4 ms·

This is depressingly true. I just exchanged contracts on a 2 bed flat in zone 4 that will leave me and my gf with a 300k debt. If it wasn't for her stable job

by yeureka 12y ago

This is depressingly true. I just exchanged contracts on a 2 bed flat in zone 4 that will leave me and my gf with a 300k debt. If it wasn't for her stable job in town I would think about going somewhere else. And we know that we will probably never be able to upgrade to a bigger place if prices keep rising at this rate since our income will not increase at the same speed. I wonder if London will become a boring rich people playground.

Gurkenmaster 12y ago
On the other hand you can sell your flat for a higher price in the future.
- peterjancelis 12y ago
  I would be cautious making assumptions like that. Interests rate have been very low, at times negative even, for a long time.
  - yeureka 12y ago
    I agree. My biggest fear is that on the next crash we are left with a massive debt and a property worth less than we payed.
  - Gurkenmaster 12y ago
    Right. I forgot that they have to pay (hopefully) 4% interest for the next 25 years. That's an insane amount of money for a flat.
suvelx 12y ago
> 2 bed flat in zone 4 that will leave me and my gf with a 300k debt. Sounds like you got lucky then.
- wattson12 12y ago
  I just bought a 2 bed terrace in zone 4 for 280k, its not cheap but there are some places that are a lot more affordable (especially if you don't mind going south of the river)
- yeureka 12y ago
  Well, both of us are in our late thirties, earn above average and used up almost all of our combined savings of the last 10 years to finance the deposit, taxes and fees to be able to get this mortgage.
toong 12y ago
Sorry, I don't know London, but I'm trying to understand your situation. You have a mortgage for around 1.5k for the next 25 years, shared between you and your gf for a flat with a spare bedroom close to the centre of London ? Sounds rather affordable, what am I missing ?
- yeureka 12y ago
  £1500 for the mortgage, plus bills, council tax, land rent, home insurance, repairs, etc... that is around £2000 per month not counting food, travel, clothes and entertainment. So realistically you need to earn £3000 after tax to be able to afford it, which translates to a pre-tax salary of £50k. We are lucky to earn more than that but the vast majority of people I know would not be able to do it. We barely feel middle class here, I don't even own a car.
  - toong 12y ago
    That is £50k for two, so £25k each ? That's about UK mean gross income and below London (2007:£27,868) Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
    - deleted 12y ago
      [deleted]
    - yeureka 12y ago
      That is correct, however when you apply for a mortgage the bank doesn't really add both incomes equally and the only reason we were able to borrow £300k is because I earn more than £50k. Also, interest rates are extremely low at the moment and we will be paying only around 4%. I prefer not to think what will happen if the BOE needs to raise interest rates. Additionally if we want to have kids, that's another £12k per year per kid for a nursery if my gf wants to keep her job. I never earned this much in my life and I never felt to financially insecure at the same time.

by yeureka 12y ago

Gurkenmaster 12y ago

On the other hand you can sell your flat for a higher price in the future.

peterjancelis 12y ago
I would be cautious making assumptions like that. Interests rate have been very low, at times negative even, for a long time.
- yeureka 12y ago
  I agree. My biggest fear is that on the next crash we are left with a massive debt and a property worth less than we payed.
- Gurkenmaster 12y ago
  Right. I forgot that they have to pay (hopefully) 4% interest for the next 25 years. That's an insane amount of money for a flat.

suvelx 12y ago

> 2 bed flat in zone 4 that will leave me and my gf with a 300k debt. Sounds like you got lucky then.

wattson12 12y ago
I just bought a 2 bed terrace in zone 4 for 280k, its not cheap but there are some places that are a lot more affordable (especially if you don't mind going south of the river)
yeureka 12y ago
Well, both of us are in our late thirties, earn above average and used up almost all of our combined savings of the last 10 years to finance the deposit, taxes and fees to be able to get this mortgage.

toong 12y ago

Sorry, I don't know London, but I'm trying to understand your situation. You have a mortgage for around 1.5k for the next 25 years, shared between you and your gf for a flat with a spare bedroom close to the centre of London ? Sounds rather affordable, what am I missing ?

yeureka 12y ago
£1500 for the mortgage, plus bills, council tax, land rent, home insurance, repairs, etc... that is around £2000 per month not counting food, travel, clothes and entertainment. So realistically you need to earn £3000 after tax to be able to afford it, which translates to a pre-tax salary of £50k. We are lucky to earn more than that but the vast majority of people I know would not be able to do it. We barely feel middle class here, I don't even own a car.
- toong 12y ago
  That is £50k for two, so £25k each ? That's about UK mean gross income and below London (2007:£27,868) Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
  - deleted 12y ago
    [deleted]
  - yeureka 12y ago
    That is correct, however when you apply for a mortgage the bank doesn't really add both incomes equally and the only reason we were able to borrow £300k is because I earn more than £50k. Also, interest rates are extremely low at the moment and we will be paying only around 4%. I prefer not to think what will happen if the BOE needs to raise interest rates. Additionally if we want to have kids, that's another £12k per year per kid for a nursery if my gf wants to keep her job. I never earned this much in my life and I never felt to financially insecure at the same time.