first time buyer: buy or wait

Yam

My circumstances:
If I were to buy a house I will be buying it by myself
24 years old
£36K income
I regard my job as insecure, I work offshore and redundancies are made when contracts are not renewed.
£25k available for a deposit, I've been looking at houses around £180k
I am currently renting a 1 bedroom flat for £460 all bills included, its quite small and not very well maintained.

I have always been worried about buying a house due to my job security but when I look at the figures, due to the incredibly low interest rates I am confident I could come up with enough cash to cover the bills on a minimum wage job, I could also rent out a room. I estimate my total costs to be about £1000, do you think I am being realistic about this?

I feel like I should rush into buy a house as soon as possible so that the mortgage lender gives me a decent wedge towards a house (155k) whilst I am on a good salary, this may be impossible on a minimum wage job and if I don't act now I might never get on the property ladder.

On the other hand I might keep my job until retirement and the housing market could crash by 50% in two years time.

Has anybody ever taken out income protection? for £50 a month they will pay me £2100pm for a year if I lose my job, that seems like something worth having.

I realise nobody can predict what will happen but I will appreciate other people's input into my situation.

marksoton

You'll do well to get a lender to accept that price property at that income.

Punch a few numbers into some lenders calculators.

Yam

I've got AIP

Bonfire_Bride

Are lower priced properties not good for you then? It would be less of a burden then if you were to lose your job.

Chanes

You could probably be best advised to get a house that needs work if you have some skills and know some trades. It can be a substantial saving at auctions too but get someone who knows about them to come with you and READ THE LEGAL PACK! Good luck.

marksoton

Yam wrote: »

I've got AIP

With whom? That's really stretching it from your own point of view.

AnotherJoe

I think your costs will be more like £2k, and that £180k would be the absolute very maximum you could possibly afford so you should aim lower so as to have some spare cash to help to manage the house and also a period of potential redundancy, as would a lodger for obvious reasons.

The_Real_Cheddar_Bob

i agree with the above post regarding costs. I'm on a wage a bit higher than the op and have a mortgage for just under £400/month on a property purchased at £140k.

My bills come in slightly over £1000 a month (excluding food) and that £40k jump in property price would add enough on the mortgage to leave you with peanuts on a £25k wage, let alone minimum.



regarding income protection - this is all about the t's and c's. You need to look very carefully at when they will pay out and when they won't. Also its rare to find an income insurance that pays out more than 60%(i think its this number) of income.

You need to check whether there are restrictions over redundancy and insurance paying out, such as you knew/expected it to happen,

Yam

I am hoping to get people's ideas on whether it is a wise choice to buy now or to wait until we see what happens to the market
I will be saving up around £15k a year whilst waiting with a 5% return.
BUT if house prices still rise by 5% a year my additional savings will account for nothing.

The topic mostly seems to be about my mortgage although I can't complain about free advice! I have mentioned some pointers below, I hope it makes more sense after reading them.

Maxing out my mortgage did scare me at first but after looking at my local market and the figures it made sense to me.

The reason I have stretched as high as possible is mainly because interest rates are so low, I know they can go up and cause havoc but I am taking a risk on betting they will be low for some time.

House prices are quite high in my area; the lowest price for a two bedroom is 160k, I have viewed one and there were a lot of sofas and fridges found on the street as well as more caravans than a holiday camp, the local gang has spray painted''LITLEMOOR SOLDERS'' [sic] on most fences, bus shelters etc.. you get the idea.

For a two bedroom house in reasonable condition in a decent location 180 is the figure you will have to spend and perhaps there are a few around for 170 if you're prepared to make sacrifices.

Dropping the price by £20k saves me £50pm in interest.
20000*0.03/12= 50.

Perhaps I will have to pay out more than £50 for new wing mirrors on my car each month, I would also like to point out that I work away for long periods at a time so I need the security.

My food and social costs are £0 for 6 months of the year that I am away working, I saved up £25k in 2 years and I was only on £31k for the first year.

If I get made redundant I will get paid for at least 3 months, right now I would get 7 months due to the leave I have accrued and I believe that would give me time to act and find a new job if the worst does happen.

If I can't find a new well paid job then I would either try and scrape by whilst hunting for a job, downsize to a 1 bedroom flat or I would sell and rent a bedroom as at this stage an interest rise would see the house being repossessed, it could happen before I have the chance to sell the house but I have to accept there is no a 0% risk scenario

AIP
I have seen a mortgage adviser and she came up with around ten lenders who would give me 155k using estimation calculators, it seems they all offered 4.3x my salary ? but I have just this minute used nationwnside's calculator myself and they now give me a figure of 162k (4.5).

I went to Nationwide to get an AIP as they are offering £1k in cashback on-top of offering me the lowest rate, I also got an AIP from London and country just to make sure they can't find anyone cheaper as it might be sometime yet before I take the mortgage out.

Just to be clear my wage is £36k, not 25k (that's my deposit) someone mentioned it to be 25.

There are some insurance companies offering 1500 per month for £37 or I can go with one offering 2100 for £50.

AnotherJoe

I am hoping to get people's ideas on whether it is a wise choice to buy now or to wait until we see what happens to the market

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You can never know this Except in retrospect. Wait until it's all rosy, prices will have risen, wait and see prices are falling, maybe you should wait longer ?? There are always "events" (Google Harold Macmillan and events) that change things in unexpected ways..

Based on what you posted, I would suggest you move further away to where it's cheaper, or if that's not possible though I dont see why not*, extend yourself and get a lodger, more to give you some financial breathing space early on.

*You say you are away for long periods. so that would seem to give you much more freedom in terms of where to live. Perhaps you can use that to your advantage as you aren't stuck around a location you can commute from.
You talk about "my area" but do you need to buy there ?

Mickygg

I Would always buy where it is affordable and does not overstretch you.

Who knows what will happen to the housing market. If the right house comes on that's affordable I say buy. In the long term house prices IMO are bound to rise, but with peaks and troughs along the way.