Need some advice

SuperBOB

Hi,

Me and my girlfriend would like to move in together in about a years time and have a couple of questions.

Is a mortgage as big of a commitment as it appears? If we were to split up would we have lost any money by going the mortgage route?

Is getting a mortgage even possible at our age and income? (23/19, 20k,12-15k)

We are both leaning towards renting, since this seems the easiest option, and allows us to dip our feet before jumping in.. so how much can we afford? I have tried roughly adding up numbers but I haven't come up with much of a budget for rent.

So in summary, how much can we afford a month in rent? or is renting a waste of money, even for a young couple?

(Our guesstimated joint income in a years time will be 35K.)

Keith

SuperBOB wrote:

how much can we afford a month in rent? or is renting a waste of money, even for a young couple?

That depends on how much you both spend each month on debts and how much is left the day before payday!

My partner and I are on similar salarys as you and yours, we have just bought a property for £130k with no deposit, its not easy as its an increase of £500 a month on what we paid when rented but we are getting used to it.

However, if we stick to my repayment plan for all our other debts, we'll not have any debt or mortgage by 2016. And that is ignoring the fact our salarys will go up!

Miss_Penny_Pincher_2

By my quick calculations based on your salaries you should be able to get a mortgage of around £95,000 but this depends on debts, credit rating etc Several lenders would probably lend you more depending on affordability. My fiance and I have a similar joint income to yourselves and we were offered around £120k by Nationwide but a few mortgage companies will lend even higher.

Personally I would not advise you borrowing more than 3x your joint income but then I'm very cautious about being able to repay the mortgage if interest rates rising significantly and in some areas a higher amount needs to be borrowed to be able to get onto the property ladder. It's just that one of my worst fears is being repossessed which is why I'm cautious and bought a house for less than the maximum that we could borrow!

Regarding whether you should rent or buy it needs to be what you are both comfortable with. In June my fiance moved in to a rented house with me as we both thought that was best before we bought together but we soon realised that we were at a stage where we felt we could make a long term commitment to each other and have moved in to our own house this April.

Getting a mortgage together is a big commitment but if the worst comes to the worst and you do decide to split up this is possible as you can always either a) sell the house and use the funds to pay back the mortgage (hopefully with a little profit left to split between you) or b) one of you decides to stay in the house and buys out the other. My fiance's sister did this when she seperated from her husband.

Seeing as you are thinking of waiting a year before you move in together, personally I would use that time to save up a deposit to buy a house as hopefully that extra time will give you time for you both to decide whether you are 'the one' for each other.

About whether you would lose money it's difficult for me to calculate - maybe compare how much rents are in your area and how much a repayment mortgage would cost per month. Then there are the legal fees, mortgage arrangement fees, survey fees etc but you will have an asset to sell whereas with renting all the rent money, administration fees go straight into the landlords pockets. The way I see it rent is dead money and we were really sick of the way we were treated by our landlord so are delighted to now own our own home!

I'm sure a mortgage advisor will be along soon with more advice but I hope this helps a little!

trackaccessgirl

The mortgage is possible, but based on what area you live in , you would probably only be able to get a flat unless you have someone helping you out with a big deposit. Any couple buying together has the dilema of what would happen if you split up. If you split up, and HAD to sell then you could potentially own money if house prices dipped. Would you be prepared to continue living in the same place and waiting until prices went back up?
A mortgage is a big commitment, at least with renting if you have big problems with a place you can move out when the 6month contract expires. With a mortgage you will have to pay for any maintenance, etc and if you want to move area it will mean selling the place.
All this said, a mortgage is better than renting in the long run, because renting is just paying someone elses mortgage for them, and at the end of it, even if you rented for 25 years you would have nothing left.
If you and your partner are both sensible with money, and you see the relationship lasting, I would go for it and buy a place, just don't overstretch yourself.

SuperBOB

Cheers for the advice, I think we are going to rent at first in the cheapest place we can find within distance of work. Then save up for a house deposit... I think we need to put down as much as possible which means living pretty cheap for a while ):

Martinslovechild

Having spent a weekend in Cambridge earlier this year, I know that house prices there are pretty high, but then it's a nice place to live. There are lots of cheaper options outside of Cambridge though, if you're both willing to commute (Letchworth, Bedford, Peterborough).

jobbingmusician

When you think about buying together, and then possibly splitting up, you have to factor in things like the cost of stamp duty (although you may be able to buy a place under the SD minimum level), solicitors' fees etc.

DON'T buy if you seriously think you may split up within 12-24 months!