Am I living in a dream world?

will369

Over the next 2 years I plan to save £15,000 for a deposit to buy my first house. I may be able to borrow abit more off my parents if I need to, so the deposit could be £20,000ish


I want a 2 bedroom house in Exeter area. So looking at £250,000.


As I currently earn £1200 a month and may still be on the same wage come when I buy the house so I will not be able to afford the mortgage repayments plus the bills?


So I was planning on renting the 2nd room out to a friend, for roughly £400 a month.


That would cover the cost of the mortgage? Then I would just be left with the bills?


That's how I want it all to plan out....but is that possible?


Thanks for your time

zarf2007

will369 wrote: »

Over the next 2 years I plan to save £15,000 for a deposit to buy my first house. I may be able to borrow abit more off my parents if I need to, so the deposit could be £20,000ish


I want a 2 bedroom house in Exeter area. So looking at £250,000.


As I currently earn £1200 a month and may still be on the same wage come when I buy the house so I will not be able to afford the mortgage repayments plus the bills?


So I was planning on renting the 2nd room out to a friend, for roughly £400 a month.


That would cover the cost of the mortgage? Then I would just be left with the bills?


That's how I want it all to plan out....but is that possible?


Thanks for your time

With your salary I doubt they would lend you the amount you need and MMR is likely to scupper it also. I think the phrase "reality used to be a friend of mine" springs to mind. Lower your sights.

BigAunty

I am not aware that a lender will take into account your intended income from a lodger in the salary to loan ratio calculations. Certainly, a lender rejected this for me but quite a few years ago.

There are plenty of mortgage affordability calculators where you can input your salary and get an idea of what they will lend based on your income and deposit.

It's not clear if that's your gross or net salary but either way, I doubt a lender will lend the equivalent of 15 or so times your salary for the 235k balance after the deposit and including the stamp duty/legal fees.

Here this article indicates that lenders have been advised by the bank of Scotland to offer no more than 4.5 times the income. On this basis, if you gross around 15k per year, you'd be loaned a maximum of 67k.

http://www.bankofengland.co.uk/publications/Pages/news/2014/094.aspx

You could look into things like Help to Buy, shared ownership or similar but be aware of the reputational issues with shared ownership (part rent, part mortgage) around mixed tenure, resale issues, high service charges, restrictions about subletting, difficulty in staircasing and so forth.

These are within your future budget but requires real research and due diligence into potentil shared ownership issues.

http://www.rightmove.co.uk/property-for-sale/property-45284596.html

http://www.rightmove.co.uk/new-homes-for-sale/property-44069746.html?premiumA=true

This one bed place is available on a more conventional tenure. I didn't find any 2 beds for under 110k in Exeter (apart from static caravans, retirement properties or properties at auction more suited to cash buyers).

http://www.rightmove.co.uk/property-for-sale/property-43183711.html

PasturesNew

You are earning £17k/year. A more realistic budget would therefore be under £100k. That means a flat in town, or a 1-bed small place in the surrounding areas - e.g. there's a 1-bedder in Ottery St Mary at about £100k right now.

Dawlish and Exmouth make town accessible by train as other options.

You can't pick how much you want to borrow and what sort of house you want .... it's decided based on your income and deposit.

makeyourdaddyproud

A hundred miles north or so in Wales will get you a two bed hovel for 8 months' savings.

Zither

If you could get a mortgage for that much - that's a lot of debt to take on! Are you sure you'd want to take on that much?

Upsidedown_Bear

will369 wrote: »

Over the next 2 years I plan to save £15,000 for a deposit to buy my first house. I may be able to borrow abit more off my parents if I need to, so the deposit could be £20,000ish


I want a 2 bedroom house in Exeter area. So looking at £250,000.


As I currently earn £1200 a month and may still be on the same wage come when I buy the house so I will not be able to afford the mortgage repayments plus the bills?


So I was planning on renting the 2nd room out to a friend, for roughly £400 a month.


That would cover the cost of the mortgage? Then I would just be left with the bills?


That's how I want it all to plan out....but is that possible?


Thanks for your time

It really wouldn't.
A repayment mortgage of £230 000 over 25 years at 5% interest rate would cost £1345 a month according to MSE's mortgage calculator.

sw_mina

I feel for you but I'm afraid all the posters are right - you're way out of your budget.

We are currently buying a 250k house with a 50k deposit and our repayments on fixed term contract is £800+ so I can't see how you'll be able to afford it as your repayments on 230k will surely be a lot more? Bearing in mind we are getting a good rate because our loan to value is okay... you probably won't get a good rate on a 20k deposit.

If you do go for it you'll be banking on a number of variables you won't have any control over, including being able to let the room, your tenant paying up each month, and rates staying low (unlikely!)

I would seriously lower your sights as if you get into missing mortgage payments, you'll be seriously stuck if you've taken a fixed rate and need to remortgage.

If you lower your sights you should be able to buy somewhere in Exeter that's cheaper. Or in Exmouth etc which can be pretty cheap. Rightmove has 83 properties for sale in Exeter for less than 150k... If you look at properties that cost more than you can afford, you'll always want more than you can have!

Don't forget you'll have stamp duty, solictors fees, surveys etc. to pay and that will be money coming out of your deposit... 1 in 3 house sales falls through so if yours does, you could loose 2k easily and need to start again. You've got to budget for that.

If I was you... I'd look at what I'm currently able to afford in rent and see how big a mortgage that would work out as.

[Deleted User]

Yeah, sorry, houses in your area are not for poor people. You will either have to rent or move somewhere far away. Such is modern Britain.

Davesnave

DELETED USER wrote:

Yeah, sorry, houses in your area are not for poor people. You will either have to rent or move somewhere far away. Such is modern Britain.

Although this appears a somewhat flippant remark, the alternative, of seeking work in a cheaper area, is something you could consider if young and relatively free of ties.

Exeter has a buoyant economy, and it's close to tourist destinations, so prices there reflect that.

My daughter would like to live in Exeter, but she's chosen to live and work in a less expensive city, where house prices are much more affordable. She felt the clock was ticking and that getting her own place was more important than being close to family.

It's a hard choice, and what's right for one person isn't right for all.

Solsol

I agree it's way over budget my hubby and I were told the max we would be able to borrow was £170k that's with a joint income of £40k, deposit of £70k, high credit score no missed mortgage payments etc.

Sorry but MMR rules are just so tough they scrutinised every aspect of our lives!!