[Finance] Does earning 100k a year make you feel well off these days?

[sussex_guy2k2]

Is that single income or joint? As I assume there would be additional income if both children are going to nursery?

Depends on the house you buy doesn't it? But a 800k+ house in a nice part of Brighton with 2 kids in nursery and assuming your partner isn't earning than yes it would be difficult, buy a smaller house in a modest part of Brighton it would feel more comfortable.

Live in a 2 bed flat and you would be cash rich but your flat would feel cramped and look like a bombsite so probably won't feel that well off even so.

If the partner is also earning 30-50k that obviously makes a big difference.

In answer to your question: Maybe.

It’s highly unlikely you’re buying an 800k house on a £100k income. You may be a boomer who owns an 800k house that you bought for 100k, but that’s not the reality for 90% of the working population.

 

[Albion my Albion]

"Make sure when near a street with automobiles to walk with your sister between you and the street.

Also you might not be able to get more than 100,000K per year."

"No, really, daddy"

 

[schmunk]

It’s highly unlikely you’re buying an 800k house on a £100k income. You may be a boomer who owns an 800k house that you bought for 100k, but that’s not the reality for 90% of the working population.

To buy a £800k house with a £100k income, and dependent family in tow, you'll likely need a £400-500k deposit. For most that becomes possible when someone dies...

 

[The Optimist]

To buy a £800k house with a £100k income, and dependent family in tow, you'll likely need a £400-500k deposit. For most that becomes possible when someone dies...

This is what’s crazy with house prices. Earn £100k (single income no dependents) and you can probably borrow £450k. Add a £50k deposit and you’ve got a £500k house - a decent house but nothing extravagant and not what you might think earning £100k would get you.

 

[beorhthelm]

have people collectively forgotten the concept of the property ladder, buying something, partially paying off, maybe improving, moving up to larger some years later? 100k earners aren't first time buyers, they'll have considerable equity.

 

[Commander]

This is what’s crazy with house prices. Earn £100k (single income no dependents) and you can probably borrow £450k. Add a £50k deposit and you’ve got a £500k house - a decent house but nothing extravagant and not what you might think earning £100k would get you.

It's very true. So you save £50K and get a £500K house in the south east, which is a nice enough house in some areas and a pretty average one in others. This scenario would put you in the top 2-3% of earners in the area, yet your house worth is only in the top 20%.

Yet there are many in the Boomer generation that own houses that are in the top 5% of value in the area, who only ever earnt in the top 50% of earners when they were working.

That, in a nutshell, is what is wrong with the housing market. And why £100K does not make you rich, by any stretch of the imagination, in the South East.

 

[Commander]

have people collectively forgotten the concept of the property ladder, buying something, partially paying off, maybe improving, moving up to larger some years later? 100k earners aren't first time buyers, they'll have considerable equity.

Sorry but I think that is nonsense. If you have had no inheritance or financial help and have rented since you moved out of your parents home, how long do you think it takes to save £50K? Remembering that you are highly unlikely to have been earning £100K all that time. There is a career / salary ladder as well, remember.

 

[theboybilly]

Blimey, how many on here earn £100k per annum? Even joint I can't see it being that many. I was (at least I thought I was) a relatively good earner when I retired 9 years, ago but £100k (say £80k in 2016) would have been a extraordinary amount for lots of people to earn - or enough to have this question asked on NSC.

 

[mejonaNO12 aka riskit]

100k earners aren't first time buyers, they'll have considerable equity.

Or they might be, and they may not have.

 

[beorhthelm]

Sorry but I think that is nonsense. If you have had no inheritance or financial help and have rented since you moved out of your parents home, how long do you think it takes to save £50K? Remembering that you are highly unlikely to have been earning £100K all that time. There is a career / salary ladder as well, remember.

well exactly, years on lower salaries, spending, saving as they go, with time to buy a flat, get hooked up (so likely two properties to fund the next), move, do a project, etc, etc. yet here we are arguing whether someone on 100k is struggling or 800k purchases are likley first time homes.

 

[Hovegull]

Blimey, how many on here earn £100k per annum? Even joint I can't see it being that many. I was (at least I thought I was) a relatively good earner when I retired 9 years, ago but £100k (say £80k in 2016) would have been a extraordinary amount for lots of people to earn - or enough to have this question asked on NSC.

I think some are referring to their household income too.

 

[The Optimist]

Blimey, how many on here earn £100k per annum? Even joint I can't see it being that many. I was (at least I thought I was) a relatively good earner when I retired 9 years, ago but £100k (say £80k in 2016) would have been a extraordinary amount for lots of people to earn - or enough to have this question asked on NSC.

