Taking the biggest mortgage i can out

motch

dotdash79 wrote: »

The thing is what if you buy a place and you discover that you need to do major works in the first couple of years. How will you afford that?

I've worked with someone who was living close to the edge and they had one little thing crop up (broken bolier) and it snowballed to them being made bankrupt and losing everything including job.

as an anecdotal a relation of mine had to fork out circa 3 grand for a new oil-fired central heating a couple of years ago, so make sure things like these are factored in whilst adding up the renting v buying figures.

shortchanged_2

motch wrote: »

as an anecdotal a relation of mine had to fork out circa 3 grand for a new oil-fired central heating a couple of years ago, so make sure things like these are factored in whilst adding up the renting v buying figures.

This is the problem with many of the property rampers on here. They will often swear blind stuff like this doesn't happen. And whilst I am not saying they are common place, these things can and do happen. So it is wise to be able to have a contingency for these events.

EvilJaz

Indeed these things can happen and definitely should be taken into consideration.

Car issues, boiler issues and anything else that could go wrong. I had always planned to put £5,000 initially aside as an emergency fund which will be topped up £300+ a month. I know it's not a lot but should cover most issues?

That being could i not do this:

If my £5,000 nest egg starts getting eaten to after a year or so. And its looking like i may have some financial issues.I could move back with my parents and rent the property out for say a year, allowing me build another chunk of savings (could i not wait till this time to fix some issues, say the roof needed work. To offset it against tax?)

Many thanks again

lippy1923

If your combined income is around £50k I would suggest looking at a mortgage of no more than around £175k. Don't stretch yourself. Think of all the extra interest you will pay back... that may be enough to demotivate you.

Me and my fella took our mortgage out for £140k nearly 3 years ago and our combined income was only about £2400pm after tax/pension payments. Although our LTV was slightly better (we saved £62k deposit) so we got a cheaper interest rate but it was still very affordable.

The only thing I would say is make sure you have a decent emergency pot in cash ISA's for that unexpected bill (car, boiler) or if you lost your job so you could still keep up with the bills. Don't even think about moving in before you have this in place! Aim for at least 6 months net salary.

EvilJaz

Thank you for the advice.

Thinking either go for a flat around 170k mark with the intention of selling in 3 or so years. By then my salary will be higher, and i will also have a far better understanding of the costs of everything.

Will allow me to build up some equity. As i will be able to get a 85% LTV mortgage. Which will help in the future move.

motch

EvilJaz wrote: »

Again many thanks for all the advice.

I'm trying really hard to try not rent as it's would cost the same and i would at the end of it have nothing to show for it.

In an ideal world i obviously would like a lower mortgage. But to get anything worthwhile 240k+ is the absolute minimum that you need to spend in my area.

I'm thinking just go for it, it will be tough but in the long run i believe it will pay off. Worse case scenario i could rent it out? and in my area it would go for more than the mortgage is. Any major issues, such as broken down car i do have the privilege of the bank of mum and dad.

How much is the rent in the area for the said £240k ish properties?

EvilJaz

Absolute minimum would be £1,100 per month.

On a side note on a 240k mortgage. The mortgage payments would 36.5% of our intake assuming a 5 year fixed. Is that really that high? assuming we have no other debt

motch

What sort of mortgage rate are you getting? sounds like around 2% going by your repayments.

Over the term of the mortgage likely to be higher than 2%

bodmil

EvilJaz wrote: »

Thank you for the advice.

Thinking either go for a flat around 170k mark with the intention of selling in 3 or so years. By then my salary will be higher, and i will also have a far better understanding of the costs of everything.

Will allow me to build up some equity. As i will be able to get a 85% LTV mortgage. Which will help in the future move.

Could you not rent a room/move home or share a house in those three years? It will fly by! I bought my first flat last summer and have done nothing but fork out on it since! First the heating was a bit funny, then it was a new boiler, then the gas cooker was leaking, if I wanted a new cooker I'd need to upgrade the electrics, then if I wanted a fitted cooker I'd have to re-do the kitchen... then there's simply painting it so it's acceptable to look at!

It's only made worth while as now I am renting the spare room to start making up for it all but otherwise I would be a long way off making any profit on the place.

EvilJaz

Motch, what repayments are you basing that off?

I did make an error in my previous post, the house value is 240k. The mortgage would be 215k.

I think i was going 4.44% fixed for 5 years.

The renting the room is a good option i guess for a year or so could ask around if any friends were interested. Is there any good websites where i can find out some more info about renting out the spare room?