouldn't you be having fun rather than worrying about a house? Do that lame stuff when you're older. Go and see the world.

That's why I make sure I go away on holiday every year. I'm not wasting my young life doing nothing but saving money. My point is that getting a house shouldn't be that hard!