First time buyer - Deposit but what now?

spenceeyftb

Hello all,

First time poster long time reader of the forums. I apologise for the length of this thread!

I'm keen along with my wife to own our own house but not sure I know exactly what I'm letting myself in for.

To give you an idea we've got roughly 25k saved. We earn a combined salary of 32k live in Norfolk and would ideally like to live around Norwich.

I would consider us young as FTB (22+23 respectively) not sure if that makes any difference though?

At the moment we are living with parents so able to save a lot (in terms of salary) each month. Saving isn't something we find hard, both of us saved a lot whilst renting to afford our wedding - we then spent another 4 months living together and decided to move home in order to save for our own house.

So that's the story so far.

Now we are in the situation where we can start looking (exciting times I hear you cry!)

But this is where it gets hard (and sorry if it doesn't make complete sense, I'm not sure if it does to me!)


How much house should we really be looking to purchase? I'd ideally like a 3 bed just so we have a little more space and if children do come along we don't have to panic move straight away.

Do I stretch myself in terms of borrowing or go towards the bottom of my budget?

We've already decided to both live near the city to keep down commuting costs I can cycle (one of my loves in life), Mrs. spenceey then has a short drive to work.

Interest rates are at a all time low at the moment which makes things affordable for us but if they shoot back up I'm worried that we would be forced to leave the house we love as we'd be unable to afford it.

Sorry for the ramble now on to my last point -

With the economy in a complete mess at the moment and no signs of growth is it really a good time to be buying? Example, we purchase our house and prices drop. We are either forced in to negative equity or realise we could have brought a lot bigger house if we had waited.

I'm not sure if we should pocket the 25k and move back renting to a small flat/house that doesn't cost much. It's not ideal but could be better in the long run, we could still save a few hundred a month this way too.



As you can see I've had a hell of a lot to think about and it feels good to have this all down in writing.


Look forward to your wisdom guys.

Thanks.

BoracicLint

I wouldn't worry about your age, it doesn't make a difference unless you have only just started working and so have little job security.

The best thing to do is take a look at a few lender's websites, most have affordability calculators which is a good place to start, and what sort of property values to start considering.

Congratulations on saving a decent deposit, I'm in the process of buying my first house at the moment and am only putting a 5% deposit down, but in your position you should be able to get a much better rate by putting up a higher deposit. (depending of course on the value of property you go for).

You should be able to get an idea on what the repayments will be, once you've decided what sort of price range you are going for and how much deposit you hope to put down. (again, check lender's websites at first or see a broker to get an idea of rates and typical repayments).

You should complete a budget (lots of these automated forms available on here and other sites) to calculate your outgoings and determine what you can afford on a monthly mortgage repayment.

On the subject of interest rates, you can offset the risk of rate increases by choosing a long fixed period. This will allow you the extra peace of mind that your repayments won't go up in the short term.

With regards to your last point, nobody can really tell you if it is a good time to buy. It will always be a gamble, but the reality is at present it is cheaper to buy than rent so on that basis I would say yes it is a good time to buy, and the main reason I decided to buy at this point in time. Is there a chance that property prices will fall further? Yes - but if you are buying a house to live in (and not an investment) this shouldn't bother you too much in the short term.

harvey115

You could be looking at borrowing between £120K and £150K. With your deposit you will be around the region of 20% to 15% accordingly. So you will have access to good interest rates and be able to choose from a list of lenders.

I am not sure about housing market were you would like to live, but if the numbers above look realistic for your new home you are in a good position.

If you are not sure about the whole process and are slightly cautious, I would suggest you get in touch with a good mortgage broker to help you through out the process. I have just purchased my first house with this approach. Ask family/friends for a good recommendation or maybe an adviser from the forum working near you could be able to help.

Hope this helps.

spenceeyftb

Thanks guys - looking at it 150k is our top really and is around £650 a month. I don't want all my money accounted for before I've earned it if that makes sense?

I've got together a spreadsheet which accounts for everything outgoing and at the moment it's well in the positive - which is great.

If we have a child I still believe that we won't be able to live on one salary but I'm sure we will work that out before it happens!

martinsurrey

If you buy a place that you love, as a house and not an investment then you have nothing to worry about.

I think you are 100% right to go for a 3 bed house over anything else, they hold thier value best and will give you space to grow without being to big for you now.

when looking for houses, use your head, but dont forget that its a home, and its worth is more then just £££.

I for one would go for it!

spenceeyftb

Thanks - for us we want a place where we can grow as a couple and have a family, which would mean not worrying about moving the minute we decide to have children. Which is why I really want to get as much property for my money as possible. We have seen some lovely places around the 160k mark but hopefully with some haggling we could drive down to the 150 mark.


Our other alternative was to rent for a little while with friends till we find a place we really like but I don't really think that's ideal for a newly married couple who want some space.


Or we could just end up at the other parents for a little while!!