Where can you afford to live?

Imagine you're looking to buy your first house. Where could you afford to live?

A mate of mine, who is from Redcar like me and is buying his house here on a mortgage which is easily affordable, is renting his house out at the moment because he is working away in Portsmouth. In Redcar, he had a nice little terrace with front and back gardens, 3 bedrooms, literally across the road from the beach, close to the shops and parks. In Portsmouth he has to share a poky little flat with 2 people he hardly knows.

Have a look at this, see where you could afford to live.

http://www.bbc.co.uk/news/business-23234033

 

I got 49% and the below locations.

• Bro Morgannwg - the Vale of Glamorgan
• Sedgemoor District
• Torbay (B)
• Perth and Kinross
• City of Plymouth (B)
• Tendring District
• Cheshire West and Chester (B)
• West Lancashire District (B)
• Charnwood District (B)
• King's Lynn and West Norfolk District (B)

 

Couldn't afford anything other than a tent now on our pensions!
But we've been very lucky. Our first home was an country estate house that we got rent free when first married on condition that we took out the old range and replaced it with a modern (1970s) fireplace. It was great as just after we moved in I stopped paid employment and became a student and we existed on my student grant of£365/PA and Mrs W's miserable salary as a newly qualified teacher. Our next two homes were low rental local council "School Houses"; the first was in a fantastic location beside a salmon river and the next in a lovely highland village. The problem with the latter location was that the village was so lovely that all "homes to buy" tended to go to "white settlers" from down south who could pay inflated prices and there was no way we'd every be able to buy our own home there. So, thirty years plus ago we moved here to a little one horse village, I got a promoted post and more ££ and we took on a mortgage that stretched us to the limit. Fish fingers, what we could grow and cheap chipped eggs from the local farm and berry picking for extra cash in the hols kept us almost solvent, though it was touch and go until the children got older and Mrs W started work again.

 

Good job we own our own house outright, having paid off our mortgage early many, many years ago.

 

Well according to the BBC link, I can't afford to live where I do. Its probably not far off the truth really. I bought our house right when the prices were at the bottom of the house price crash, and prices have recovered a bit since then. Plus our house was a repo in the cheaper end of town anyway.

I'm still not convinced of the accuracy of the tool though. I had to go up to £600 per month before Redcar lit up, and I know for fact that you can get houses on cheaper mortgage terms than that.

Still, its a real eye opener. No wonder there are so many people upset that they can't get on the property ladder.

Rent is atrocious. I don't know how some landlords can sleep at night. It seems to me that rent is higher than mortgage repayments would be and fair enough, there are going to be maintenance and repair bills for the landlord that the tenant shouldn't have to worry about (although my considerable experience of renting suggests that repairs rarely get done anyway), but in effect they are getting the tenants to not only pay the mortgage but also pay a bit extra on top to cover repairs, all knowing that the tenant gets nothing at the end of it while the landlord has the house.

 

For the deposit part, I put in just a bit more than I put put down on our house. I think I put £11k down on ours, just over 3 years ago. I put £15k in as the deposit on the BBC's tool. Here's the thing though. At the time, the mortgage companies were just going into blind panic mode after the collapse of Northern Rock, and so were reviewing all their lending packages, usually with the result of ramping up the minimum deposit. I got a deal requiring 'only' a 15% deposit. I understand nowadays it is not unusual for lenders to ask for a much higher percentage, which still has the same result. My house was cheap. The going rate in Redcar for a house like mine is about £130k. Lenders that ask for a 25% deposit are asking people to turn up with £32500 in readies as an absolute minimum. When I bought my place, in addition to convincing the mortgage lender I was ok, I had to convince the estate agent too before they would recommend to the seller that they accept my offer. That meant I had to prove that in addition to being able to afford the deposit, I had to prove that I could afford the legal fees and have a few bob spare for unforeseen circumstances. That means that if I was doing it all today, I'd need to have probably £35k in readies. There's not many young(ish) families just starting out that have that kind of money in ready cash, so they are priced out.

 

Worst one is this. When I was about 10 year old, a dilapidated old mill came up for sale not too far from us, in the woods. As soon as it came onto the market, my dad immediately came up with an idea. He wanted to buy it, and working with a few of his mates who would also be investors, they would turn it into flats. My dad and his selected mates were right up for the idea. It was the wives and the bank managers that were the problem. Everyone they spoke to said "who wants to live in a crumbling old mill in the woods". Consequently my dad and his mates were crushed into submission and didn't bother. The building was sold for something like £50k if I remember right. To put that into perspective, at the time our terraced house with no gardens was valued at around £35k. Estimates of the cost of doing a basic renovation and conversion to flats, meeting all the necessary regulations, put the total bill at around £120k.

Someone else bought the old mill and turned it into 'apartments'. I saw a promotional poster for them a few years back. From what I could gather, they'd put around 20 apartments in there, and the cheapest was about £200k.

 

I can't really participate in this as I sold my UK properties in 2002 and 2006. So, now I own five properties in Portugal with no mortgages. It took us 20 years to get to this point ... but we have done it ... with no regrets.

The one thing I would like to say is that during the years before our departure from the UK in 2001 we worked all hours that were available to us in our high-flying business jobs, saved, did not eat out/go to pubs/clubs/etc ... we didn't have time for that! We also did 'homework', ie, taking in jobs to work at home ... mostly from Hozelock as I was a senior person there and worked in the factory when t'other half was on the road and brought boxes of stuff home that filled our cottage ... but it earned us a couple of grand a year which we put into savings.

We would not lose a penny on any of the properties we have ... at this point would probably double our investments ... plus we have the added bonus that two are long-term rental and one in a holiday resort where we are guaranteed an annual income.

We gave up a certain lifestyle to now enjoy a more relaxed one ... we pay our taxes in the UK, the States and here but it is well worth it ...