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[expatinuk]

There's a thread in the money forum about mortgage cost in relation to annual income and take home pay.

Most of what they say... house at 2.5 times annual income and mortgage payment at less than 20% of take home don't really seem to address the housing problem that we have in the UK.

So, what is the strategy that you have adopted?

I bought my house 6 years ago for 54K. I got a great deal because I bought from a colleague and I'd actually been renting the house for 2 years. The house is now valued conservatively at 200K. Hubby Bubba bought his house 7 years ago for 52K and just sold it for 175K.

We've looked at selling my house and buying one together but can't really find anything that suits for less than 400K. I don't really want to acquire that debt load. I'd rather invest the profits from Hubby Bubba's house in something other than real estate because I think that the UK housing market is so over priced.

What's your housing strategy? Do you keep moving up and acquiring a bigger mortgage to get the 'dream home' or do you get what's liveable and bank the rest of your money?

[doctorhu]

Here in the southeast, I'm renting a very nice house for *much* less than the mortgage payments would be on the same place (even given an interest only mortgage).  We then bank the difference, and will move back to the US to buy a place if the UK market doesn't crash within the next 3-5 years.  I think a crash is likely though.

[donstefano]

Bought a flat in my home country before coming to the UK, and renting it out. I find prices too high in the UK, especially given the size and quality of the housing stock. The type of house I could afford as an ass prof in my home country is simply unaffordable here (Would cost me at least 400-500K£ in the UK).
Strategy: Cheap renting in the UK, and saving a lot (Wages are higher). Migrating to another country in 5 years and having saved enough to afford the type of house that is clearly beyong my reach in the UK (+ cash in on value increase of flat).

Strategy 2: becoming a full prof ASAP, and stay in the UK, and settle for the lower standard of living....

[wegie]

I rented throughout my academic career. In Scotland I didn't have a long enough contract to get a mortgage, and when I came back down south, my salary wouldn't have got me a shoebox in Oxford. I shared a house in Oxford with a fellow less than gruntled academic, who had just had enough money to be able to get a mortgage on a crummy 1930s terraced council house.

Aforementioned less than gruntled academic is now an ex-academic. He's now paying 1200 euros a month to rent an absolutely ginormous house just outside Munich.

My strategy? I married a banker/fund manager. Possibly not a repeatable strategy for everybody, and in any case we still can't afford a really nice house in the area we live in!

If I were on an academic salary in my part of London? Definitely rent and share. Our flat is theoretically worth the best part of 300k, but the pilot who used to live upstairs and is now renting out her flat has real difficulty finding anybody willing to pay more than 1,100 a month.

[scotia]

My strategy is that I need somewhere to live in which I can be comfortable and which is affordable with a mortgage that is no more than 3.5x salary plus any equity from previous sales at the time of purchase. My mortgage payments have fallen as a proportion of my salary in the five years I have been here so I now invest more in equities and pension. If move again (I probably will) I will again aim to go for the best I can afford, as long as I envisage being around for some time - otherwise I will rent.

One of the things driving up the UK housing market is that demand is outstripping supply and the projected housebuilding is not sufficient to fill the gap. I am not entirely convinced that there will be a big collapse, although small corrections might occur, and the major rises enjoyed in some areas are unlikely to be sustained. But I may well be proved wrong.

I avoid living in London and areas where I cannot afford at least a two-bedroom home in a reasonable area.

[snape]

My strategy is to get on the housing market and pay if off before I retire (in around 36 years time). Pragamtically. I'm better off if my parents don't live too long!

[qrypt]

I agree that a collapse is unlikely, given the way growth in demand continues to outstrip growth in supply. 

Expatinuk, I'm a bit puzzled as to the reluctance to buy.  If both you and hubbybubba had had 100% mortgages, your equity would still be 275k at this point, which means you would only need to borrow 125k.  The only thing I can think of that would give you pause is age - if you are within, say, 10 years of retirement then perhaps the mortgage payments would be higher than on a standard 25-year mortgage.  On the other hand, that would also mean the interest load would be pretty low. 

My strategy is to buy the biggest house I can afford, because living with two small kids in a small house was driving me nuts.  I'm still hoping to go back to the US and take the vast increase in equity with me.  But even if I don't, I now live in a house I love, and it makes the rest of my life manageable, even pleasant.

