How do people pay these mortgages?

  Colin 13:05 02 May 06
Locked

When watching programmes like House Doctor etc. a lot of houses in the London area in particular are in the region of £500,000. Quite a few of the people they show as potential buyers appear to be late twenties/early thirties with a couple of kids. Even if they put a deposit down of £200,000, that still leaves a mortgage of £300,000. Am I missimg something or are these people on fantastic salaries?

  GANDALF <|:-)> 13:39 02 May 06

Money can also come from an inheritance or two. It only needs a surviving parent or sainted aunt to pop their clogs and an only child can easily be £300k richer....or more. Hate to sound like a vulture but that's life.

£70k/year salary is not that uncommon in London; so 4 or 6 x 70k = £280k - £420k mortgage and mortgages are incredibly cheap at the moment.

G

  €dstowe 13:40 02 May 06

When I was looking for a mortgage some years ago the maximum amount I could borrow was twice the combined salaries of the mortgagee(s). For certain "reliable" professions this was three times.

Nowadays, apparently, mortgages of six times the annual salary are fairly normal. For workers in Central London, a salary of £150,000 is not all that unusual and there are quite a lot of people on much more than that.

The calculation of salary to mortgage is quite simple.

  johndrew 14:08 02 May 06

You could argue that a similar, if not worse set of circumstances existed in the late 1970s.

I purchased a house and took a mortgage of £14000 at 8%; wages at the time were about £4000 pa gross.

Within a few months mortgage interest rates had gone to 17.5%, inflation to 25% and no change in wages!!

We survived, just, with no help from anyone (parents no longer on this particular coil) and it did us the world of good. In hindsight. Simply a matter of priorities.

  amonra 14:11 02 May 06

A house ? You were lucky, we only had a shoebox with a lifetime mortgage !!!!

  namtas 14:29 02 May 06

So now I understand why car repairs/servicing in London can equal £90 per hour

  Colin 15:58 02 May 06

Borrowing the money is one thing, paying it back is another. I suppose that's why we in this country are obsessed with house prices. It's not sour grapes - good luck to them. I just can't imagine people sleeping at night with a £2000 a month mortgage payment.

  dmc727 17:10 02 May 06

The mortgage scene has certainly changed over recent years – when I was starting out it was the norm for the wife/mother to stay at home and you lived on one wage. Now, it is the norm for both spouses, regardless of children, to go out to work to service the ever increasing bills.

No wonder more are saying stop the world I want to get off!!

  jack 17:46 02 May 06

When I and my other half started out nearly 50 years ago a new build cost---wait for it ---£2185- yep you read it aright - wages were £12 a week- e.g., the house cost approx 4/5years pay
A pair of decent shoes cost a days pay
A business suit and shirts etc., cost a weeks pay
A Fridge cost 2 months pay
A TV[9/12 in B/W] cost 6 months pay
and a family car cost a years PAY

To day consumer electronic/electrics cost a fraction of that [ reasonal colour Tv a weeks pay?]
Cars are still about the same[except for some cheapo far east imports]
And modest houses are a little more - but not much

  keith-236134 19:31 02 May 06

When i was an apprentice i looked in awe at the tradesmen getting £20 a week and my first house cost £7000.

  bluto1 20:53 02 May 06

Back in`72 My house cost £6150 and my salary was about £4500. Interest as johndrew said, was about 8% and about to go into orbit around the sun. We managed, but I often wonder if Mum and Dad in their nice London pad with 2 sweet kids, send the kids out to work as models.
Its not an option most of us had, and I don`t think too many of us could mince down a catwalk!!!

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