Buying 2016?

[Deleted User]

I’m jumping on this thread a bit late but it looks to me like you are seriously under budgeting your outgoings. You have budgeted £80 per month on petrol but not other car related costs. I am assuming you pay car insurance? And £60 per month on food? Unless you are eating beans on toast every night I highly doubt this is an accurate figure. Also, does it include toiletries? You also need to have a monthly figure for variable stuff – be honest what you will spend on nights out etc and include this. Sure you can cut down, but you are also not a hermit! Plus what about things like dentists appointments, car maintenance, birthday presents. All need to be accounted for in your variable figure.

Think about what you would be having to spend on household bills once you actually buy a house. Council tax, gas and electric, water, buildings/contents insurance. etc

You need to be honest with your figures. If you under budget your spending and can’t afford what you think you can afford on a mortgage you will find yourself in trouble.

Bodders11

Oozle - not sure if you read my earlier message correctly as this referred to my current budget and what I currently pay. I am very much aware that I will need to establish an 'Emergency Fund' in addition to a fund for "variable stuff". I live at home with my parents, therefore I get many of my meals made for me and the £60.00 I pay for food is for me to make my own breakfast and lunches for work. I am well aware this figure will increase when I move out.


Living alone on my salary will undoubtedly make my monthly budget very tight, but hopefully if I am able to rent a room this will help me drastically which from using the various calculators available to me seems probable. I envisage the money I draw in from renting a room will effectively be used as my disposable income/savings and my monthly salary (£1600) used for mortgage, bills, maintenance fund, emergency fund.


I would be interested to find out if there is anyone living in a 2 bed flat on a salary similar to mine that could provide comment...


I was very excited about the thought of owning my own home but the scaremongers (realists) amongst you have made me feel more nervous and sceptical than anything.

[Deleted User]

I’m not trying to scare you off buying your first home. Sorry if it came across that way.

I was just trying to offer some advice based on my experiences with my own budgeting. My OH and I are currently looking for our first house and when we did our budget a couple of months ago and jotted down everything we spend money on we were surprised at how much it all added up to once you look beyond all of the obvious stuff like petrol, car insurance etc. We are now budgeting for over £300 per month on household bills and on average £1200 per month on all other stuff (for two people with no children). This is on the basis that we spend very little on luxuries (like new clothes, shoes, going out, etc). After all this is deducted from our income, whatever is left is what we can afford on mortgage payments.

Good luck with it all. Hope it works out for you.

Bodders11

Thanks, Oozle, I appreciate the advice.


Moral of the story...I need a pay rise!!

jhyt89

No you don't need a pay rise! You need to spend less and save more. £300 a month on social life is really taking the !!!! if you want to save for a home. If you are serious about getting a place you have to make sacrifices. It means no football, get a sim only for £20, spend £150 on social life, and you will get to your goal much sooner.

McTaggus

I made the mistake of rushing into buying my first home, and moved into my first home at the age of 23, with a salary of 25K per annum. I thought I had factored in every conceivable cost, and that I would be able to scrape by without too much pain on the mortgage payments. However, I hadn't factored in how much the cost basic maintenance of the property would be, the car died and I had to fund a new one, and then interest rates went up sharply over a short period of time when my fixed rate came to an end. My careful budgeting at £550 per month went out of the window when my mortgage repayments, at one point, went up to £750 per month. At that point, I wasn't scraping by - I was accruing monthly debts that it has since taken me almost 8 years to pay off.


I sold the house, eventually, but given the 2008 crash happened in between I lost out on the property value (sold for 40K less than the original purchase price). However, it was that, or continue paying towards a house that (quite simply) had lost all of its joy for me and was no longer fit for what I needed. I moved abroad for a few years, relooked at my life, and sorted myself out from that point onward.


I'm 34 now, and planning on starting my next home buying journey in the UK, however if I can impart any advice whatsoever.... Never buy a house if you're going to scrape by on your finances, and never buy something if you can't afford to lose what you have tied up in it in the mid-term. They were my two biggest mistakes, and I would hate to see anyone else in that position. If your mortgage is more than 30% of your monthly salary, honestly ask yourself if you could afford to keep it if a) that doubled, and b) you no longer owned any equity in it because of a house price crash.


You will make your own choice, as we all do, but don't be fooled into grabbing early independence - some times it simply worth the wait.


Just my very humble opinion having been personally stung in the past!

Bodders11

Jhyt - I realise once I buy a property I will not be able to live so lavishly, but, as previously stated, this is my current budget. I will indeed make those sacrifices (to some extent!) when I buy.


McTaggus - thanks for your comments. It is an eye-opener. I am in no rush to move out, and I certainly won't buy on my own if this means I will have no social life and/or worrying about getting from one month to the next. Although, as I've mentioned, with the additional income from renting out a room, I anticipate this should be enough for me to be comfortable.


In the meantime, I will save like mad and then re-evaluate my position once I have a deposit in place.

McTaggus

You're welcome, Bodders. It's an exciting thing to plan for, and gaining that independence is really important to pretty much everyone at some stage, just really make sure you go in with your eyes completely open - work out the "worst case" scenarios and figure out how you would deal with it, and think about the "what if's" - such as, what if I can't rent out a room and my mortgage payments go up?


When you've figured it all out, you'll know what you need for a deposit plus emergency funds (to cover empty times on room rental for instance) and you can try to avoid any nasty surprises well in advance.


Good luck with saving, and for the future - whenever you decide is the right time to buy

littlemissrach

I'm in a similar position to yourself, similar wage, back living at my parents and saving for a deposit.. I'll admit that I have really scrutinised what I was spending, reigned it in and made some sacrifices of the "nice to haves" - I think it depends on how quickly you want to reach your goal and what your priorities are. I'm with the people saying you need social life etc, but it's striking the balance whilst doing the deposit saving

Bodders11 wrote: »

Alternatively, I could buy a property, remain at home with my parents, rent out the flat I purchase and, in the meantime, continue to save. If this was the case having bought a property and with an additional 12 months of savings I could have a further £8400 + interest in the bank (even more when I open a H2B ISA in April) plus some of my mortgage paid off by January 2018 when I turn 28 at which point I will certainly be anxious to leave home.

just where you've said above (if I've understood it right), if you've bought the property to rent out, just be mindful you then won't be eligible for the 25% government bonus even if you opened the H2B ISA, you'd have to lie saying you were a first time buyer in application just for the interest.

Good luck in your saving! It's a long road but eventually get there

Bodders11

Thanks McTaggus and Littlemissrach. I have definitely found a balance now moving forward and excited about saving so that is my priority.


One thing that I am struggling with, as I want to be clear about what I can/cannot afford as posters have explicitly outlined above, is benchmarking prices for things such as gas, electricity, water, phone, broadband, etc. As I haven't had to worry about this before I am not 100% sure what I would expect to pay. My friend has shared what he pays for a 2 bed flat so I am using that as a guide price. If there are any other tools/websites that would serve as a suitable indicator that I should be aware of please share these. In addition, any advice on income I could anticipate from renting out a room (I really want this to be last case scenario as I am leaving home for independence so don't want to have to worry about a stranger/friend living in my home).