[expatinuk]

Expatinuk, I'm a bit puzzled as to the reluctance to buy.

Because we have a house ... the only reason we need a BIGGER house is that he's not interested in getting rid of anything. We've got WAY too many books, CDs, records etc. I was willing to do a loft extention to add a 4th bedroom (and 2nd bathroom) to house the books, CDs, records ETC. If we invest the profit from his house and live in my house, we will be in a position to save about 35K a year.... and still do all the travel etc we do now. Our financial advisor says that the 140K we'll have from his house should give us a return of about 10% per year. Add that to the 35K per year we can save and you can see that we would be doing well.

We are in our 50s, I just do not see any reason to buy a 400K house, when we don't have anything more than our standard pension. Yes, a final salary pension is good, but it's not like having a half a million in investments that pay an annual income. A house doesn't pay you anything... it costs. A bigger house, a larger mortgage is more expense. I do not want to increase my expenses, I want to reduce them.

[empyrean_aisles]

I agree that a collapse is unlikely, given the way growth in demand continues to outstrip growth in supply. 

agreed.

Below's what I posted over on that other thread, before I saw this one:

2-bed terraced house in terrible condition in a not very posh but apparently up-and-coming bit of London. No garden. Loft is too small (by a matter of inches) to be converted. Used to have a roaring heroin trade going on down the road. Wikipedia, bless it, says that's apparently in the past.

Something over 4x the combined salary of partner & I, once we've done the extensive repairs and renovations needed. Downpayment was 10% (& no help from family or anyone else with that). Mortgage will be about 50% of income after tax. Nothing needs to be spent on health insurance or a car (which is about all the good financial news we've got at the moment).

You all probably think I'm making this up, or completely stupid, or both, but in fact we feel wretchedly lucky to have crawled on to the London property ladder at all. With inflation at 2% a month, people who are unpartnered or without a large lump sum from rich parents have no chance.

Our strategy has been to get on the ladder as fast as possible, given what it would cost to rent in London. We can pay a bit more than the cost of renting and have a house at the end of it (well ... a few decades later).

[dyst_uk]

I was quite surprised to find out that university lecturers don't count as 'key workers'; although FE teachers teaching FE within a HE setting potentially do.

[donstefano]

swiftuk, that is because we are better paid than teachers and nurses, and can still afford houses (outside london). OK, not large ones, but still.
An average young lecturer would make somewhere between 30 and 35K, partner, let's say 25. That's about 3400 net a month. If you live cheap and save, buying something is not all that difficult. Buying a nice house though is harder.
But one thing I did notice is that British people are very bad at saving money: They spend and spend, and are big fans of gadgets. Provided you don't have too high student loans, and were paid to do your PhD, a young family should be able can easily save a 30.000 deposit in 3 years or so.

[snape]

OK, not large ones, but still.
An average young lecturer would make somewhere between 30 and 35K, partner, let's say 25. That's about 3400 net a month.

This is the problem. It depends on two people working. It becomes a problem when children come along, especially when child care costs come into the equation.

[dyst_uk]

It also depends whether you were fortunate enough to get your phD funded - my field falls between two of the research councils (potentially three if you count collaboration with engineering/computing), which makes it difficult to find funding.

[expatinuk]

But one thing I did notice is that British people are very bad at saving money: They spend and spend, and are big fans of gadgets.

I've found that Europeans (generally) tend to be more concerned with making a fashion statement... thus having to spend money to keep up.

Also, what really amazes me is the amount of money that is spent on 'going to the pub' My students look at me in total bewilderment when I suggest that they order a pizza and get a six pack of beer rather than go to the pub. It's a lot cheaper and you can socialize with friends just as easy.

[august_leo]

An average young lecturer would make somewhere between 30 and 35K, partner, let's say 25.

I have read this over and over again on these boards, except something I read tonight about <30k from a newbie.

My uni publishes online the salaries. I am just done with my Ph.D. (<45days) and will make about 27k. Should I be in a panic? I certainly feel like I should. I will get married in March, he will be post-doc. I'm guessing he'll make 25k. Will we ever afford a house in SE England?