First time buyer guidance - London

Trevelyan

Hi all!

Just looking for some pointers/demystifiers/advice I guess, really. Perhaps others in a similar situation would benefit from this too.

I'm a 28 year old IT professional, currently work in Luton but decided last year I wanted to relocate to London (friends, partner, social life, job opportunities and 0 comitments/responsibilities). I managed to find a better job that paid a lot more money, but it is in Luton still.

Now, I've just moved to London, since I only pay about 500pcm for rent/utilities right by a zone 3 station, and that's fine. I even manage to save each month; 200 a month goes into my HtB ISA, around 500 goes into my repay-my-rail-ticket fund and then perhaps another 200 goes into savings too.

My partner is selling her own flat and getting herself a new place and that made me think I should possibly look into getting on board and finding something to invest in myself. To my dismay, however, that looks near impossible for London (which is my aim here).

Issues:

1) Current income is 28381 a year, meaning that I suspect I could only really get a mortgage of - max - 127k.

2) I have 0 debts and 12k of savings, but I imagine with fees involved, this would reduce the deposit to something much less

3) The help to buy scheme, where you only need 5% of a deposit, ends this year

4) The help to buy equity loan for London only really works for places that actually are in my range, and nothing seems to be! I can only see myself realistically getting around a 170k place (which doesn't exist in London).

What other options do I have? Or what suggestions do people have? Shared ownership/Share to buy sounds useful, since I really just want to be able to invest my money in something and get started just somewhere, but there's nothing that I would be able to afford (or, rather, convince a lender that 28k is sustainable, versus the 40k that many suggest as a minimum).

I have this idea that property is really the best thing to invest in - and London especially. I would like something in Southwark area, but ultimately I just want something to get me started for the next few years before I can move on up to something more desireable.

I really am just looking for suggestions as to what kind of thing I should aim for, what hints there are of schemes that may exist to replace the Help to Buy loans frm next year, if there are any other options I should consider or if I should be avoiding London housing for the next couple of years entirely (Brexit impact, suspected housing cost stagnation and so on, giving me some breathing space? Or should I cram into trying to make the most of the HTB loan scheme now?)

I guess I just want to have some sense of direction and not feel like I am missing out on investing in my future, really!

All links and information are very gratefully appreciated!

Cheers guys!

wjr4

Just a quick note - the help to buy mortgage guarantee ends this year but you can still get a 95% mortgage without this (sorry I can't help with your other questions!)

MARTYM8`

Sadly on your salary you won't be able to afford much - a studio flat in Dagenham maybe?

If you are desperate to stay long term in London and at least have security of tenure then shared ownership may be your best bet. Try doing a search here - resales are often good value and it might allow you to get a 2 bed in Battersea for what a one bed in Dagenham might cost.

Its not without its drawbacks - but possibly the only way you will get to own a share of a property in a vaguely decent part of London. Some are restricted e.g. you must work or live in the borough but not all are.

https://www.sharetobuy.com/

This is an example - £7.5k deposit and £1k a month to own 25% of a flat with balcony in Bermondsey. Says its still available - but use the search function.

https://www.sharetobuy.com/firststeps/sharedownershippropertydetails?id=23445

economic

If you're working in Luton and commuting from London what's the point of buying in London? I would first aim to land a higher paying job in London perhaps and work your way up for 5 years. Then decide whether you can buy. At your salary and savings there's no point thinking at all about buying. I wouldn't buy a studio in the worst part of London just to live in London. That's a recipe for disaster.

amnblog

Trevelyan wrote: »

friends, partner, social life, job opportunities and 0 comitments/responsibilities

Do not fit with home purchase.

Life style = London

Property ownership on current income -= Luton

Trevelyan

rjw4 wrote: »

Just a quick note - the help to buy mortgage guarantee ends this year but you can still get a 95% mortgage without this (sorry I can't help with your other questions!)

Fab to know - didn't consider this actually. I just wonder how available that is from different providers, but I haven't really looked yet!

MARTYM8` wrote: »

Sadly on your salary you won't be able to afford much - a studio flat in Dagenham maybe?

If you are desperate to stay long term in London and at least have security of tenure then shared ownership may be your best bet. Try doing a search here - resales are often good value and it might allow you to get a 2 bed in Battersea for what a one bed in Dagenham might cost.

Its not without its drawbacks - but possibly the only way you will get to own a share of a property in a vaguely decent part of London. Some are restricted e.g. you must work or live in the borough but not all are.

https://www.sharetobuy.com/

This is an example - £7.5k deposit and £1k a month to own 25% of a flat with balcony in Bermondsey. Says its still available - but use the search function.

https://www.sharetobuy.com/firststeps/sharedownershippropertydetails?id=23445

I saw this link, but it talked about viewings in April. I'm wondering if it hasn't already gone, but hasn't been taken off the site yet. Nevertheless, that would be perfect for me; just I wouldn't be sure as to whether or not it would be deemed out of my range by a lender!

economic wrote: »

If you're working in Luton and commuting from London what's the point of buying in London? I would first aim to land a higher paying job in London perhaps and work your way up for 5 years. Then decide whether you can buy. At your salary and savings there's no point thinking at all about buying. I wouldn't buy a studio in the worst part of London just to live in London. That's a recipe for disaster.

