FTBers. Can we do this?

dotexe

Our gross income would be 18k and 16k.

The deposit doesn't have to be paid back.

We have a small sofa that would do for now but we would be looking at buying carpets/flooring and a washer/fridge but definitely not on credit.

I ought to come clean about my deposit too. It's actually only 22k, with a 7k 'gifted deposit' from the builders.

DVardysShadow

dotexe wrote: »

Our gross income would be 18k and 16k.

The deposit doesn't have to be paid back.

We have a small sofa that would do for now but we would be looking at buying carpets/flooring and a washer/fridge but definitely not on credit.

I ought to come clean about my deposit too. It's actually only 22k, with a 7k 'gifted deposit' from the builders.

So

House Value: 135,250
Our Deposit: 22,000
Mortgage Required 113,250
LTV: 83.7%

Fees:
Stamp Duty: £1425
Arrangement: £499-999
Solicitors: £1000
Total Fees: £2924-3424

Your deposit looks quite good still, but not astounding for an FTB. On a joint income of 34,000 you are borrowing 3.33 times income, which is fine - or 5.4 times higher income plus lower income - not so good.

You will have to avoid having children until you are able to put all of one income away as savings each month - putting it to paying down the mortgage will bring that point closer quicker.

dotexe

My fear is that whilst we can afford it now we may struggle in the long term if rates were to go up. We could stomach an increase on a more affordable home but this is at the top end of our budget.

Would we be better off staying put, saving for another year and looking again? We could probably save another 20k between us in that time. But what will the mortgage/house price situation be like in 12 months?

DVardysShadow

Where are you living at the moment? if you are saving 20000/yr, I am guessing with parents.

I suggest you forget this house, you rent and get married if this is your mind and you save some more. Forget new houses and gifted deposits! After a year or so of this, you will be far more confident of the budget. And if you are not renting at the moment, it's hard to understand why you are so unsure as to your budget.

dotexe

Yes we're both still living at home.

I'm a worrier by nature so planning for the worst is my forte, but I still feel incredibly naive about budgeting, house prices, mortgages etc.

edit: MSE doesn't like accented e's.

pinkteapot

It's unlikely that house prices will rise dramatically in the next year, so I strongly doubt the market will run away from you in that time.

Sometimes this decision isn't purely financial. The budget really does look healthy and it sounds like you're careful with money so I think you'd control the spending on new stuff for the house. Given that, it really comes down to what you want. Of course if you wait a year and have a bigger deposit then your mortgage repayments will be less, or you could look at a house that's £20k more expensive. Check how much the mortgage repayment would be if the mortgage amount was £20k less.

But, since you can afford to buy now, it's really a question of what you want. If you're happy living at home for a year then great. If you're itching to get your own place together then go for it. If you're a natural worrier you're going to worry just as much whenever you buy.

As for marriage/kids - (1) Weddings needn't cost the earth; they can be done for a few hundred quid in registrar fees. You should talk about what sort of wedding you'd both want. (2) Approximately 0.01% of people can "afford" children when they have them. If people looked at the financials of it for the coming 20 years, they'd never have kids. You make do. You cut back in other areas to buy nappies.

Only slightly less positive thing I'd say is if you haven't lived together before, rent for six months and try it out before you buy a house. If things don't work out it's far less complicated. It may also make you feel more confident about buying as you'll have to pay bills etc and you'll see how much you really spend on food etc.

dotexe

Thanks pinkteapot. Everything you have said makes a lot of sense.

Yes we are desperate to have our own home together. But the more I think about it the more it makes sense to buy something more affordable, or wait a while, or both. Especially as (and I hope I understand the current situation correctly) the interest rates can only go up at the moment and house prices may not increase for a while, or even fall again.

Please tell me if I am wrong, or any other points of view are very much welcome.

lizzyshep

dotexe wrote: »

Thanks pinkteapot. Everything you have said makes a lot of sense.

Yes we are desperate to have our own home together. But the more I think about it the more it makes sense to buy something more affordable, or wait a while, or both. Especially as (and I hope I understand the current situation correctly) the interest rates can only go up at the moment and house prices may not increase for a while, or even fall again.

Please tell me if I am wrong, or any other points of view are very much welcome.

It sounds like you have your head screwed on and I agree with the others that your budget looks healthy and it's really a case of what you want to do. Bear in mind if you are worried about interest rates rising you can get a fixed rate mortgage (which is what me and my husband are doing as we are about to have a baby). They are more expensive but you get peace of mind. The only thing I am unclear of in your case is how the gifted deposit works, if you don't include that then your loan to value is above 80% which makes your mortgage more expensive. Personally I would either save up the extra myself or find a cheaper property - then I would go for an older house as I have heard new builds don't hold their value very. well. Keep us updated and good luck!

dotexe

Yes it's just a case of what we want to do. Trouble is I don't know what that is, hah.

Would I perhaps be happier if we waited a year, saved a bigger deposit and didn't buy a new build home but instead a more affordable property without the new build premium, and with all the extras already paid for and installed and perhaps even under the stamp duty threshold. Thus driving down our initial outlay and long term mortgage costs? Maybe.

I'd still be terrified I'd made the wrong decision and passed up this opportunity because as it stands on paper we could afford it (as long as rates don't go through the roof) and it's anybody's guess as to how the property market will stand in a years time.

As you can probably tell. I'm still no further forward on a decision, hah.

dawyldthing

property prices aren't rising, many are overvalued and the more savings you have the lower the mortgage rate and the less the mortgage will be