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'I'm 20 and I own a £250,000 four-bed house'
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No, but he DOES own a rather juicy mortgage.
In any event, until he repays the government equity loan, he'll never own 100% of the house.
Exactly!
Alan Sugar pointed out once (or more) that some people borrow a million pounds and then think they are millionaires when in fact they have 'Jack shit!".
🙂
Fair play to them though, saving £18k in 2 years (ok, easier to do when you live with your parents). More than most people would manage.
The equity loan is only 20% of the deposit, or £2500, so not huge in the grand scheme of things.
And it's a 4 bedroom house - assuming they only use one, they could rent out the others for a couple of years and more than cover their mortgage.
Sounds like they are quite an astute couple. Boring, but astute....
But, in answer to the original question, no they don't really "own" it until the mortgage is paid off, but how many people would answer "No, just renting from the bank" if asked if they owned their home?
£250k purchase price
£12.5k deposit
£237k balance
Say 3.5% fixed term (possible with that size of deposit)
£691 per month interest + £790 per month capital = £1481 monthly cost
Article states he was on £27k when they bought; as a legal secretary she may be on roughly the same - possible take home of £3,600 between them.
I suspect no fancy foreign holidays for a few years, but it's doable.
You should be a financial advisor
I am an accountant.....
Never mind Nessie
I hope the interest rates stay low for them...
and that staying in all the time does not interfere with young love
but if they are willing to live on baked beans then why not.....
but to me the maths does not work out..on their salaries they have been saving £1000 a month......even iof they managed to get a 3.5% rate and pay £1481 a month mortgage.
that means they need to have spare £481 a month and the money for all the household bills and then food.....
nessie ... she will not be on £27,000 as she is so young and inexperienced...
so I think the fact they both got brought up in detached houses indicates to me that the bank of mam and dad will be helping out here....I imagine they have already been doing that with the deposit
I know an accountant.
He's an expert at counting money and spending the stuff, but has 'f' all idea of how to make the stuff and keep it.
He earned at a guess five times what I have, but seeths at my semi retired status.
What can I say to the guy when he revealed that he's remortgaged his house to 'release wasted money' tied up in it?
This was to give him the standard of life he believes he deserves. He says he was forced into doing this. "How else do you get what you need"?
A sense of entitlement not helped by the "absolute shit level of the state pension" awaiting him. "How the 'f' can I live on that"?
🙂
I know a runner that is a twat..doesnt make all runners twats...
Looking at the fact that this young lad earns £27000 but I cant see anywhere what he does...I wonder if he works for his mam and dad in their company........£27,000 is a lot to earn outside of London at 22......and she was on an apprentice wage last year...
It says he's an estate agent, Seren.
As for 4 beds for £250k! That's a blinking bargain
Though to be fair I'm looking at moving to a shit area to improve my quality of life so I am not knocking it entirely.
it would be a mansion for that price around here.......outside the south east of britain £250,000 will still get you a half decent house...
I remember Mrs F now I did read that..but forgot....so would any of that £27000 of been commission I wonder.....
It's common for people to grab the biggest house they can get hold off. Why not? it worked for previous generations.
But the danger is that the running costs and overheads are so great that financially there's no room for maneuver. It's the sort of thing which leads to interest only mortgages.
Sure the mortgage rates are low and there's house price inflation to build some equity, but lets face it. If you borrow 100's of thousands of £'s, there's still the issue of paying it back.
My accountant friend (who seron, is just the one accountant, not representative of all accountants, and no twats involved) has at my guess, got about 10 years before state retirement age to pay back £150,000. Do the maths.
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You mean pretty much any area outside London and a chunk of the surrounding counties?
The equity loan is only 20% of the deposit, or £2500, so not huge in the grand scheme of things.
I think the reporter is confused. The government equity scheme provides 20% of the value of the property, not 20% of the deposit.
So I guess the essence of the article is "Look, I'm only 20, yet have already managed to work the system to drown myself in mortgage debt, when most people have to wait until they are at least 30".
🙂
Since having a mortgage is about the only way any of us would ever be able to buy a house, sounds to me they are being sensible getting on with it at a young age. So long as they stay sensible, the mortgage should be cleared in their mid forties giving them plenty of time to set themselves up for a decent retirement. Well done I say!
Sounds better to me than a life of renting. 20 is the time to get in debt for your own home.
Maybe they intend to rent out their spare rooms then?!
is there people living out further out than that? I use 'living' loosely
i do think they have probably made a shrewd move.if they can make the payments..and life together on virtually no money and not get on each others nerves.....
they are very young to take on such a massive commitment
Obviously buying is better than renting, but let's not get too carried away. This article is a sign that the housing market has become so skewed, and debt so prevalent, that people are now being eulogised for stuffing themselves big time.
It's like showing off who has maxed out the least on their credit cards.
Personally, I think they're a bit greedy and unrealistic. They have almost certainly bitten off more than they can chew. Painted themselves into a corner in a way.
Btw Peter. Is that how you get financial security? Deal with the house first and then somehow in your 40's (too late) start to think about getting around to giving the idea of retirement some consideration?
🙂
I disagree with both Peter and Seren. If we're assuming Nessie is correct with her maths, that's a ridiculously large proportion of their income going on housing. You shouldn't spend more than 25% of your take home pay on housing, otherwise youve really put yourself in a dodgy place financially. It might be that they have other income, but i think this is a disaster waiting to happen. What's the bet they also have other debt?!
if they had other debt they would not of got a mortgage on affordability at the moment.......its a tough market to get mortgages in still
I did say a lot could go wrong.
I got married at 20 .. had a mortgage and my own house a year later......( not a new one but a run down one)
and two years later was divorced
Flyaway......the majority of people in this country could not rent anywhere to live if they only spent 25% of their take home pay on housing..
I bet you they do though. Student loan, credit card, possibly car?
The average salary in the UK is £26,500 meaning the average take home is £1760 a month, so the average couple both working average jobs have £880 a month to spend on rent. The average UK rental value, when London is excluded, is £749 a month. So that means the majority of people in this country are perfectly able to rent somewhere to live.