Affordability

caeler

I'm after some advice/opinions. I'm considering moving house and I just can't get my head around if I can afford it or not. It is such a big commitment and I'm single so it is all just on my income. My current home is very small yet affordable but I've been feeling it recently along with noisy neighbours! This new property is much larger and I would be able to grow into it.

My existing mortgage product can be ported, I am eligible for further borrowing and the new house is just within an 80% LTV so I can get an okay rate which is the same as current borrowing.

My monthly income is currently spent as follows: 30% on bills and mortgage, 16% for groceries and spending money and 54% is saved.

The new house will deplete all my savings and my monthly income would change to: 45% on bills and mortgage, 16% for groceries and spending money and 40% saved.

This is quite a big change. Hopefully my salary will continue to increase and after a tight first year I would expect to have rebuilt some savings so I can start to overpay the mortgage. It feels a bit scary swapping a £100K mortgage for a £170K one.

I know only I can make this decision, but does this sound affordable? What else do I need to consider?

ReadingTim

Bigger houses tend to cost more to run (heating, council tax etc) - have to taken that into account? And does the new location mean higher or lower travel costs to work?

You don't sound like you're stretching yourself too thinly, plus as you're single, you can afford to take more risks than someone with a family to support might want to, so I say go for it!

Finally, it's probably quite a good time to be buying, so get yourself a deal! Conversely, it's not a great time to be selling, and it sounds like you're in a first time buyers type of property - and there aren't that many of them around just now! You probably need to have a realistic think about selling the current place before buying somewhere else...

I-love-a-bargain_2

I say go for it too! If you can afford to save 40% even with the bigger mortgage then I don't think you're overstretching yourself. Don't forget to check out the new neighbours first

caeler

Thank you for the opinions so far! I have factored up the utility costs but might need to be more generous although there still is only one of me. Council tax is much more expensive so I have calculated it over 12 months just to give me some room to breathe in the first year.

The house is a newbuild in the street next to where I live, I bought new build 2 years ago and plan to part-exchange. 2 years ago I couldn't quite stretch myself, but 2 years worth of saving now makes the ideal home possible! Initial figures seem acceptable, however I'd want a further reduction on the property to make the loss on the part-ex palitable - the game has already started! I suspect they already have investment buyers lined up to buy my home which is indeed a first time buyer starter home style property.

Fire_Fox

Percentages are not the key, 10% of minimum wage is nothing whereas 10% of a £100K salary would leave you rolling in it. Complete a Statement of Affairs - you can find the template on the Debt Free Wannabe board. Don't forget you need three months mortgage payments set aside in case of illness, injury or redundancy from day one. Also consider whether you can or would take in a lodger for tax free income if things got tight.

caeler

You make an excellent point Firefox about the 'buffer zone' which I would not have until I'd started saving again so I'd be vunerable for a few months. The 40% equates to £1000 and I've managed to live off the 16% alloted for general spending and groceries quite comfortably for the last 2 years. I absolutely could take in a lodger great suggestion if I find I'm struggling, although it would not be my first choice. Thank you.