£75k flat on £18k salary?

typeractive

Hello all,

I am in need of opinions. I like the people and varied advice on here, so if anyone can please help that would be super.

I am a FTB, and I have pretty much fixed my aims on getting a flat. As I am on my own and I want some flexibility in the future (I may take a year out and would like to be able to rent the property out. I think renting a flat would be easier to manage....I could be wrong? ).

I earn 18k at the moment.
I have a deposit of upto around 15k. (bearing in mind this is all my savings)
I don't have any loans except for a student loan.
Car is paid off.

Originally I spotted a flat for 105k....but it was just way out of the picture.
Then my aunt's property has came up for sale. It is valued at 64k, though I reckon it will be around 6k/7k to get it how I want (GCH/new kitchen/all rooms decorated etc) I would buy this instantly if it was not for the location - it is a wee way out of the way. ....The lease is 64years aswell.

Tomorrow (Wednesday) however, I am going to visit a new development area. It is in the heart of the town centre. Not even completed. There are 20 flats from 75k to 180k for sale. Obviously I am looking at the lower valued flats. The guy is taking me on site tomorrow, which I am quite excited about - as I thought when i found them, they would all be snapped up already! I have driven past the block a couple of times now, and it looks like a nice new hotel in many ways. I have my own issues about looking at this: could I live in a more 'communal' area, similar to university etc? The great thing about the development is the location and the fact that everything will be brand new with a 99 year lease. This would making renting much easier in the future if I decided to take a year out. It would be very desireable to a lot of people I think....well I hope!

So....why am I posting? Well I am looking at the possibility of the repayments on my salary etc. I would like to go repayment, and probably looking over 35years.

Taking into account if I bought my aunts flat (64k...maybe even less if she dropped the price for me by a grand or so) and spent approx 6k in refurbing it and installing gas etc. Then we'd be lookign at around £70k anyway. So I would need to find finances for £5k. Which by the time I move in, I could have possibly saved up another 1.5k maybe? (guess that depends on how long to complete development and sort out my finances).

I have to remember that the cost of buying a house also includes the initial costs - I have no ideas what these are! What is the process of buying a house? Who will I have to pay and what? I know I am stamp exempt as of the threshold, but otherwise I don't know what costs I am paying and what I get for it. These will all come out of my savings.

I would like to get a mortgage of around the low £300's a month. Thus meaning if I leave at all, someone will be able to cover my mortgage by paying the rent.

Any suggestions on how I should spend my money?

The prices are 'from' £75k, does anyone think it would be worth me making an offer of below this? They are new builds in a good spot, so I think they will probably sell - but maybe not the 3 bedrooms at £180k, I don't think many people would want to pay this.

I have to let my aunt know at the end of easter, and she has already been very patient with me. Obviously after viewing the flat tomorrow I may have more of an idea with my heart than my head.

Sorry for the long post - I am notorious for them these days! lol

Thanks all!

typeractive

anyone? :S

toonfish

the borrowing will be easy, but you'r not going to get it for £300 unless you go interest only. With new build they will often do a deal and "give" you a portion of the deposit but they are generally higher priced at outset.

My advice would be to pick whichever one you would most like to live in, and not worry so much about the cost.

New build is easier to let maybe, but possibly harder to sell on.

typeractive

toonfish wrote: »

the borrowing will be easy, but you'r not going to get it for £300 unless you go interest only. With new build they will often do a deal and "give" you a portion of the deposit but they are generally higher priced at outset.

My advice would be to pick whichever one you would most like to live in, and not worry so much about the cost.

Hmmmm - well I don't really want to go interest only . Though I didn't know about giving me some deposit? That sounds good (I know it's obviously wrapped up in the price there somewhere, and just a marketing ploy....ya don't get anything in this life for free - certainly not in property). However if they give me money towards the deposit, and I combine my deposit, then maybe I will get the price down somehow.

toonfish wrote: »

New build is easier to let maybe, but possibly harder to sell on.

That's interesting. I would have thought it would be easier to sell a new build property? Do you mind if I ask why you think that could be the case?

When I go to see the site manager today, should I ask if they will put forward a deposit? With regards to the prices, am I best to just check the prices and then make an offer at a later point (if I make one)? I am thinking this is best, as I don't want to be too hasty I guess.

