Mortgage affordability

adele9365

Thanks michelle that is what I am thinking too. There will be much more than meets the eye when we come to actually buying a house I'm sure.

I am very wary of overstretching. The sad part is that where we live there seems to be a massive gulf between houses priced around the 130k mark and cheaper ones. It feels like a choice between stretching ourselves for a nice house in a nice area or settling for a small house in a not so nice area. There doesn't seem to be a happy medium.

Reactor_2

adele9365 wrote: »

Thanks michelle that is what I am thinking too. There will be much more than meets the eye when we come to actually buying a house I'm sure.

I am very wary of overstretching. The sad part is that where we live there seems to be a massive gulf between houses priced around the 130k mark and cheaper ones. It feels like a choice between stretching ourselves for a nice house in a nice area or settling for a small house in a not so nice area. There doesn't seem to be a happy medium.

I think you answered your own question. You are over-stretching yourself.

When I bought my first flat a few years ago, I used 3.5 times gross salary and that was a stretch. You'll definitely need to factor in costs of decorating and furnishing the place, stamp-duty, solicitors fees, mortgage fees and a potential shortfall should your mortgage lender value your property lower than the price you are paying for it.

Contrary to what everyone says, buying property is high-risk. I will also side with the accountants that property is a depreciating asset. I would definitely make sure in your mind that this is what you want. I don't want to ruin the party too much, but you might also want to agree with your partner what happens if you both fall out of love, in regards to your home.

Good luck.

curlygirl1971

I know this isn't any help but I went for the small house in the not so nice area - because it was what I could afford. I've regretted it ever since but there again I'm not sure I had an option back then. After almost 10 years (and this is on a single income) I am however in the position where I could move somewhere a little nicer

You know what they say - better to buy the worst house on the nice street rather than the best house on the worst street.

As for expenses - start by what you can't live without and add a contingency. All the other things will have to wait until you can afford them. When I bought mine I had no furniture of my own - I found a factory seconds shop and bought everything from there - half the price it was in the next catalogue

One of the other things I did for myself was save up in advance for expenses such as my Insurance - its cheaper than paying it monthly. So every year when I buy a new policy, I start saving up for the next one - obviously the first year was the hardest.

In terms of what mortgage you can afford based on your salary - obviously that iis a hard one as there are so many variables. One wa of lowering your monthly repayment is to extend the term - just because you take out a mortgage for 30 years doesn't mean you have to use the full 30 years to repay

Have you spoken to a Mortgage Advisor? Of course it's their job to sell you a mortgage but you can also get a good idea of what's what from them

The_J

I would stretch myself also otherwise you might as well rent. As Mario Balotelli says, "You only live once".

If 3.5x income is a stretch then you're spending too much on crap.

Buying a property is not high risk in the slightest. God, it's a wonder you even get out of bed in the morning. Investing in Argentina is high risk, flying Chinooks in Afghanistan is high risk, buying something that you will use every single day that is very likely to increase in value over the next few decades is extremely low risk.

lee_w

i am borrowing 121k with joint income of 30k, putting down 22k deposit, affordability not a problem for us, we live comfortable, we will be paying £100 less on the mortgage than we were rent and coped fine renting, we also have a 2 year old but no outstanding debt or credit

adele9365

lee_w that's good to know. So you guys think I am overreacting? Of course I may be more worried than normal because I've never even rented before. I will be moving out of the parents home where I have very little outgoings (thanks to this we've saved our deposit).

Thrugelmir

The_J wrote: »

, buying something that you will use every single day that is very likely to increase in value over the next few decades is extremely low risk.

Speaks someone that's never experienced a down turn.

shortchanged_2

The_J wrote: »

Buying a property is not high risk in the slightest.

No it's not as long as you are prepared for any potential shocks.

Basically do your sums and you know if you are stretching yourself or not.

Reactor_2

The_J wrote: »

Buying a property is not high risk in the slightest..... buying something that you will use every single day that is very likely to increase in value over the next few decades is extremely low risk.

Here is a question for you. Why would you pay more for my property than I did and hence making me a profit at your expense?

Horseunderwater

Look up actual council tax banding for your intended property - the vendor pack should tell you that banding is probably around the b-c range I'd guess. You can find out that cost at least from local council web sites.
Ask vendor how much they spend heating the house and running electrics and how much actual water bill is. Vendor should supply details as they want to sell up.
Certain bills have to be paid and council tax is one of them. Jail can result if left unpaid, and bailiffs and high charges have to be considered sometimes.
Be practical. Furniture - freecycle or freegle groups can be good ways to get used stuff free, save it from landfill sites - it can be used until you can afford to buy either new or better 2nd hand stuff. All you need to do is arrange collection. Even seen full cans of paint on offer, so decoration can be fairly cheap too.
Finally, use the 3.5 rule to calculate your mortgage but use an interest rate of 16% and see how bad it could get. We did have rates that high under tories in the 1980's and economy was just as it is now - high unemployment rising all the time. Could you pay the monthly SVR's repayment each month. Fixed rate mortgage for 3-5 years might be better option? All things to think about.