Can Single people with low wages afford a mortgage?

[TommyV]

See below quote



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!

But in the same post you discuss about how you yearn and struggle to save for a mortgage.

Regardless of age or what society says you 'should' be doing, if you wanted that mortgage as badly as it appears you do, you'd put that extra cash in saving. I get yhacks point, I'm 25 myself and have done many years of the same thing!

I'm currently living off of 20% of my net monthly wage, with 50% going into savings and the other 30% covering a loan/rent in a houseshare. It's doable!

 

[EdGey]

Well, I'm on minimum wage at the moment (though I often do overtime) and I'm confident I could have a decent deposit in about 3/4 years if I wanted to. I already have a little over 5k put away and I've been working for a year.

Not that I plan to be on minimum wage for the next 4 years... but you know, it's do-able should it come to be.

If I was going to buy with this income it'd have to be a flat.

 

[Jez]

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.

Very bad advice. Its a great time to be buying property. You don't have to live in it either.

 

[platypus]

@EdGey And do you rent?

 

[DiCe!]

Single, 26 here, low 20k's

It is impossible in Surrey. Basically, I need grandparents to die. I am currently looking for another job but damn it is hard.

 

[EdGey]

@EdGey And do you rent?

No, I'd imagine that would be almost impossible unless you shared with a bunch of people.

 

[PiKe]

What happens if you default on your mortgage payments? I know the lender basically sells the house but do you get any money back from it?

 

[covenantuk]

Its a great time to be buying property. You don't have to live in it either.

Looking at historical costs, property is still way above where prices need to be. The market is being propped up by low interest rates and government subsidy. I would not advise any first time buyer to buy a house unless they got a 25% discount on it or intend it to be their "forever" home.

What do you think is going to happen when interest rates return to the long-term average of 5% (7% mortages)? Yup, all the people who can "just" afford it now will be in the brown stuff up to their eyeballs. Interest-only on £100k now is about £250/month, repayment around £600. At 7% the interest will be £580 - repayments £1000/month

If you don't live in a house and rent it out, the rental income is taxable.

 

[covenantuk]

What happens if you default on your mortgage payments? I know the lender basically sells the house but do you get any money back from it?

You get back any profit, but the lender can deduct EVERY cost of selling it (which could run into thousands) and only have to get a market value - you have no say in what offer they accept.

 

[PiKe]

You get back any profit, but the lender can deduct EVERY cost of selling it (which could run into thousands) and only have to get a market value - you have no say in what offer they accept.

If you knew you were going to get into the position where you couldn't afford to repayments, could you sell it yourself?

 

[elmarko]

Looking at historical costs, property is still way above where prices need to be. The market is being propped up by low interest rates and government subsidy. I would not advise any first time buyer to buy a house unless they got a 25% discount on it or intend it to be their "forever" home.

What do you think is going to happen when interest rates return to the long-term average of 5% (7% mortages)? Yup, all the people who can "just" afford it now will be in the brown stuff up to their eyeballs. Interest-only on £100k now is about £250/month, repayment around £600. At 7% the interest will be £580 - repayments £1000/month

If you don't live in a house and rent it out, the rental income is taxable.

This is what I thought, think of the double impact of the house market crashing (leaving all of these people in massive negative equity) along with the interest rates sky-rocketing....

 

[Freakbro]

If you knew you were going to get into the position where you couldn't afford to repayments, could you sell it yourself?

Of course.

But it all depends if someone wants to buy it, one house might sell in a week, another might take 2 years. So it's not quite that straightforward.

 

[Jez]

Looking at historical costs, property is still way above where prices need to be. The market is being propped up by low interest rates and government subsidy. I would not advise any first time buyer to buy a house unless they got a 25% discount on it or intend it to be their "forever" home.

What do you think is going to happen when interest rates return to the long-term average of 5% (7% mortages)? Yup, all the people who can "just" afford it now will be in the brown stuff up to their eyeballs. Interest-only on £100k now is about £250/month, repayment around £600. At 7% the interest will be £580 - repayments £1000/month

If you don't live in a house and rent it out, the rental income is taxable.

Haha, sometimes i forget the demographic i am dealing with on this forum. Lets say our views clash somewhat and leave it at that.

 

[platypus]

No, I'd imagine that would be almost impossible unless you shared with a bunch of people.

My thinking too - I assumed you lived at home but didn't want to sound patronising..

 

[Clipsey]

How much is minimum wage these days in the UK? hourly and yearly?

 

[Jez]

£6.19 ($9.35) per hour, no yearly minimum.

A standard UK working week has 37.5 paid hours, and holiday is usually paid, so annually it could be said to be £12000/$18500 per annum with 4 weeks paid vacation

 

[Eliot]

My plan consists of buying a house in wales near my parents for around 65-70k with a 20% deposit. I'm 23 now, so say i do this next year for example.
Start at 24

Paying it of as fast as possible while still renting.
Sell it. Hopefully before around 30
Buy a house near parents with around 100k using all the 60k from previous sale and mortgage the rest.
Pay off.
Sell. Before 35 ideally
Use 100k and hopefully be this time bigger salary to purchase house in central london.
Hit age of about 60
Move back to wales
Profit.

 

[p1RATE]

Mortgage lenders usually give a mortgage out 4x salary. You still require a 5%/10%/15%/20% deposit. Anyone below 15K a year would struggle with a mortgage I would say.

Would a mortgage lender count bonus/commission as part of a salary? I earn about 7k a year on top of my salary in commission.

 

[tom_e]

£6,000 is a nice deposit?

£12,000 is better

 

[PiKe]

£24,000 is even better.