Can I buy a house?

johnnydude84

I have been saving for a house for a while now with the intention of buying with my partner. She has now gone but my house buying ambitions have not.

I am earning just under £35,000 before tax a year have no loans (only a monthly phone bill of £20 and travel costs of £35).

I live in the Croydon area and ideally would like to stay around that part so looking at about £200,000-230,000 houses.

I want to buy next year and will have about £30,000 deposit.

Is this realistic to be aiming to buy a house on my own on my salery or am I just getting my hopes up?

Thanks in advance for your advice.


JD

Thrugelmir

Scale back on your ambition. As you'll find it nigh impossible to borrow 5 times salary.

Find a property to get you on the first rung of the ladder. Your dream home can wait.

josievg

You are looking to borrow around five times your salary. I don't think anyone offers that any more. On a very similar salary, broker told my OH not to look at property over 150K. With a deposit of 10%, I guess they were thinking of a maximum mortgage of around £135K. (In the event we only needed 100K.)

HappyMJ

Assuming you have a student loan your net income would be around £2,000 per month. The mortgage payment on £170,000 at 4.95% over 25 years would be £1,000 per month. I'd say it's too high.

You can buy a house but you have set too high a budget. I'd aim for about 3.75 times income so around £112,500 which would result in a mortgage payment of around 1/3rd of your income of around £660 per month. Adding on your deposit of £30,000 means you can afford a property of around £142,500 and having a 20% deposit which should open up some better deals.

beecher2

£150,000 would be a more realistic price to be aiming for - your LTV would be 80% and your mortgage £120,000

johnnydude84

Thanks for the quick responses.

My only issue is that where I live there are no houses available for that kind of price. I dont have a stufent loan and in fact the only outgoing I really have are rent to my mum (who i currently live with), travel which is £35 a month and my mobile phone bill which is £20 a month. I am able to save about £1000-£1400 a month without much issue and so my thinking was with bills on top of that it would be about the £300 I currently pay in rent so if my repayments per month were between £1000-£1300 then it would be affordable.

HappyMJ

You may think it's affordable but the bank thinks it's too much risk. If you borrowed £120,000 paying back £1,000 per month it would take you 13 years to repay. At that point or before you could sell and start another 25 year mortgage on a larger property.

johnnydude84

I see. My issue remains that without moving really far away that kind of value property does not exist here.

I guess I either need to earn more money or get a bigger deposit.

beecher2

I can't afford where I ideally would like to live either - such is life I'm afraid. You need to look at cheaper areas, or keep saving for a long time.

Are you saying you think bills will be £300/month? How much is the council tax in your area?

Regardless of what you think is affordable, the lender will be unlikely to agree.

johnnydude84

Yeah. I understand that but I work in London and live in London and I need to live near my mother to help her out and things. Its pretty tricky. I am not sure exact figures on council tax etc but I am going on what my mum pays at the moment which I assume will be pretty similar to surrounding areas. Actually I live just outside Croydon and surrounding areas are sanderstead, bromley and the like which are even MORE expensive.

I have 20k saved at time of writing and expect to have 30k by middle of next year. If I got to 40k by end of year would that change my prospects much? Thats 20% on a 200k house which sounds good but really not too savvy on this stuff yet...all these figures confuse me :-)

HappyMJ

Could your parents or the local housing association be able to help you out? If they were to buy the house with you on a shared ownership basis you own 75% and they own 25%. You'd still borrow £120,000 but you would pay rent to either your parents or the housing association on the 25% which isn't yours.