The aim is to relocate the job to London, too. The place I stay at currently is not expensive at all and I've spent most of my weekends in London for the last 3 years; it was costing me a fair amount in train fare commuting as it was. As for not buying even a small 1 bed flat; really? I would have thought it was the best investment of my money - if I have 12k just sitting around gaining almost no interest, what else should I do with it? I don't need it anytime soon; investment in something (housing) along with throwing my current rent cash in makes sense to me!

amnblog wrote: »

Do not fit with home purchase.

Life style = London

Property ownership on current income -= Luton

You're probably right about the prop. ownership on current income - but I just felt that London was probably the best return on investment over something like 5 years perhaps. The overall trend is mental compared to other parts of the UK, even for really grotty places!

csgohan4

Generally People don't buy their first house as an investment, but somewhere to live for sometime especially with your wage bracket.


Your not a Buy to let Landlord with 10 houses. Be realistic.


A better investment would be career and/or relationships.


I loved London, couldn't afford to live in it, so moved out and found a job somewhere else. Never regretted moving out of London, got a house I would only ever dream of getting in London.

Trevelyan

csgohan4 wrote: »

Generally People don't buy their first house as an investment, but somewhere to live for sometime especially with your wage bracket.


Your not a Buy to let Landlord with 10 houses. Be realistic.


A better investment would be career and/or relationships.


I loved London, couldn't afford to live in it, so moved out and found a job somewhere else. Never regretted moving out of London, got a house I would only ever dream of getting in London.

Somewhere to live for now is fine - that's where I am right now. I even live next to a station so I'm fine with that, too. But I with London prices rising so rapidly and at such a rate, there is surely no better place to invest money I have? It just seems a waste to have the cash sat there, doing nothing and earning naff all really. My logic is that I would pay rent/monthly costs whatever, so it may as well go to paying for a place to own. I'm looking to live in London for many years to come so surely its not a bad idea to try and "get on the ladder" somewhere?

Still, what I'm getting is that I should really get a higher salary first; I guess I was just wondering if shared ownership/first steps/share-to-buy things are something people would recommend I steer clear of if I was looking to make my money grow over time, or if they're the best way for me to have any hope of owning my own place..

Oh and as for relationships; my girlfriend is selling her place (ex council flat in southeast London) for 400k. She paid 160k for it, 6 years ago. I doubt anything else would have such a relatively high rate of return! But we are both very independent and that kind of suits us both!

csgohan4

IMHO Shared ownership is a scam,


Buying a property in London is a good idea, but you need to have the money to buy it and need the right location. Just because you put London on the postal address doesn't mean it will double in price next year.


Your fixated on London is the end all be all. Tread carefully. Flats which you are more likely to buy have their own problems with leasehold and service charges increasing every X years.


I think it's important to live life and not let it rule you. What good is equity when you can't use it when you need it


Your Gf didn't buy her flat via Right to buy did she?

MARTYM8`

csgohan4 wrote: »

IMHO Shared ownership is a scam,


Buying a property in London is a good idea, but you need to have the money to buy it and need the right location. Just because you put London on the postal address doesn't mean it will double in price next year.


Your fixated on London is the end all be all. Tread carefully. Flats which you are more likely to buy have their own problems with leasehold and service charges increasing every X years.


I think it's important to live life and not let it rule you. What good is equity when you can't use it when you need it


Your Gf didn't buy her flat via Right to buy did she?

If the alternative is paying private rent with no security of tenure then I would beg to disagree.

There is pretty good demand for SO resales in London – few people can afford to buy a £500k new build flat outright in SE1 but plenty can afford a part share and pay rent on the remainder.

And if prices fall you can buy additional shares more cheaply.

I am not saying its not without its drawbacks – clearly there are. But the poster wants to live in SE1 in their own flat – shared ownership will work out as cheaply if not cheaper each month as paying private rent and if you pay up each month you can live there for ever if you wish unlike renting where it could be two months and you are out. And if you want to live in inner London then flats are the only option for first time buyers – and all will have service charges.

If it’s the choice between buying part of a one bed flat in SE1 which will have a market or a paying more each month to buy a studio in Dagenham outright that you might struggle to sell then many might pick the former.

AnnMollys

I am not entirely sure about your present situation, but from first read, I would like to know why it is necessary to be in London? I mean, if you have such issues and the situation (salary) you are into, I won’t really suggest you to move, at least not at this stage of your career.