£74,250 in 2016 is the equivalent of £100k today.

I think many people underestimate inflation (not you £80k was a decent guess).

This tool is handy to check:

Inflation calculator

Use our inflation calculator to check how prices in the UK have changed over time, from 1209 to now.

www.bankofengland.co.uk

I think the general point of the thread is that £100k is a very good salary but with house prices (and other cost of living issues) doesn’t make you as rich as you’d think. For people on more modest incomes who didn’t buy a house years ago home ownership in the south east is very difficult.

My brother is on a reasonable salary (£40k+) and his wife works part time in retail but he can’t afford to buy somewhere big enough (3 kids). I can’t see him owning a property until he inherits half my mum’s house. If there was no inheritance then he’s got no chance.

 

[mile oak]

100k is nowhere near enough but having said that its all relative depends how you wanna live your life and cost of that

 

[schmunk]

have people collectively forgotten the concept of the property ladder, buying something, partially paying off, maybe improving, moving up to larger some years later? 100k earners aren't first time buyers, they'll have considerable equity.

I earn over £100k/year and have lived in my house, bought for ~£300k, now worth ~£500k, for well over 10 years as we can't afford to move to anything significantly better.

As a family we are not extravagant, but spend significant amounts on basic utilities and feeding/clothing/activitying(?) the children. No nursery fees, no school fees. Maybe one takeaway per month, a meal out every 3-6 months max., one holiday in the UK each year, Albion STH for 3 of us. Two cars, averaging 10 years old each.

The mortgage on our house has barely shifted over the last 12 years, albeit our equity has increased through market pricing. We could probably raise £300k equity from selling it.

To move from this house to an £800k house would mean increasing the mortgage from £200k to £500k - from £1,200/month at current rates, to £3,100/month. Where do I find the extra £1,900 every month? Where do I find the £30,000 lump sum to pay the SDLT?

 

[sussex_guy2k2]

have people collectively forgotten the concept of the property ladder, buying something, partially paying off, maybe improving, moving up to larger some years later? 100k earners aren't first time buyers, they'll have considerable equity.

Some will.

 

[The Optimist]

I earn over £100k/year and have lived in my house, bought for ~£300k, now worth ~£500k, for well over 10 years as we can't afford to move to anything significantly better.

As a family we are not extravagant, but spend significant amounts on basic utilities and feeding/clothing/activitying(?) the children. No nursery fees, no school fees. Maybe one takeaway per month, a meal out every 3-6 months max., one holiday in the UK each year, Albion STH for 3 of us. Two cars, averaging 10 years old each.

The mortgage on our house has barely shifted over the last 12 years, albeit our equity has increased through market pricing. We could probably raise £300k equity from selling it.

To move from this house to an £800k house would mean increasing the mortgage from £200k to £500k - from £1,200/month at current rates, to £3,100/month. Where do I find the extra £1,900 every month? Where do I find the £30,000 lump sum to pay the SDLT?

It’s almost like decades and decades of house prices rising at rates above inflation ultimately creates a crap situation.

 

[The Optimist]

It’s almost like decades and decades of house prices rising at rates above inflation ultimately creates a crap situation.

My parents bought their house in 1975 for £12k. That’s the equivalent of £91,500 today. It’s worth a minimum of £400k.

They earned £3k a year each, the equivalent of £23,900.

 

[Weststander]

You’re being optimistic with some of these numbers. It’s fine if you have a 2 bed house or you’re closer to retirement, but that income with a bigger house, with these interest rates, is going to be a much bigger mortgage payment.

There’s a lot of data online. £412k is a typical new mortgage in Brighton, loan to salaries ratio 6.8, 30’s the typical age of a borrower.

That gives monthly repayments of £2,300 if able to get a 4.5% rate.

Almost as bad numbers for Worthing.

 

[Ⓩ-Ⓐ-Ⓜ-Ⓞ-Ⓡ-Ⓐ]

There’s a lot of data online. £412k is a typical new mortgage in Brighton, loan to salaries ratio 6.8, 30’s the typical age of a borrower.

That gives monthly repayments of £2,300 if able to get a 4.5% rate.

Almost as bad numbers for Worthing.

Aren't most lenders just doing a 4.6 loan to salary ratio?

 

[Paulie Gualtieri]

Aren't most lenders just doing a 4.6 loan to salary ratio?

They are allowed a % above 4.50 income multiple but only like 10% of their entire mortgage book