What to do???

Phaelok

Hi all,

I live with my parents at the moment so as to save as much as possible to put a deposit down on my first home. I am looking at a new build and will be a first time buyer. To date I have £25k in savings and, like most, find myself in a position where what I save is nothing compared to how much house prices are going up.

I have obviously done my research before hand and have been informed that I could have a mortgage of around £185k-£190k based on my annual salary of just over £40,000. My intention is to use the help to buy.

Having looked at a number of properties, I am aiming for a three bed house and, in this area, they sell for around £250k. I have no other financial commitments and single with no children. The mortgage repayments work out to around £700-£750 per month. After tax I take home just over £2300 and have set aside around £1500 for bills, including the mortgage.

Given the above, do you think this is feasible or is this too much of a financial risk given the help to buy ends after 5 years and would owe circa £50k based on interest alone?

Thanks for any advice you can offer.

bigfreddiel

Instead of a new build why not buy something cheaper.

As a ftb in the 70's there was no way I could afford a new house. I bought a tiny 2 bedroom terrace. Only just affordable on my salary of £2k! And that's per year, or £200/month before tax, NI and pension deductions! And I was an aero engineer with a degree!

So don't tell me how difficult it is these days, it just the same, just lower your housing aspirations.

Glad to provide a bit of insight.

Cheers fj

Phaelok

bigfreddiel wrote: »

Instead of a new build why not buy something cheaper.

As a ftb in the 70's there was no way I could afford a new house. I bought a tiny 2 bedroom terrace. Only just affordable on my salary of £2k! And that's per year, or £200/month before tax, NI and pension deductions! And I was an aero engineer with a degree!

So don't tell me how difficult it is these days, it just the same, just lower your housing aspirations.

Glad to provide a bit of insight.

Cheers fj

That's a perfectly valid point you make. I have looked at cheaper properties but weigh this up against potential costs that perhaps new builds would not necessarily have. I suppose that long term I also see it as an investment where a 3 bedroom would be more likely to appeal to a wider audience. I do agree that I need to be realistic....just caught in two minds at the moment!

alchemist.1

Phaelok wrote: »

That's a perfectly valid point you make. I have looked at cheaper properties but weigh this up against potential costs that perhaps new builds would not necessarily have. I suppose that long term I also see it as an investment where a 3 bedroom would be more likely to appeal to a wider audience. I do agree that I need to be realistic....just caught in two minds at the moment!

New builds will appeal to a narrow audience in general. You're paying a premium for the "new". In general they tend to be smaller with rooms sizes and plot.

Gorg

bigfreddiel wrote: »

So don't tell me how difficult it is these days, it just the same, just lower your housing aspirations.

"Average salaries were around £2,000 a year in 1971, with the average house selling for £5,632: in essence, less than three times earnings. The average asking price for a home rose to £238,874 in May this year, according to Rightmove, while the average salary sits at about £25,000." - http://www.theguardian.com/worklifeuk/cost-of-living-1971-today

In other words, it is a bit tougher to get on the housing ladder now than 40 years ago.

Phaelok - Sounds like you're in a good position to buy, regardless of whether you use Help to Buy or not. Have you looked at older properties in the area you're interested in?

My main piece of advice would be to not borrow the maximum the bank will lend you, if you can help it. Gives you some breathing room if interest rates skyrocket, and also more of your income can be put aside for other things (savings, other investments, big purchases, holidays, and so on).

bouicca21

Carefully designed to make maximum use of space means small rooms, narrow halls and crowded together. And surely the incentive to buy means the prices are inflated?

I know what you mean about fearing maintenance costs. Frightens me too. But you can teach yourself some basics about what to look out for in an older house, like signs of damp, a bridged doc, missing roof tiles. Or you might want to buy peace of mind by going for a flat and paying a maintenance charge for someone else to be responsible. And on 40k you can afford a handyman.

If you do decide to use help to buy, then budget for it. You are going to have spare money! That's more than many FTBs have.

Above all think about where you want to live - there is no point in having a lovely place in an area you hate because it is too quiet/lively, long way from essential shops and has crap transport links. You will probably be in your first place for 5 or more years. Make sure it is somewhere you look forward to going back to.

KRDmum

Most builder have to build affordable housing whenever they put a new development. With a new house, well, you get everything new, plus 6 months and two year snagging list, then 10 years building warranty. Yes, as you can probably guess, we have hot a newbuilt, bought 8 years ago and very happy that we did. All the best to you, whatever you decide to do

KRDmum

CobaltBlue wrote: »

You'd be massively over stretching yourself.

New builds can drop in price after a few years.
Developers build on the plots gradually and release onto the market gradually, in order to avoid flooding the local market.
This means that the green fields next to your house may well turn into a building site....

New builds are also thrown up with great haste (during the actual building phase for that part of the development) - means quality isn't always that great.

If you are seriously considering buying one, speak to the contractors working on the site. Don't ask the developers - just make a note of the vans during the build phase.

You're also paying for the Section 106 costs of the development.

Your roads may also not be adopted as soon as you would hope for.

On the plus side, like you say, maintenance is low and new builds are energy efficient.

I would advise you buy a small, two bedroom mid terraced house.
Those built 1930s and earlier should hold their value better.
I don't know where you live, but in most places you can get them in good condition for under 100k.

Pay off your mortgage ASAP.

I have to disagree with some of the points made here. When it comes to the quality, it depends on the developer and people working for them, we have had a lot of issues with our house (our first snagging list was 7 pages long), but all were resolved and fixed, at no cost to us. Yes, the main road hasn't been properly finished for about 6-12 months, but that hasn't really bothered us, same as living next door to a building site for so many years, you just know they won't be there for years. Anyway, if you have any questions about a newbuilt, feel free to ask.