FTB affordable price range

Fiveboy

Me and my Partner cannot decide on how much to borrow, which will determine the max house price we can go for. I'm just wondering how high your max would be if you were in our situation?

Location: Exeter, Devon
Salary: £29,500 (full time)+ £13200 (3 days a week) both permanent
Child Benefits: £1040 per year
Total Household income: £43,740

Age: 34 & 27
Child: 1 (7 months)
Childcare: No cost, we are lucky with family members helping out
Debts: £0
Cars: 2 fully paid for we don't need to replace them yet both under 45k mileage and reliable, however may sell both for a total of 11k and get 1 car.

House Savings
Deposit: £75000
Fee\Costs: £7000

From Jan 2015 at the end of the month we will save a further £1500 per month.

We believe we can borrow up to 195k, however we do have a 30% deposit for a 250k house, but a 175k mortgage sounds a lot. The deposit is not gifted we been saving for nearly 4 years.

We want to get the best house we can that's affordable for our situation for the long term. Ideally we would like a 3 bed house with parking, in our city these type of house start from 200k for something in a good part of the city

Thanks for reading any advice will be appreciated.

samsam89

Im no professional, but if I were you, I'd get an idea of what you could borrow from a broker or financial advisor and aim for slightly less. In doing so it allows you to maintain the lifestyle you're used to and still continue saving a decent amount each month.

System

I assume you are renting, what is your current rent approx? You need to think about how much the mortgage repayments are going to be, both during the initial fixed term and after when you switch on to a variable rate.

I would definitely recommend you speak to an independent mortgage adviser.

penguingirl

Fiveboy wrote: »

We believe we can borrow up to 195k, however we do have a 30% deposit for a 250k house, but a 175k mortgage sounds a lot. The deposit is not gifted we been saving for nearly 4 years.

What are you basing the 195k borrowing on? 4 times your joint income is 175k, so this seems a bit high. A mortgage advisor would be better placed to comment on this though.

Personally I would like at it less from a 'what can I afford' way, to a 'what is available in our price bracket' way. If you can get a 3 bed in a nice place for 200k so only needing about a 130k mortgage than that sounds a lot less stressful

dirty_magic

No-one else can really answer this for you without knowing your outgoings. I'd add up all of your outgoings, including the one off things like car insurance/Christmas etc and then add on £200 per month or so for savings. This should show roughly how much you have left over for mortgage payments.

There are loads of comparison sites online you can play with, I liked the totally money one when we were looking.

kinger101

With a 30% deposit, you'll probably be able to find something under 2.5% (tracker). 2.5 % would be a repayment of £791 on a 25 year mortgage (edit: borrowing £175K). You might even get it down to 2% (£747). However, if the interest rates crept up to 6%, this becomes £1141 a month. Are your salaries likely to increase in future years?

You'll find even lower with a fix, but check whether the product fees make it worthwhile. You will need to remortgage on these, as the reversion rates are often silly percent.

Personally, I'd stay away from the top of my budget, get a 25 yr mortgage and then overpay. I'd also leave £5-10k aside for rainy day money. But that's me.

HappyMJ

In a normal interest rate envrionment I'd say to a FTB to borrow as much as possible (affordably) on a fixed rate for as long as possible (let's say 5 years) and use the increase in wages/salary over those 5 years to meet the new payment once the variable rate kicks in.....but with interest rates so low and an increase (within 5 years) likely then it's much harder to suggest doing that as the jump from 2.5% to something normal like 6% is a much bigger leap than what used to be from 5% to 6%. I would in your situation try and borrow somewhere around £190-£200k to buy a house in the £250-£270k region. I'd think you'd need that for a really nice (forever) place in Exeter. I wouldn't try getting onto the ladder just to get "something"...I would rent until you saved more. Costs of trading up cost quite a bit...try and find a really nice house where you never have to move from for a very long time.

Fiveboy

dieselpower1988 wrote: »

I assume you are renting, what is your current rent approx? .

Currently living with parents we pay a total of £250 all in, food, energy etc. all included. This has allowed us to save what we got.

penguingirl wrote: »

What are you basing the 195k borrowing on?

I just did a online bank calculator on how much you could borrow. Also saw a bank mortgage advisor and £175k is a amount they would consider lending us.

kinger101 wrote: »

Are your salaries likely to increase in future years?

I'm top of my grade within my team I would need a new job, or another to increase my income. I will only get cost of living which is normally 1% per year.


My partner is not top of her grade and her wage may go up to £14,865 plus cost of living normally 1% too.


My current Outgoing are..
£190 rent
£90 Sky and Internet (out of contract)
£16 Mobile phone (out of contract)
£105 per month to run the car this included everything from MOT service and Petrol. I cycle to work as much as possible.
I spent £320 on xmas presents £200 on birthdays this year.


My Partner Outgoing are..
£60 Rent
£16 Mobile phone (out of contract)
£16 x2 insurance policies
£150 per month to run the car


We don't smoke or drink.


Thanks for the replies.

pinkteapot

You need to write a proper monthly budget for a house of your own, with mortgage repayment, council tax, utilities, food, etc listed out. Focus on the size of the monthly repayment (and how it may change when interest rates go up), not the total mortgage size (though the two are of course directly linked!).

Be realistic. £250 a month doesn't cover food and energy for two adults.

Also, 'buy cheap, buy twice' applies to houses. We bought a very safe house (small safe mortgage) and upsized three years later because we wanted nicer. Waste of fees! Spend as much as you can, stopping just short of the point at which you'll lay awake at night worrying about how to pay the bills.

jackyann

Way back in the 80s, we looked at a house that we could just afford, it was a dream.
We decided to be cautious and go for another pleasant house but smaller & cheaper, that gave us a little margin.
This was a few months before the massive interest rise that caused many to become unable to pay their mortgage. We were OK.
I also wonder if anything might suddenly happen to cause a childcare problem?

So I would go for something with a bit of a margin for problems.

I personally (and I do know this is a gamble) wouldn't worry about anything other than the standard "rainy day" savings, pensions and life insurance. My own attitude is that once the kids are off your hands, you can save a bit more.

I would also remember to factor in "hidden" costs - choosing a more expensive house near a bus route / town centre may save on fuel / car costs, for instance.

Loopy28

Get the best property you can afford. Having a good property in a decent area makes a massive different to your everyday life and property is also a good future investment.

But stay realistic and look at repayments now and what they would be if the rates rose. Online mortgage repayment calculators are useful as you can play about with the interest rate to get an idea of what they would be with different increment rises.