If I can't afford a house, what's the next best type of property

GoodnessGraciousMe

Hello all,

I have just started my research into buying a house and will be in a position to buy in July 2016.

I will be buying alone:

Annual salary: £44k + quarterly bonuses of 2% of salary (I will disregard my bonuses for now)
Take home monthly salary: £2700
Deposit: £40k
Additional money saved for fees: £9-£10k
I work in central London, am single, have no debt and no commitments.

I originally wanted to buy a house in the borough of Bexley/Swanley/Dartford but having looked at RightMove, I couldn't find a decent 2+ bedroom house that would likely sell for under £260k (assuming that I could borrow 5 x my salary).

Also, my repayments for a mortgage (5 year fixed) of £220k would be c. £1k (I used the best buy mortgage calculator on this site) which whilst affordable, would be a good chunk of my take home pay; this scares me.

I know its better to buy a house over a flat; no maintenance charges/ground rent, you actually own the freehold unlike a leasehold flat, etc. but if a house is out of the question then whats the next best property type?

Having done some research, it looks like a top floor maisonette or a top floor flat in a converted house or a small block (less than 6 flats in the block?), is my best bet in terms of low maintenance charges and the possibility of owning a share of the freehold. Am I correct? Are maisonettes or flats in converted houses, the next best property type to buy after a house?

What are the pros and cons of each?

In your opinion, would it best for me to go for a house, if I can buy one for under £260k, and know that money will be tight for 12-18 months until my next pay rise (which isn't a guaranteed amount) or a cheaper property type?

Thanks

Running_Horse

Plenty of freehold houses within a mile of Dartford, Maidstone East, Farningham Road, Longfield and Rochester stations. Probably many other commutable options in the region, which I can't be bothered to search for you. Long term, any of these would be preferable to a flat, and would reduce the need to move in the future.

[Deleted User]

I agree, living in Gravesend, there are 2 bed houses in your price bracket aplenty. Prices are rising rapidly though.

csgohan4

Don't forget to factor in fees for insurance, maintenance, council tax, utilities e.t.c.


Can you afford to have more than 1k deducted and live?

GoodnessGraciousMe

Hi all,

I really didn't want to go any further than Dartford to be honest; there are talks to bring it in to zone 6 and I didn't want my commute to be too long and travel costs too expensive.

The further out I go, the further away from family and friends I will be and the less multicultural areas are.

Could I afford to live after a £1k mortgage payment? Yes; I budgeted £500 per month for utilities, council tax, insurance, etc. Not sure how much to budget for maintenance costs. What maintenance costs are you referring to?

After taking into account travel to work and other direct debits, I will have c. £750 left per month to buy my groceries and play around with.

I currently have an old car (02 reg) but will likely have to get rid of this if I buy a £260k house. I havent factored any car-related expenses into the expenses I mention above as I would happily (well, not too happily) use public transport if it means getting my foot on the property ladder.

Then I would still like to save regularly towards mainenance of the house; maybe £150 a month?

After food (£300 per month) and £150 saving, there wouldn't be much left of that £750.

It seems buying a £260k house means giving up a car, social life, holidays, etc.

Not sure what to do.

I would consider getting a lodger but not sure if its worth the invasion of privacy, tbh. Also, there will be times when I can't get a lodger so i need to ensure that I can afford the house with out the lodger income.

GoodnessGraciousMe

In relation to my question on maisonettes/flats in a converted house, what is your opinion on them?

Do you get the same freehold rights as a house?

Lemonsqueezer78

That entirely depends on the property - flats will be either advertised as share of freehold - or leasehold. So a leasehold flat/property is obviously a different proposition. There is nothing inherently "bad" about leasehold properties, however you do need to consider any rules/provisions in the lease very carefully, as well as any charges, insurances, ground rent, maintenance and service fees and of course the remaining lease length as all of these will impact the affordability, attractiveness - and saleability of the property in future. However if everything is reasonable in the lease (including the lease length) then it can be fine. And you may even be able to buy a share of the freehold in future if it makes sense to do so.

Lemonsqueezer78

and even some houses can be leasehold... freehold arrangements are more common with houses, but it's not automatically the case.

Nike79

Could you possibly look into buying a flat, may be 1 bedroom flat?

If you buy period property or a flat in a small block of flats service chargers wont be that high. Also, i wouldn't worry about the leasehold/freehold dilemma as healthy lease is no different to owing freehold especially when it comes to owing small properties (1-2 bedroom flats).

However you need to plan carefully how long for you are going to live in this flat?

You mentioned that you are single and what if you have a partner and you decide to move in together?

Are you happy to accommodate your partner in you property?

If not then you met need to let your flat and the rent may not cover the mortgage and other outgoings as the rents in the area you mentioned are not that high unlike in London.

What if the interest rates rise (they definitely will mid- long term) and use a mortgage calculator to compare how much difference even 1% rise can make. I assume you decide to fix the rate for 3-5 years but still what are you going to do a after that?

Also, 1 K fee is a bit high given your current income (IMHO of course).

I was in the similar situation when purchasing the flat though have smaller mortgage payments and bigger income and still worried a lot.

missbiggles1

GoodnessGraciousMe wrote: »

Hi all,

I really didn't want to go any further than Dartford to be honest; there are talks to bring it in to zone 6 and I didn't want my commute to be too long and travel costs too expensive.

The further out I go, the further away from family and friends I will be and the less multicultural areas are.

Could I afford to live after a £1k mortgage payment? Yes; I budgeted £500 per month for utilities, council tax, insurance, etc. Not sure how much to budget for maintenance costs. What maintenance costs are you referring to?

After taking into account travel to work and other direct debits, I will have c. £750 left per month to buy my groceries and play around with.

I currently have an old car (02 reg) but will likely have to get rid of this if I buy a £260k house. I havent factored any car-related expenses into the expenses I mention above as I would happily (well, not too happily) use public transport if it means getting my foot on the property ladder.

Then I would still like to save regularly towards mainenance of the house; maybe £150 a month?

After food (£300 per month) and £150 saving, there wouldn't be much left of that £750.

It seems buying a £260k house means giving up a car, social life, holidays, etc.

Not sure what to do.

I would consider getting a lodger but not sure if its worth the invasion of privacy, tbh. Also, there will be times when I can't get a lodger so i need to ensure that I can afford the house with out the lodger income.

You could easily halve both that first estimate and the amount you've allocated for food. It sounds to me as if you could easily afford that level of mortgage just by being more realistic about your other outgoings.

Brown_Eyed_Girl

The maintenance costs for a leasehold can be anything from a few hundred to a few thousand (the latter is rarer). If your freehold or share of freehold you'll still have maintance as house always need stuff done to them.