Buyers: how far did you stretch your budget when buying home?

sterl1ng

Although I can borrow more from lender I don't want to go max which would make it around 210 I could get a place for. I've told myself to go no higher than 190 on a place, especially as rates are low (getting a 85% LTV) and could change anytime but then it leaves me with not as much choice in 2 bed properties I want in the croydon (east/south) areas which would be ground and garden.

I wondered if anyone is playing it safe like me and thus waiting longer for the perfect place OR are they going with max the bank will lend them plus their 10% or 15% deposit?

TMC35

Hi, I have been asking the same question myself as in a similar situation.

The advice I have received from everyone I have spoken to is that providing you can afford it of course, try and get the best house you can even if it costs a little extra as its very expensive to move especially in the short term.

Clearly it has to be financially viable though, so if you can't afford anymore than £190k then that's what you should stick to.

sterl1ng

Looking at the monthly mortgage payments its more than affordable though 140 more to what I pay now on my 1 bed garden maisonette in east london but my rent is very very cheap plus i'm looking to get a 2 bed property. I would love a house so its all mine without the hassle of leasehold. I guess really watch this space and if I have 15% then for the 210k property then perhaps look for that. I just don't want to go crazy tbh. See how I feel.

moreofthegoodstuff

I could borrow up to 126k but the rates on the 95% mortgage I was going for meant the repayments were around £650 so went with a 108k property with repayments at £550, the £100 difference will help with the extra insurances we need. I was amazed by how little extra we needed in terms of the deposit to get the 126k property but it's the repayments that can be the issue. I would try and go off what you are paying now in terms of rent or mortgage to see how high you want to go.

sterl1ng

well at the mo I'm paying 610. For a 190 2 bed place that would go up to 747 but if I got say a 205 2 bed place that would be 804 a month using the nationwide 85% LTV. So from 1 bed 610 to max 2 bed 840 that's nearly 200 increase. Its affordable but I did say to myself when property hunting that I didn't want to go above 750 on mortgage as I want much more to play with after everything.

thedalmeny

Based on my salary (Not including my 8k yearly bonus) and my wife only earning 7k a year (Part-time currently before she goes back into teaching) we are lending a good 60k less than high street banks would be willing to lend us.

Our mortgage repayments will be £712 a month. (We have zero debt elsewhere, also just bought a new car so no major expenditure coming up)

We are getting a 4 bedroom detached home (new build) at around 1300 sqft, we have 1 child who is 3.

I personally didn't see the need to stretch beyond that, sure we could of gone for a home at 2000 sqft and it would be perfectly affordable for us now.. But i like to have disposable income..

What happens if interests rates begin to creep up? You have to ask yourself not only "Is this house affordable now" but also "Is this house affordable *if*".

Even though i know i'm due for promotion soon, have 8k bonus unaccounted into my affordability, that my wife when going back into teaching (In yeay ear) will jump from 7k to 24k and that my son will be going into full time school from September removing childcare costs.... It's still best to be prudent i feel. Then again, i'm buying a house that is big enough to raise a family with 2 children comfortably. I may have a different opinion if in the area i live i couldn't afford that without stretching slightly.

Our current thinking is we *May* upgrade the house in 6 years to something around the 2000 sqft mark if everything is going swimmingly. Then use the extra disposable income from wife working full-time into a second property which we let out.

Then again, i have colleagues who mortgaged themselves to the hilt and took a chance and it worked out very well for them.

moreofthegoodstuff

How much are you managing to save each month at the moment towards the deposit? (after your usual bills)

We are saving £400-£500 so we said we would go for a mortgage repayment that was not much more that £100 more than our current rent (£500) that way we won't have any issues if the utility bills are slightly more, can get decent life/cic cover, boiler cover etc and also still be able to put away £250 for the just in cases. Don't stretch yourself too far as you don't know what might happen when you're in the property, it might end up needing a new roof etc and you don't want to put yourself in a position where it's all going towards the mortgage.

sterl1ng

After all bills I put in 1k a month away. There are times though in the past where I have dipped into it a bit to treat myself but since this year I've been more focused to reach 15% which i'm there now and my thought process is to go no more than 750 a month on the mortgage as i'm looking to upgrade to 2 bed garden flat so the 140 increase on month is understandable.

I will still have a decent disposable income after that but I'm thinking of getting a lodger for other room which will pay well into mortgage as well as saving for kids/'rainy day' fund.

Hopefully, if my plan comes into play by end of 2yrs of mortgage I am paying a lot less when renegotiating new rate.

I think me being me (too sensible!) I'll just look at 190k 2 bed property and be patient. That way at least i'll have more savings each month which can go to bits for flat but also rainy day/baby fund

japmis

I was restricted by my 10% deposit rather than my salary.

When working out how much you can afford, your mortgage payment shouldn't be more than 1/3 of your take home pay e.g. if your take home pay after tax is £1500, then your mortgage payments shouldn't be more than £500.

Hope this helps.

sterl1ng

That's a good way to look at it thanks for that. So that sounds about right as I pay under 1/3 currently with rent.

nakiwala123

I had told myself that we would not borrow the maximum the bank would lend us but in the end we did when we found that pushing our budget a tiny bit further we could the 3rd bedroom. The repayments are still affordable leaving us with about £550 to save after other bills and expenses. We have got the best house we could afford and hopefully whatever the future brings we can stay there a long time and not feel too stuck in a tiny 2 bed house. Our repayments are going to be 41% of our net salary.