What is the most we should mortgage

nufc_fan

Bit of advise please. 27 currently renting withy partner, both have good jobs earning a combined £110K, currently have £25K saved up and starting to look for a house and mortgage. Currently saving approx £1500 per month at the moment.

Struggling to know where to set out limits price wise, One part of me says to keep smaller and keep the payments down but on the other had I dont want to but something then want to move again 3 years later.

We had thought max of £250K to avoid the stamp duty rise however most of the property that we have seen and like is nearer £300k

arbrighton

You currently have less than 10% deposit of the value of properties that you like. Most mortgages offer better rates for 15, 20,25 % and upwards deposits. At the rate you are saving, you can reach £30k by September approx and if you wait 12 months, would have 40k plus, which will make the amount needed to borrow smaller, and possibly better rates.
3x combined income is about what you'd be able to borrow, but you probably wouldn't need to, and the more you can save now, then overpay after purchasing, the better off you will be long term.

hazyjo

Agree with above. Wait another year or so and save, save save.

I would buy for the long term wherever possible. Definitely don't buy too small. Think long term!

Jx

Vampgirl

With a bit of hard work we'll be in a similar position as yourself in a year's time (though with slightly less income) and face the same decision.
Either we buy a 3 bed identical size to the house we are currently renting which would be around the £250k mark or we go for something bigger around £350k.

Whilst I much prefer the thought of a small mortgage, I actually think the more sensible option is to go for the bigger house as we already know that the 3 bed is really too small for us and I don't fancy the hassle (and cost!) of moving again in a few years. So my vote definitely goes for the long term option. It does mean that we will have to save longer/harder to get there though. In the meantime I'm already monitoring the market (asking and sold prices) and working to make sure our credit files are as good as they can be so that no matter what size deposit we eventually have, we can be sure to get the best deal at the time.

nufc_fan

Thanks for the advise. Its difficult to know when to take the leap, as we could always say save more for a few more month but I think once you have more saved you start looking at more expensive houses. I think perhaps we should stick at the saving until we have £40K then seriously look.

SecondTimeBuyer

I personally wouldn't buy anywhere with less than a 20% deposit. If there was to be a drop in the market if you have 20%+ equity in the property at least you have a 'buffer' to prevent you from going into negative equity.

Also don't worry if house prices do drop a bit, if you are not in negative equity you will still be able to move and say your house drops by 10% your next purchase is likely to have dropped by the same amount!

Another thing to consider is that interest rates are only going to go one way. Work out what your payments are going to be like at 7% or 8%, as if you can't afford them at that rate you can't afford the place you are buying.

GDB2222

I think you should work out your finances and new housing on the basis that you start a family fairly soon, unless you are both dead set against that. That will mean more expense and less income. Unless you believe that house prices are going to take off again big time, I suggest buying somewhere that will be adequate to bring up your family, rather than going for something bigger and more expensive than that. Try to work out costs allowing for a hike in interest rate.

R_P_W

I obviously dont know much about your personal circumstances, but with a combined salary of £110k a year, are you not able to save more than £1500 a month? That way you could quickly get to a better LTV ratio on mortgage.

I would think the payments on a mortgage on a £300k ish property you would manage comfortably as well - which is obviously good.

Myself and my partner currently buying a property in London (so nothing massive at these prices). We were not able to wait another year to save, but we managed to get together 15% deposit (less than we would have ideally liked), but we have budgeted to make significant overpayments each month - so if all goes to plan in a couple of years when our tracker period ends we will have got down to the 75% LTV ratio. Worth considering maybe?

shiny76

nufc_fan wrote: »

Thanks for the advise. Its difficult to know when to take the leap, as we could always say save more for a few more month but I think once you have more saved you start looking at more expensive houses. I think perhaps we should stick at the saving until we have £40K then seriously look.

Presumably you are renting at the moment? If so, then bear in mind you're continuing to pay off someone elses mortgage (or adding to their savings) rather than paying off your own!

nufc_fan

Thanks

£1500 per month is a comfortable target, we transfer that into savings automatically then add what is left at the end of the month, which is resulting at around £2K but some big expenses such as Car Insurance etc recently.

Good point about the continuing renting, obviously we dont want to do this forever and would prefer this to be paying off our mortgage.

Looking at the mortgage options incliding Offsets as other half is self employed so has a fair amount of cash in savings at anyone time for tax purposes etc.