Thanks very much.

mobilejo

Newbuilds seem to suffer price crashes - usually because they're over priced to start with, then investors buy a huge chunk and attempt to rent them out or sell them on, flooding the market with lots of properties on the same development - the competetion can mean you have to be willing to take less than you expect to get yours sold, as the buyers have so much choice.

If you have a strong stomach, go to https://www.housepricecrash.co.uk - but take what they say with a pinch of salt, they're very bitter people on there. You will find out why new builds can be hard to shift though.

Miss_Penny_Pincher_2

Hi typeractive!

A possible reason for new builds being slightly harder to sell on could also be because people will more readily pay the premium for a lovely new home fitted in the latest style. When the buyer comes to sell it in 3 years or so it won't have quite the same appeal. Where I live these types of flats that are around 3 years old or so have still risen in value and cost more now than what they were bought for but they aren't selling for quite as much as the new new build flats that are now springing up.

Using a deposit of around £12k (keeping £3k aside for fees involved with purchasing the flat, savings etc), on a £75k property you would be looking at a mortgage of £63k. If you took a repayment mortgage out over a 35 year term with an interest rate of 5.5% this would cost you just under £340 a month. If the mortgage was set at a 25 year term then payments would increase to around £387 a month and you would save around £26,000 in interest payments to the bank/building society!

The key initial costs involved with buying a property are:

- legal fees including searches which your solicitor / conveyancer will include in their bill. This will be altogether somewhere around the £600 mark.
- mortgage fees - depends on the mortgage but can include arrangement fee which can usually be paid up front or added to your mortgage. Varies - ours cost £399 for a 2 year fixed rate but the average price has now risen even higher!
- basic valuation fee - usually expected by mortgage company. Again costs vary but looking at £100 minimum. As it's a new build property you probably won't require the more in depth homebuyers survey as the flat will have a NHBC 10 year guarantee with the property.
- moving fees unless can use a car / mates van.

You are right that there are some lovely people on here... Please let us know how your viewing went!

RedTomato

Do be very careful about buying a brand new flat. As the poster above said, they often don't keep their price very well. Also, be wary of the salesperson when you look around, they are there to sell.
Other complaints about new build tend to be low rates of owner occupancy which can lead to tenants not looking after the building well and also that flats are very small (try to get a floorplan so that you can compare price per square foot).
One thing you must factor in when buying a leasehold flat is service charges, it will be difficult for you to judge how they might turn out with the new build (are they guaranteed for any length of time?). Remember if the building has a lift for instance that these are expensive to maintain.
With your Aunt's flat you'll be able to know how much was spent over the past years on service charges and what has been done, that will help you budget for the future. Good luck!

typeractive

Hi guys,

Thanks very much for the responses. There has been a bit of progress. I have been to view the new flats.

There are 3 potential flats inside. They are all 1 bed. Asking prices start at 75k and varies upto 85k. Each have pro's and cons.

1. Basic flat - 75k. Cheapest of the lot. Open front door and straight into the living room. This space shares room with the kitchen - not seperate. Bedroom to the left, of the living room, shower to the right (no window in bathroom). Next door neighbour door is close by.

2. Medium flat - 77k?. Directly above the basic flat. Same layout. Better view as higher up. No next door neighbour, for some building reason.

3. Higher priced flat - 85k. This one is next door to the basic flat. However when you walk in, there is a hallway. This dog legs round the flat. Bedroom on it's own, then continue round to the bathrrom, and end up in the living room - again the living room has the kitchen built in. There would be nobody above this flat, because of the building regs. Certainly more space, as it has the corridor, but some would say this is 'dead' space. The other flats felt more 'airy' but this one felt more secluded. Oh it also has a bath in it I think - the others just have showers (shower would be above the bath).

The sales guy said to me, that basicallt take any flat and knock around 5k off it - that is what they'd be willing to accept. Now as stated before I never believe sales guys, I don't mind being ripped off when I know it, but hate it if taken for a mug. This guy seemed pretty straight up. Telling me to view other places, think it over hard. Took me up and down a fair few times.

The things that put me off the flats are their size of living quarters. The fact that the kitchen is in the living room. If I was cooking it would stink the room out (even though it has 2 windows). I could seperate it with those smoked glass walls - that may help.

