Finance Choices
Young couples cannot afford homes
Large numbers of young married couples are unable to afford a first home, new research reveals.
Alliance & Leicester Mortgages' movingimproving index shows that 25 per cent of married renters would like to get on to the housing ladder, but cannot afford to do so.
Just one pair of married renters in eight of is able to afford their first home, but this still makes them twice as likely to be able to buy compared with singletons who rent.
Unmarried renters are also finding it hard to get on the property ladder, and just one singleton in five owns their own home.
In fact, 17 per cent more single Britons live at home with their parents than in a house of their own.
"Living at home with parents provides many with a great opportunity to save towards a deposit on their first home. For the last three quarters our research indicates a trend towards more men in their 20s staying at home with their parents than moving out," said Stephen Leonard, director of mortgages at Alliance & Leicester.
London, the area of the country with the highest house prices, is unsurprisingly home to the largest number of renters. Almost half of all Londoners (44 per cent) rent.
By contrast, residents of the north-east are most likely to live at home with their parents - and are five times as likely to do so as those in the East Midlands (15 per cent vs three per cent).
To find a cheap UK mortgage, go to www.financechoices.co.uk/mortgages.html
Alliance & Leicester Mortgages' movingimproving index shows that 25 per cent of married renters would like to get on to the housing ladder, but cannot afford to do so.
Just one pair of married renters in eight of is able to afford their first home, but this still makes them twice as likely to be able to buy compared with singletons who rent.
Unmarried renters are also finding it hard to get on the property ladder, and just one singleton in five owns their own home.
In fact, 17 per cent more single Britons live at home with their parents than in a house of their own.
"Living at home with parents provides many with a great opportunity to save towards a deposit on their first home. For the last three quarters our research indicates a trend towards more men in their 20s staying at home with their parents than moving out," said Stephen Leonard, director of mortgages at Alliance & Leicester.
London, the area of the country with the highest house prices, is unsurprisingly home to the largest number of renters. Almost half of all Londoners (44 per cent) rent.
By contrast, residents of the north-east are most likely to live at home with their parents - and are five times as likely to do so as those in the East Midlands (15 per cent vs three per cent).
To find a cheap UK mortgage, go to www.financechoices.co.uk/mortgages.html
posted by Bruce Wayne at 9:31 AM
Young couples cannot afford homes
4 Comments:
I'm 23 and engaged to be married within the next 1-2 years. I'm debating if I should purchase a house now or continue living at home with my parents for another 2 years. I have 25k saved. I was looking at some houses for around 100k. i was told the taxes would be about 2800-3000 for the houses in that area. I'm living at home with parents rent free. They even said it would be fine if my girlfriend lives with us for a while. If this happens we will give my parents about 100 dollars a month for rent. I work at ups and I will be putting about 10k a year into the discounted stock purchase plan(actually was wondering if this was a good idea, everyone so far at work seems to
think so). Besides the stock I will be able to save around 250 dollars a week. in 2 years this would put me around 50k which I wanted to put down on a house. Or I could take the 25k and just get a house now while interest is low. Living in a house would be much more comfortable for me but I can
easily handle another 2 years with parents and they say I'm welcome here so its a tough choice. my girlfriend lives about a hour away but when she does move here i cant count on her to help with any of the bills right away until she pays off her credit card debt and finds a stable job here. any tips or suggestions?
Anon, don't marry the girl until she's debt free ;-)
The best time to buy a house is yesterday. Get in whilst the going is good would be my advice.
BTW: Even though your parents say it's OK, it realy isn't a good idea to live at your parents house with your girlfriend. You two need your own space.
In my opinion, you would be wise not to buy a house.
Your best bet, as always in all cases dealing with finance, is to save and pay off the house it full. Avoid the bankers and the mortgage companies always.
But let's assume that interest rates are so low now that you simply can't resist taking out a loan and getting a house. I say "getting" a house, because the house is not officially yours, it belongs to the people who loaned you the money. They hold the title until you pay it off. And if you can't pay it off, if you lose your job or have a serious illness, and have another hefty expense that is unavoidable, then the these people will come and take the house and foreclose on it. You are back to square one, and you have lost all that money you had put into it up to that point. Sometimes they can foreclose on the house if you are
one day late on payment, depending on your loan terms. It is perfectly legal to foreclose on the house for bogus reasons, the law is not on the side of the little guy.
But let's also assume you are financially secure and don't lose your job or have serious illness. You keep making payments on the house. Say you get a fixed mortgage of 5% and it stays fixed no matter where interest rates head. That's the best case scenario. Now, interest rates are
undoubtedly going to go up, probably sooner than is anticipated, because they have nowhere else to go. Also the dollar is having less and less
worth, it is depreciating in value. When that happens, the bankers demand more interest for their borrowed money to offset their loses in dollar holdings. So interest rates are going to go up it is a matter of time. Yippee for you, you are locked in at 5%! Are you? Maybe not. When interest rates going up, the value of your home becomes less, and correspondingly, the interest you are paying on that home goes up.
Confused? It works like this: Say you take out a mortgage of 100K for 5% to buy a home worth on the market at the time of 100K. If your home value falls to 75K as interest rates increase, you are still paying off a 100K mortgage at 5% on a home now worth 75K. Your real cost of interest is now considerably higher. If your house falls to 50K? Much, much higher. So you see, "fixed" interest is just another con word used by bankers to sucker people out of money. Nothing is fixed.
On the other hand, what if you wait, save your money, and then pay for a house in full? With interest rates going up, and house prices sure to fall when that happens, you may not have to wait that long. The market will be flooded with unsold homes and foreclosures, and with the glut
supply of homes on the market, so will prices fall.
As interest rates go up, homes get foreclosed on, and put on the market, which in turn devalues everyone's home, and as a result of that, other people end up foreclosing and it runs into a vicious run to the bottom in home prices. If you have saved your money and have been paitent, you
could find some really good deals out there, with the added benefit of not having to get sucked into a loan sharking nightmare.
If I were you, I would save my money and live with my parents.
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