Advice Needed - Am I in a position to Buy?

YoungGentry

My friends and I have been talking lately about the new schemes and he said I am actually in a position to buy, that said being new to the housing market I am sure there are things I may have missed.

Age:23
Savings: £13K
Student Loan: £20k
Possible Mortgage(Santander Mortgage Calculator): £104k
Credit Report(Experian): 863

Current Monthly Income: £1.6k
Current Monthly Savings(staying at home):£1k

Working Area: Canary Wharf
Usual Nightlife: Shoreditch/Oxford Circus
Personality: Professional/Creative/Trendy
Majority of Friends: East London

Areas of Interest (Full List): East London(Bow, Shoreditch, Hoxton, Stratford, Mile End, Stepheny Green, Bethnal Green, Victoria Park), South London(Battersea, New Cross, Richmond)

Areas of interest(Realistic List): Bow, Bethnal Green, Victoria Park

I was looking at a 2 bed Shared Ownership(50k-100k), with a total house/flat price(180k-280k) and rent the second room to a friend to cover the rent portion.

Assumptions Made:
100k(50% share) would mean £~600 @4% mortgage for 20 years
Rent will be ~600 + 160-200 service charge.

What do you think? Any help/opinions would be much appreciated!

Errata

Buying a property very much rests on what mortgage or mortgage+rent payment plus service charges you can afford each month.

19lottie82

what would you do if you had a void in renting the room out, how could you afford £600 rent, £600 mortgage, £200 service charge + bills + food + transport?

Answer, you couldn't.

hazyjo

Did you add your student loan to the mortgage mortgage calculator? Guessing your salary's around £26k which comes out at £104k WITHOUT any debt. Once you start having to pay that loan off, what they offer you will drop substantially.

Sounds way too low a salary to me to be buying.

I would try to save for longer, although I appreciate you must be concerned about a rising house market in London.

Don't rule out Walthamstow either. Not much further, and you can get the tube to Oxford Circus, or the overhead to Liv St. Much nicer areas on your doorstep too (Epping Forest, etc).

Lenders won't take into account any proposed income from renting a room.

Speak with an all of market broker maybe.

Also remember you don't get something for nothing. Make sure you do your homework thoroughly (and search this forum) when signing up to any 'scheme'...

Jx

princeofpounds

huh?

You say rent plus service charge plus mortgage will cost £1400, and your (I assume take-home) pay is £1600.

The rent will not count as income. It would also be stupid to rely on it, as you will barely be able to afford your council tax in the months you don't get it.

YoungGentry

princeofpounds wrote: »

huh?

You say rent plus service charge plus mortgage will cost £1400, and your (I assume take-home) pay is £1600.

The rent will not count as income. It would also be stupid to rely on it, as you will barely be able to afford your council tax in the months you don't get it.

I never even considered council tax.

Thank you for all your replies, considering the 200k was the lower end of the spectrum, it seems I need a higher paying job.:rotfl:

Since the rising house prices are making things worse; I will need to join a hedge fund or something similar.

princeofpounds

I know you are probably eager to get out of home given your age, but one thing I would say is that you appear to be saving at a good rate.

I'd urge you to consider hanging around for another 12 months or so. If you can build up a 10% deposit for a typical starter property then you will achieve one big tick in the box. This will be much harder to do without (presumably) free or near-free accommodation.

Hopefully over time you can work on improving the income side.

YoungGentry

princeofpounds wrote: »

I know you are probably eager to get out of home given your age, but one thing I would say is that you appear to be saving at a good rate.

I'd urge you to consider hanging around for another 12 months or so. If you can build up a 10% deposit for a typical starter property then you will achieve one big tick in the box. This will be much harder to do without (presumably) free or near-free accommodation.

Hopefully over time you can work on improving the income side.

What is a typical starter property price? £200k?

Errata

No 2 bed flats in Bethnall Green under £200k. You are looking on Rightmove, aren't you?

ValHaller

YoungGentry wrote: »

Credit Report(Experian): 863

That is not the credit report, it is the worthless so-called 'credit-score'. What really matters is the facts on the credit report. I suggest you and your friends stop paying for the 'credit-score' and put the money towards your savings

DRP

YoungGentry wrote: »

Personality: Professional/Creative/Trendy

Sounds to me like you will have absolutely no problem getting a mortgage!