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Advice for first time buyer

I'm alittle bit of a novice when it comes to buying so I am looking for advice to plan ahead.

Right now I live in a rented flat which I pay £550/month for, The purchase price for it is around £110,000.

At the minute I have around £16,000 (£5640 in ISA and £11000 in a savings account) in savings and save £200/week). Come December I should have £21000 at the my current savings rate. I can afford to increase by another £500/month without stretching myself too much so I figure realistically come December I should have about £25,000 in savings.

What I am not sure is weather to continue to save or what to do next. I'm 24 and single, I earn just over £40,000/yr and realistically I don't want to live in the flat for more than another 2 years although not going to totally rule this out. I suspect if I was to purchase it I would be tied here for a much longer period, the problem I am thinking is alot of the houses I would go for are out of my reach (Around £170,000).

What I can't decide is if I should purchase the flat next year and stay here for a year or two or to continue saving and cut my losses. I believe you need around 60/70% of the value to be able to let it out (There are lots of tenants available at the £550 rate for this area). Fast forward to say Dec 2014 I can get to around £40,000 but would this be enough to purchase say a house at £170,000 ? By that time I should also be able to add an additional £10,000-15,000 from my business if it would swing things although I would hope to not need this.

All in all I am just slightly confused at which path to go down and am looking for assistance so I can decide which to focus on and then achieve it.

Comments

  • Salary is most important when it comes to acquiring a mortgage, a larger deposit will give you more flexibility but your limiting factor will be your salary. From what I remember of the figures, 4 x salary is a reasonable amount to expect so for you that's £160,000 which should allow you to purchase a £170,000 because you've got >£10,000 cash.
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