Potential first time buyer - what to do?

talksalot81

Hey everyone,

I, like many others, am rather disillusioned by all of this. I live at home as yet because renting would be a waste, but coming 25 I need to get onto the market eventually and then end of my studies looms making now a good time. Unfortunately, I dont know if I can actually do it in a way that i am remotely happy about.

I will have a reasonable deposit (up towards £15k) and have a gross salary (hopefully) in the region of £28k. So doing the generally accepted sums, i can get 3x salary + my deposit. That takes me up to £110k if I am lucky. Now if i do a search in my area (Belfast), there is virtually nothing suitable at that money, not even relatively small apartments. So my choice is to either get something away out of town or to get something in town (but in a bad area). What on earth am i meant to do?!

If I dont buy, I will effectively lose money. I dont know what to do. Money isnt meant to be everything (coming from my parents generation), but that same generation has forced the situation that money is pretty darned close to everything!

In honesty, the only way I could manage to get a reasonable place to live (without needing my parents help) is to get married.... what on earth sort of idiocy has led to that being the case!?

F_T_Buyer

I don't understand what you mean by "if I dont buy, I will effectively lose money"?

Would you be happy in that £110k home for the next 10-20 years?

Someone on £28k (way above average earnings) should expect a home far better that what £110k would buy. If you can't afford to buy, what about joe bloggs who earns half of what you do? Will these lower earners never own their own home? I think not.

PJD

It's unbelievable. I would say you're doing alright for yourself, there's not many people at 25 years old who can say they have a 15k deposit & a base salary of 28k, & yet you're still unable to get on the property ladder. What are people supposed to do when they can't even afford to buy a home in the country they live in. Immigrate?

talksalot81 wrote:

... what on earth sort of idiocy has led to that being the case!?

Inflation has gone through the roof, but salaries have hardly moved. I don't know who makes up these silly inflation figures - 2% 3% PA!!?? - my ar5e. Morelike 10% 20% PA!

It's a very sad state of affairs that you can get off your backside, do well for yourself & yet if you want a reasonable sized shoebox you have to move hours away from friend & family. (or get a joint mortgage, like you say). TV programmes like "would you buy a house with a stranger" are a sign of the sad times we live in!

FaTB

You are still years younger than the average FTB, so my advice would be to give it a couple of years to see what effect rising Interest rates & unemployment have on the market.

Also enjoy yourself, but save, save, save !!

My plan is to pay maybe 20k less for a property in a couple of years time, and have 20k more in savings, ie £40k less to mortgage, years more freedom !!

PJD

F_T_Buyer wrote:

I don't understand what you mean by "if I dont buy, I will effectively lose money"?

I'm presuming he/she means that property prices are continually on the increase, so the longer yo'ure off the ladder the more expensive it is to get on

F_T_Buyer

PJD wrote:

I'm presuming he/she means that property prices are continually on the increase, so the longer yo'ure off the ladder the more expensive it is to get on

Yes, I gathered that. I'm just pointing out how that is an unreasonable assumption. I think prices will fall, this isn't just a gut feeling, it's based on countless statistics and fundermentals - yet if i wrote posts with the automatic assumption prices would fall, I would get flammed!

AndrewSmith

talksalot81 wrote:

Hey everyone,

I, like many others, am rather disillusioned by all of this. I live at home as yet because renting would be a waste, but coming 25 I need to get onto the market eventually and then end of my studies looms making now a good time. Unfortunately, I dont know if I can actually do it in a way that i am remotely happy about.

I will have a reasonable deposit (up towards £15k) and have a gross salary (hopefully) in the region of £28k. So doing the generally accepted sums, i can get 3x salary + my deposit. That takes me up to £110k if I am lucky. Now if i do a search in my area (Belfast), there is virtually nothing suitable at that money, not even relatively small apartments. So my choice is to either get something away out of town or to get something in town (but in a bad area). What on earth am i meant to do?!

If I dont buy, I will effectively lose money. I dont know what to do. Money isnt meant to be everything (coming from my parents generation), but that same generation has forced the situation that money is pretty darned close to everything!

In honesty, the only way I could manage to get a reasonable place to live (without needing my parents help) is to get married.... what on earth sort of idiocy has led to that being the case!?

Just one point I would note. With a deposit of £15,000 you are in, as others have said, a fairly good position.

Also you may be able to borrow more than 3x your salary, and there are lenders who work on affordability instead of income multiples.

That said, I do not know the full details of your situation, thus cannot comment on what would be suitable or unsuitable for you. Just a guide though.

Andy

lynzpower

"If I dont buy, I will effectively lose money"

I used to think this till I bought. You must be making money on this 15k you have in the bank earning interest daily? Is it in the rigt place? Could you be making more on it? The more you have in the bank the greater the deposit you will be able to put down.

I look at this and see "I will have a reasonable deposit (up towards £15k) and have a gross salary (hopefully) in the region of £28k." you seem to be heading for graduation? Is that right, as you suggest your studies will come to an end shortly. Dont rush anything. If you dont have any student debts left, then thats great, if you do, make the effort to clear those and save as you go . 28k means you come out with 1700 plus a month after tax, could you save at least a grand a month towards your deposit?

I have heard about belfaqst seems to be a huge bubble there, and hopefully those prices will start deflating soon

zag2me

You have to remember he is in Belfast where anual house price inflation is huge at the moment, every month you wait a house costs alot more. In a rising market its always worth getting on the ladder as soon as possible, you cant debate that point.

Also you can borrow alot more than 3x salary these days, most big banks will offer you up to 4 or 5 times based on affordability.

FaTB

zag2me wrote:

Also you can borrow alot more than 3x salary these days, most big banks will offer you up to 4 or 5 times based on affordability.

The above is no doubt true, but its not necessarily a good thing.

Lending has been far too lax for a long time now.

Many people have taken on far to much debt in recent years, and will regret it for many years to come, and the banks don't care because if you can't manage for whatever reason, they just take your house !!

drinky_2

What do people generally think these days is a reasonable % of take home pay to be paying in mortgage payments. My daughter wants to buy a place at the moment but she is looking at interest only mortgage with monthly payments of about 50% of her after tax income. She isn't on a great wage - about average earnings. This feels too much to me for her to cope with on her own, especially as she has a young baby to bring up, car to run, etc. We both filled in Martins budgeting tool but with very different view on inputs and of course subsequent answers.