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>A couple on minimum wage and 37.5 hours a week has a £3,200 a month net wage after tax. Even just 33% on a mortgage means you can get a c. 180k mortgage at 5%,
by OtherShrezzing 3y ago
>A couple on minimum wage and 37.5 hours a week has a £3,200 a month net wage after tax. Even just 33% on a mortgage means you can get a c. 180k mortgage at 5%, enough to buy a 3 bed house in many parts of England, assuming you can find the required deposit.
That a couple on minimum wage can save for a £20k deposit within any meaningful time horizon is a pretty significant assumption.
- ricardo81 3y agoTo be fair, you can take 25% off that with a Lifetime ISA, so 15K needed.
- matt-p 3y ago4k savings gets a 1k bonus per year so; -It's 16K -They need to wait 4 years. The point stands if they are aware of the scheme when they start saving and save exactly 4k a year every year (more realistically it will be 2k year 1, 4k year two, 7k year 3..)
- ricardo81 3y agoThanks yes, your maths is better, 20% on top. Having to save for 5 years doesn't seem unrealistic for people who don't have the bank of mum and dad. Totally doable - though below average house price in any area, preferably somewhere more affordable. There are a lot of tax instruments available today that never existed a generation ago.
- matt-p 3y agoI do agree but I think not enough people become aware of it when they start saving. In a sense it would probably be easier on all if the government just said we'll top up your deposit by 25% upto the value of 5k when you buy your first house.
- ta1243 3y agoI'm not sure in what would someone on minimum wage would be able to afford to buy an average house You can get a 3 bed semi in dozens of towns across the UK though. Sure you won't be living in a 5 bed detached with a swimming pool on minimum wage. I don't see that as a terrible thing.
- ta1243 3y agoOh sure, and that's the rent trap. You end up spending more on rent than you would for a repayment mortgage, and can never raise the deposit.