They have very little storage area.

Logically it would be my aunt's flat in terms of size for size and layout etc. It has a seperate kitchen, loft space for storage, it has cupboards and stuff. Also I have thoughts of making the flat quite interactive with technology, network my stereo through the house with speakers / projector for films and stuff I wouldn't be able to do this as neat and tidy in the new ones, as the plastering has all been done.

In speaking to some friends whose opinions all count I said: "it's such a pain to think of what to do - I don't want to make the wrong decision" they all said: "there is no wrong decision" ...which I found quite reassuring in a way. And I guess they are right to an extent. It's more of a choice as to where I will be happy to live. Getting on the property ladder is a good step. Incidentally my aunt's flat is also cheaper from teh outset and even including building costs ***should*** work out cheaper also. However watching Sarah Beanies' property ladder - nearly everyone gets the budget wrong lol!

Pro's and cons to them all.

RedTomato

The way you describe it, your Aunt's flat sounds the better deal all round but if you really don't want to live in that area then maybe you have to just keep looking to find the right flat in the right area?

Lack of storage space can be a big problem with flats quickly becoming cluttered.

As for the kitchen, personally I don't like this trend for "open-plan living". The initial idea was that today's busy people don't have time to cook so it is more sociable to have an open plan living area. However, as you say, the smells get everywhere. Also, if you want to have a lazy couple of days and let the washing-up pile up a bit you can't get away from it if it is in your living area.

As the future for house prices is very uncertain, if we do get into a period of price falls, you may have to stay in your first flat for a while until the cycle works through so you have to think which one you'll be happiest in if you aren't able to move on for a bit.

If you want to get onto the property ladder now to enable you to move up in the future, buying a new build that doesn't keep it's value could be worse than just renting and saving hard.

As for the price of doing works - yes, it always seems to work out a lot more than the budget!

typeractive

RedTomato wrote: »

The way you describe it, your Aunt's flat sounds the better deal all round but if you really don't want to live in that area then maybe you have to just keep looking to find the right flat in the right area?

Yeah. A very good point. I think I will struggle to find anywhere else though. I would like to ideally stay in my home town. The surrounding villages and towns all have bad names (well I'm sure the one I live in does too) however I know the territory well. My Aunt's flat is in a very nice area. Small village with a few amenities and a nice church. It's quaint. I will not be able to afford a house in any area I would like to live but I am realistic and I have came round to the idea of flats and I think it would be much easier for me to manage and also perhaps even save money up for the future still....I hope!

Lack of storage space can be a big problem with flats quickly becoming cluttered.

Yep!

As for the kitchen, personally I don't like this trend for "open-plan living". The initial idea was that today's busy people don't have time to cook so it is more sociable to have an open plan living area. However, as you say, the smells get everywhere. Also, if you want to have a lazy couple of days and let the washing-up pile up a bit you can't get away from it if it is in your living area.

Good point. I think it's important (for me) to have seperate rooms. or at least have them 'hidden'...ie. I don't want to be able to see into the shower room, from sitting in my bedroom looking through the living room. It provides no place to 'hide' myself.

As the future for house prices is very uncertain, if we do get into a period of price falls, you may have to stay in your first flat for a while until the cycle works through so you have to think which one you'll be happiest in if you aren't able to move on for a bit.

If you want to get onto the property ladder now to enable you to move up in the future, buying a new build that doesn't keep it's value could be worse than just renting and saving hard.

As for the price of doing works - yes, it always seems to work out a lot more than the budget!

Thanks for the responses. Talking with others helps me to pull ideas out and think about them whilst typing. It really is helping me. My friends are fantastic, though I think they are scarred of saying what they really think in certain ways. It's horses for courses as they say = and at the end of the day only I can decide....until that day I will thrash the idea out as much as I can!

drummer_boy_2

I have to remember that the cost of buying a house also includes the initial costs - I have no ideas what these are! What is the process of buying a house? Who will I have to pay and what? I know I am stamp exempt as of the threshold, but otherwise I don't know what costs I am paying and what I get for it. These will all come out of my savings.

Try the following link https://www.archdale-ifa.co.uk/conveyancing.htm and get a quote, this will detail the costs for you and hopefully help you to understand where your money is going