Renting VS Buying - Will I even get a morgage?

Ladyshi

I finished my undergraduate and postgraduate degrees just over a year ago, and moved back in with family to help save money as I looked for a job in the relevant field. Now that I've got a more permanent job, I am dying to get my own space again but I'm not entirely sure what the best option is.

My commute is fairly expensive (around £400 - £600 pcm) and time-consuming, so I've been looking to move closer to work - but it's a fairly expensive area in Hampshire.

I've got some money in savings, but it's closer to 3% rather than 5-10% of a cheap flat or house mortgage for the area. I only bring home around £1000 - £1100 after tax each month, around £160 of which is spoken for in student loan repayments and phone contracts.

Rent is around £500 - £600 pcm in the areas I am looking at, with bills and travel still to add on top of that.

Friends keep insisting that mortgage lenders will only give up to twice your salary - if they will offer anything at all.

Does anyone have any advise on which is the better option? My transport is costing similar prices to rent, but I'm worried that by the time I add on bills and utilities, I won't be able to keep saving towards a deposit. On the other hand, the lack of space is driving me mad with relatives!

Thank you in advance for any advise.

Just to add -
I don't spend any money going on holiday, going out to the pub, nor do I have other personal debt.
Isn't the new government help to buy scheme based around the 5-10% deposit amount?
Is shared home ownership at all advised for a first time young buyer?

BitterAndTwisted

You're going to need a 20% deposit, or 10% as an absolute minimum, and there are few lenders willing to offer a mortgage with a mere 10%.

Mortgage-lenders can and do lend up to multiples of four-times salary but you will need a decent deposit all the same.

My advice would be to remain living at home for as long as you can bear it and save as much as you can, meanwhile as your career progresses you would hope that your salary will increase.

There are no short-cuts to home-ownership

HappyMJ

Your friends would be wrong then....mortgage lenders will go up to 5x your salary if your salary is high enough and your living expenses are low.

I would move much closer to work into a shared accomodation property and save as much as possible for the next few years....you can only do this by not going out....no holidays etc...in a few years time look at it again.

Renting is not that bad. It can be cheaper than a owning a home with a mortgage...remember if you own a home you need buildings insurance and you have annual maintenance costs you must pay yourself. If you need another bedroom yo either have to extend or sell...very expensive when you own. If you rent you just hand in your notice and find somewhere else....much cheaper.

BitterAndTwisted

What is that £500-£600 a month rent based on? At the moment it appears that your take-home pay probably wouldn't be enough to live independently. In a year or two's time this may not be the case.

Ladyshi

BitterAndTwisted wrote: »

What is that £500-£600 a month rent based on? At the moment it appears that your take-home pay probably wouldn't be enough to live independently. In a year or two's time this may not be the case.

The average studio to one bed apartment in the 1-5 mile area around where I work (so the affordable, commutable distance from where I work).

tiger_eyes

It may be that your best option is to rent a room in a shared house to keep costs down while you save up a deposit.

Ladyshi

BitterAndTwisted wrote: »

You're going to need a 20% deposit, or 10% as an absolute minimum, and there are few lenders willing to offer a mortgage with a mere 10%.

Mortgage-lenders can and do lend up to multiples of four-times salary but you will need a decent deposit all the same.

My advice would be to remain living at home for as long as you can bear it and save as much as you can, meanwhile as your career progresses you would hope that your salary will increase.

There are no short-cuts to home-ownership

I thought the new government scheme was for as low as 5-10%?

It's got past the point of bearing it, and the travel expenses are high enough that they are comparable to paying rent (only with added stress of travel) hence why I am trying to figure out if it is worth renting while saving, or trying to avoid rental if possible.

Thank you for the advise.

Ladyshi

HappyMJ wrote: »

Your friends would be wrong then....mortgage lenders will go up to 5x your salary if your salary is high enough and your living expenses are low.

I would move much closer to work into a shared accomodation property and save as much as possible for the next few years....you can only do this by not going out....no holidays etc...in a few years time look at it again.

Renting is not that bad. It can be cheaper than a owning a home with a mortgage...remember if you own a home you need buildings insurance and you have annual maintenance costs you must pay yourself. If you need another bedroom yo either have to extend or sell...very expensive when you own. If you rent you just hand in your notice and find somewhere else....much cheaper.

I've already got the no holidays and no going out part down - I wasn't one of those 'blow it all on a good time' students Not sure if I can remember my last holiday!

I hadn't thought of insurance; though I know that maintenance can be quite high. Thank you for the advise

Tixy

and the travel expenses are high enough that they are comparable to paying rent (only with added stress of travel)

How much have you been able to save a month towards your deposit?
If rent is comparable to travel costs then out of that monthly amount you had been saving you would need to pay council tax, utilities, water, food, basic living costs etc. Sounds like there would be very little left over to put towards building up any more of a deposit.

You could look at flatsharing/renting a room as a cheaper way to move closer to work, although you still don't have your own space, the same as at home.

19lottie82

Ladyshi wrote: »

I finished my undergraduate and postgraduate degrees just over a year ago, and moved back in with family to help save money as I looked for a job in the relevant field. Now that I've got a more permanent job, I am dying to get my own space again but I'm not entirely sure what the best option is.

I only bring home around £1000 - £1100 after tax each month, around £160 of which is spoken for in student loan repayments and phone contracts.

Hi I'm a bit confused here. What is your actual salary?

£1000 is only a little over national minimum wage and you only pay student loan repayments I'd you earn over 16k ish, and even at that, it's minimal. I earn 24.3 k and only pay back about £50 ish a month.

How much are your phone contracts?

Also would you study an under and post grad to earn such a low wage?