Can I afford this property?

Smexybean

Hi there, I was wondering if you could help?

I've seen a BEAUTIFUL property to rent, but am wondering whether the landlord would decide I don't earn enough to rent it?

Basic info is:

Rent of £1,250 per month.
Bills on top (utilities, tax, tv, phone etc) I estimate at £330 / month.
I have a salary of £45k and take home £2,600 per month. Oh, and it is close enough to work for me to walk so no transport costs.

I have no debt, and enough savings that I could cover 5 year's rent, although I wouldn't be keen to share details of my savings accounts with estate agents / landlord. Just in case! :eek:

What calculations do landlords / EA's typically use?

Ta!

Old_Git

why do you want this flat .It will cost you £1500 per month

cashbackproblems

With such an income and savings surely it makes sense to get your own place rather than waste it on rent?!?!

ERICS_MUM

Consider how much rent and utility costs you pay at the moment and how well you manage on what's left?

Do you have enough for a deposit to buy a property or could you save a deposit within a reasonable time ?


Linda

Smexybean

Old_Git wrote: »

why do you want this flat .It will cost you £1500 per month

Because I want to live in a lovely detached house with a south facing garden in an area near the city centre which has a nice cafe culture. There is another cheaper house nearby but I prefer this one.

cashbackproblems wrote: »

With such an income and savings surely it makes sense to get your own place rather than waste it on rent?!?!

Over the long term, I definitely agree. I am splitting up with my fiance, and looking at living there for a year or two, whilst I decide where next with life. I don't feel ready to commit to buying, as I'm not certain where I want to live long term.

The current jobs and housing market situation may work in my favour too. House prices do not have to decline much in the next couple of years for renting to become the more financially sensible decision.

Very rough figures of two year timescale versus buying a £220k property - break-even happens with a price drop of c6%.
Rent -£30,000
Extra costs buying versus renting +£2,500
Saved mortgage interest +£10,800
Interest earned on savings +£3,200
6% decline in property value +£13,200

Smexybean

ERICS_MUM wrote: »

Consider how much rent and utility costs you pay at the moment and how well you manage on what's left?

Do you have enough for a deposit to buy a property or could you save a deposit within a reasonable time ?


Linda

Previously (when I had my own place) I paid c£1000 / month for mortgage + bills, and saved £800-£1000 per month, and lived on £600-£800.

For the rental place I have figured out £330/month for household bills,
£405/month living expenses (food, clothes and small amount of petrol)
Which leaves £670/month for socialising, and adding to my savings. If I know what I'm like, I'll have a cheap social life and still find ways to squirrel away money.

I already have a deposit to buy again, when the time is right.

Smexybean

I perhaps should change the question.

I'm pretty certain I can live within my means whilst renting the house I've fallen for

...... but what will landlords make of the figures I've given at the outset?

Any LL's around? :cheesy:

cashbackproblems

The landlords wont ask for anything, iv seen a few ads from EA asking for proof of income but never encountered this. As long as you can pay first months rent and deposit in advance you are doing the LL a favour.

PasturesNew

As a rule of thumb, some will apply the rule of "40% of your takehome pay" as being the maximum. Another twist on affordability is: if you lost your job, how much is LHA for a 1-bed flat in your area, because that's the max you'd get in the worst case scenario.

HappyMJ

honeypopper wrote: »

Why are you only taking home £2,600 a month when you're on £45k?

That would be this thing called tax
£45,000
less £7,930 tax
less £4,210 NI
less £2,700 student loan (i think so)
net £30,160pa which is around £2,500 per month

kunekune

That's about right for take-home: mine is about the same - no student loan but they take out pension contributions.