First time buyer trying to work out budget!

NovaBlack100

Hey Everyone

Myself(26) any my girlfriend(24) of 4 years are thinking about taking the plunge and looking at buying a house for the first time. Being a complete novice when it comes to understanding mortgages / house buying etc, ive been reading the awesome MSE guides for the last hour or so, and thankfully things are becoming a bit clearer now! (so thanks for that).

However im currently trying to figure out what price range of houses we can afford and should be looking at ( ive come to the vague conclusion we can look at houses £130 -> £150 k).. but i just wanted to check what other people thought...

Currently i am earning £24k a year (hoping for a pay rise in the next 6 months:p) and my girlfriend is on £13,500. so between us thats £37,500 ( before the tax man helps his chubby mitts to his share obviously!:rotfl:)

Luckily, thanks to the fact i started saving AGES ago, and thanks to an unexpected trust fund set up by a close relative, i reckon that I now have a deposit of £40k. (This may actually be closer to £45k in the near future.) Hopefully this should help us out a LOT.

Just wondering on wether im looking well beyond our means here or if im at least vaguely in the right ball park. We currently pay ~£600 a month in rent and manage with absolutely no problems, don't seem to be struggling financially (not living in the lap of luxury or anything, but we can afford to buy a few dvds a month , go out for a meal etc now n again) and have money to spare to put into savings. Itd just be nice for that rent money to be going somewhere useful each month!.

As far as debts i currently have none, and my girlfriend jsut has her student loan (£7.5k?), which she hasn't started paying off as she still earns below the minimum repayment level.

Apologies for the absolute beginner level knowledge i have! (im trying to learn fast!). I appreciate the input of anyone who could comment :T

Thanks in advance guys and girls.

pinkshoes

Your mortgage is usually limited to 3 or 3.5x your joint salary, which is generally a sensible limit, so in your case, you could borrow up to around £131k, so with a £45k deposit, you're looking at properties around £175k.

An example of the mortgage; Post office is offering 3.19% at the moment if you have a 25% deposit or more, so your repayment (taken over 25 years) would be about £640/month.

dianah

we just got a mortgage through santander (offshore) and they're lending up to 5 times your yearly income. you have a fab deposit - keep in mind you'll need to pay the lawyers, surveyors, mortgage fees etc on top of that; this can add up to several thousand pounds.

go see an independent financial advisor. find one that doesn't charge a fee, instead, they get paid by the financial institutions - that way it won't cost you anything and they can print out different options for you.
we did this and they were really brilliant, they got us a mortgage agreement in principle within a couple of days and the mortgage offer (after we had the offer accepted and bank did the valuation) took about a week and a half.

also, be a little wary of tracker mortgages, at the moment, you can get life trackers that give you free fees and the interest rates look really good - the base rate however, is 0.5% at the moment and should go up in the next 20/30 years

707

Dinah can you let me know if you went direct to Santander(via phone or office) or thru a mortgage advisor/financial advisor pls? If so wud it be possible to email me some details pls? Also what document did you need to submit to them and approx how long dod this take. Many thanks

getmore4less

First step is to actualy do a budget

This should be detailed for a full year and outline plan for at least 5 years.

1. Do one for now based on the current spends(use the last few months to set up the details)

This will tell you exactly where all you money has been going.

2. Review your spends to see if you want to make changes now.
you might decide to reduce the cd buying for a year or reduce a TV package to increase savings.

3. Develop a new budget based on buying.
a lot of things will be similar food going out, utilities will probably change a bit, rent swaps for mortgage.

For this budget you have the ongoing living in the place that is where you want the details and a 5 year plan for replacing/buying things.

There are the one offs that are part of moving(buying selling costs, buying stuff etc) these are a hit on the savings and the eventual size of the deposit.

There are some planning tools in the likes of MS money, spreadsheets work or for a monthly breakdown a SOA works
http://www.makesenseofcards.co.uk/soacalc.html

poppysarah

What mortgage can you get for the same amount as the rent now?