FTB advice needed

ftb-soon · 25 September 2009 at 1:41PM

Hi,
I'm currently saving for a deposit and am looking at having a 10% deposit in around March time. This is going to be my first house, so I am not looking for anything too big as it is just be on my own. Prices for 2-3 bedroomed terraced houses which have been modernised range from between £85-105k in my area so I am looking at saving £10k.
I have recently started saving after graduating and am fortunate enough to be able to save around £1000 per month. My annual salary is £36K plus bonuses of normally between £1-2K. The £10k deposit seem achievable by then, hopefully sooner, as moving back in with my parents is starting to annoy me!
So really I have two questions. The first one is, in addition to the 10% minimum depsoit I will have, what other fees am I likely to expect to have to pay on a house for approximately £100K?
I have been give conflicting advice on how much I should spend on my first house. There are two camps, spend as much as you can and in a couple of years payments etc won't be as much. Or buy somewhere cheaper just to get on the property ladder. My job is pretty secure given the sector that I work in and know that my salary will increase to closer to £40k in August next year. Any advice?
I have tried to budget how much everything will cost me as shown below and it looks like I should comfortably be able to afford a mortgage of around £600-650 a month. Does this look realistic? Obviously not having my own house before I may be unaware of other things I will have to pay for.
Thanks in advance
Annual Salary £35,912.67
Additional £ 91.67
Monthly Gross £ 3,084.39
Monthly Deductions:
Pension £ 156.38
Tax £ 477.69
National Insurance £ 230.40
Student Loan £ 163.90
Company Loan £ 55.56
Train Pass £ 31.65
Net Pay £ 1,968.81
Other Expenditure
Mortgage / Rent £ 650.00
Gas £ 50.00
Water £ 35.00
Electric £ 35.00
Phone £ 10.00
Broadband £ 10.00
Sky £ 20.00
Council Tax £ 115.00
Home Insurance £ 20.00
TV Licence £ 12.00
Food £ 180.00
Car TaxFuel £ 60.00
Car Insurance £ 37.50
Car Finance £ 172.00
Mobile £ 42.00
LoansCredit Card £0
Savings
Holiday
Lottery£ 8.00
200 Club £ 8.00
Total Expenditure £ 1,464.50
Disposable Income £ 504.31

_Andy_ · 25 September 2009 at 1:52PM

Nice to see someone planning properly, top work.

Couple of thoughts - gas looks a bit high, you haven't factored for clothing, or holidays.

The other thing to think about is contengencies - e.g. boiler breaks down etc; the ongoing cost of maintaining a home.

You'll need to budget for legal fees, valuation fee, cost of moving including new locks etc.

Regarding how much to borrow - don't push yourself too high - all very well thinking payments might be cheaper in two years but I don't see why they would.
Owning a property can be great but not when you've not got much disposable income.

Well done on the job and saving, nice one

vicshippers · 25 September 2009 at 1:53PM

Looks to me like you're in a great position, if I were you I would save around £3k for all moving/legal expenses (that should be a worst case).

Whether you choose to get somewhere a little larger depends on your personal situation, and no one else can tell you what to do there as no one knows what the market will look like in 6 months - let alone a few years. If your personal circumstances change (thinking kids and partners etc) do you think you could stay where you are? Would you like somewhere bigger? Do you have the time to spend on something bigger? Would you rather have a few good holidays a year? All these things are upto you - no one else can tell you what will work best for you.

GSXRCarlos · 25 September 2009 at 2:00PM

consider saving more, i took a mortgage out based on 85% LTV (loan to value) of the property (in your case approx £15,000) that'll afford you better rates.

And 2-3000 should be enough to cover you, i spent about £2k on buying my first place

As for when you move in, keep things cheap and simple. you can buy expensive thing when you have more time/money, but for now "beg, borrow and steal"

Good luck

herbiesjp · 25 September 2009 at 2:05PM

Well done on the detailed break down, and analysis of your situation.

You are well on the way to getting on that first step.

The only thing I might add is to make sure there are no surprises on your credit file, so get a copy of that

To increase your credit score, and therefore chances of getting a mortgage in the eyes of a lender, make sure you are on the electoral register, and use a credit card each month (clear in full though)

These will help to boost your score, and hopefully keep as many doors open to you as possible

Idiophreak · 25 September 2009 at 2:14PM

I know you've probably stuck it out about as long as you can, but it's just worth remembering that you'll probably only be able to save £1000/month one time in your life - and that's right now...On a 100k property, every month you stay there will improve your LTV by 1% - so every 5 months you stay, you potentially have a lower interest rate available to you.

I'd agree that gas seems high and I'd add that council tax is probably on the high side, by the time you take off the single occupancy discount.

Phone line will probably be £12 or so on it's own, but guess you're going to bundle with sky.

Food I'd have thought was touch and go - depending on whether this is supposed to cover cleaning products, beer etc, too - obviously you have a better idea of how much you'll spend than I do - but I know my gf and I initially budgetted for £50/week for the pair of us, but now spend around £75 - stuff just costs more than I'd anticipated

Finally, I'd agree with the above, around £3k sounds reasonable for the "boring stuff" of moving. But don't forget to budget for the "fun stuff", too...furniture, TV, stereo etc, pots and pans - again, you know better than I do how much of this stuff you'll need to buy, but gf and I spent 5k-ish getting our flat set up - and that was buying stuff as cheap as possible from ikea and argos, not expensive stuff. Sure, all of this stuff you can buy once you're in, but again, it's much easier to save for it now than once you're paying a mortgage. I'd just write a list of everything you need and budget for it.

GSXRCarlos · 25 September 2009 at 2:34PM

Idiophreak wrote: »

I'd just write a list of everything you need and budget for it.

That's exactly what i did, and now i can't afford a sofa :cool:

ftb-soon · 29 September 2009 at 7:48AM

Thanks very much for your advice guys.

12-15k is looking like the right time to start looking for somewhere then?

I believe I'm on the electoral register, although I haven't got a credit card or have ever owned one! Is this important? I really don't like buying things on credit and would prefer to just pay for them outright

Bufger · 29 September 2009 at 8:16AM

ftb-soon wrote: »

Thanks very much for your advice guys.

12-15k is looking like the right time to start looking for somewhere then?

I believe I'm on the electoral register, although I haven't got a credit card or have ever owned one! Is this important? I really don't like buying things on credit and would prefer to just pay for them outright

Ive never had a credit card either and my credit score was very good. You have a car you're paying for each month? that will help if you pay it off on time every time. Also mobile phone contracts stay on your credit file so if you've always been on time paying those that will also help.

If i were you i would put up living at your parents for a while longer. i was also saving 1k a month and so was my gf for our first house. When it starts annoying you just keep thinking 'nearly there, not much longer!' and once you reach that initial target you know you could move at any point you want so you wont feel as trapped. Every month saving that much is a gift so you're better off saving as much as you can!

FTB advice needed

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