Buying a 175k house on an income of 54k

rammster

As the title says, I am buying 175k house on an annual income of 54k, do you think it is a sensible thing to do. I am going to put down a 5% deposit. So effectively borrowing 166250 . The house is Old victorian so needs another 5-10k to do up. (I will keep 10k in mind) , the house was selling for 180k, my offer got accepted for 175k. The adjoining 2 bedroomed house with a different layout went for 170k a year ago. I have been checking houseprices.co.uk , but by knocking door to door I have found that although they are all 2 bedroom properties , they have different designs. Like the one adjoining to me is on 2 floors, while mine is on 3 floors. That gives me more area , but reduces practicality (i.e bathroom & kitchen in basement ). But its victorian property with lots of character.

After reading the above do you think I am buying something more than I can afford. (I am single and have no other debts, and have a job contract upto next 2 years)

cheers

mrstinchcombe

Are you taking the pi$$ mate?

On that wage you can comfortably afford that house and good luck to you

roswell

Well thatsa nice friendly post if ever i saw one,

To the Op,

How sure are you that in 2 years you will have the same salary ? are you planning to over pay the mortgage incase it takes 6 months to get another contract ?

Most importantly do you feel that your making the right choice for yourself eg no plans to move out the area / not owrried about interest rates / inflation or future house values.

Redbedhead

Do you know what the mortgage repayments would be? I would suggest you find that out and see how much that will take out of your take home salary and what it leaves as disposable income. If you are happy after, then go for it.

Roswell's point about re your income after 2 years is a good one as well, you don't want to do all this work on the house if you are then forced to sell it / have it repossessed because you can't afford the mortgage at the end of your contract.

Good luck!

RHemmings

The OP doesn't give enough details really. Is s/he buying the house because that's the house they want to live in for the rest of their life. Or are they buying something much less than they would like or need, based on current house prices?

rammster

At the end of 2 year contract , my plan is t do locum work for a year or so, I have done that before and know how the market plays. With Locums I will be able to make money to the tune of about 80% of the current salary.
My monthly payments would be 840 pounds interest only fixed at 5.79 % for the next 3 years. Meanwhile I will keep 10k in my account as saving so that if the market has really changed big time , I could then put it on market and wait for 4-5months or so for a sale.

pollyanna24

We have joint income of £56K and took out a mortgage on £185K on a property we bought for £210K. We seem to be doing okay, might change when I get up the duff though!

Payments are £885.86 repayment fixed for two years. Fully appreciate that in April 2008 when the fixed is up, payments are likely to increase.

PS. We manage to overpay every month by about £185, hoping to increase this soon.

Catmeister

We first bought in Surrey nearly three years ago when I was a full time student and husband earned £20,000. Our mortgage was 100% - and £129950!!! (Bank knew his family and his dad guarantored some of it, plus we were paying more than the mortgage repayments in rent at the time.)

Money was tight but we managed, and it was the best decision we could have made. Now we are looking to buy in London for 2-250k (joint salary now £55,000, plus I'm a key worker and should sell our house for 30-40k more than we paid (based on identical properties in our block.)

Take the usual precautions like ensuring you have three months salary in the bank and maybe critical illness cover. Even if your finances take a nosedive in two years time, you can sell up if need be and, assuming you bought well, should still walk away with a profit. Compare that with two years rent - money wasted.

One cautionary note though, it sounds like you're a bit unsure of whether your proposed house is a good buy. Get a builder around to give a fully itemized quote so you can get a good idea of how much the house will really cost. Then research the area and compare like for like as far as you can, remembering bonuses like gardens and garages which will add to the value. If the house exchanged hands within the last ten years, find out how much it went for, and then estimate how much it should be worth (based solely on inflation rates) on nethouseprices. Finally, was the house on the market for long? Was there much interest on the property? If not, why not? If so, yippee!

RG_to_NP

I can just afford a £156k 25-year mortgage on 40k with a wife and small child (both out of work!). So 54k sounds comfortable.

stolt

I'm goign for a 141k mortgage on a salary of around 36k so you look a safe bet, as other people have said if you can overpay aswell (which is what i hope to do when we get in)

benood

I wouldn't be concerned about the level of mortgage on your income esp if you're a GP. It's natural to initially be concerned about the size of your mortgage but after you've made payments ok for a few months you'll wonder why you ever worried!

Agree with Catmeister - the most important thing is for you to be happy with the house.