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First time buyer dreams.. can we do it?!
username_user
Posts: 38 Forumite
Hi all, looking for some advice and support to help my anxiety about getting on the property ladder!
The current situation.. rent a 2 bed flat in the South West with my boyfriend paying paying £800/m + bills. We've both never owned before and are sick of paying so much rent to pay off someone else's mortgage. We're not getting any younger (29 and 32) and really need to get ourselves set up for the future.
The issue is we are on low incomes and don't have a great deposit. We get by now but can't save much. We both have help to buy ISA's which we plan to transfer to Lifetime ISAS next year. I have around £13k saved but my partner has pretty much nothing. He is struggling to have anything left at the end of the month to save with our current housing costs. With what we spend on rent now i suspect mortgage payment would be less so we'd be ok, it's just getting the mortgage in the first place. Joint earnings are £26k from employment and i also have self employment of £5-10k year but don't have 3 years books yet.
We are looking at moving down the road to a much cheaper area, where currently prices are around £110,000 for 2 bed flat or £180,000 for 3 bed house. Where we are now we'd be lucky to get a 2 bed flat for £180,000. I know we'd have a better chance of getting a mortgage on a flat and that would be fine for us now but the issue is by the time we actually moved we'd be getting to the point of wanting a house for a family.
Just trying to figure out realistically what our chances are of getting something in a year or 2 and if they are terrible, what we can do to make it happen. I've used the mortgage calculators etc but they all give varying amounts of lending and also been researching what we'd need to save for fees but again it varies massively.
He is currently looking for a better paid job. I am weighing up the decision to get a better paid full time job or take the plunge and grow my self employment full time but i think thats only going to make getting a mortgage harder. I am planning/hoping that within 6 months of job hunting our combined income could increase to 35-40k. My credit rating is pretty good - nothing bad but haven't had a huge amount of credit. His isn't great but hopefully not bad enough to affect us too much.
So, say we aim for the £180,000 property, manage to scrape together 10% deposit of £18,000 and an extra £5k for fees, (is that acceptable or am i underestimating?!) and up our combined income to around 35-40k.. do we have a chance?
Alternatively if it's not looking like thats going to happen, how realistic is £110,000 flat with 10% deposit and 26-30k salary?
The current situation.. rent a 2 bed flat in the South West with my boyfriend paying paying £800/m + bills. We've both never owned before and are sick of paying so much rent to pay off someone else's mortgage. We're not getting any younger (29 and 32) and really need to get ourselves set up for the future.
The issue is we are on low incomes and don't have a great deposit. We get by now but can't save much. We both have help to buy ISA's which we plan to transfer to Lifetime ISAS next year. I have around £13k saved but my partner has pretty much nothing. He is struggling to have anything left at the end of the month to save with our current housing costs. With what we spend on rent now i suspect mortgage payment would be less so we'd be ok, it's just getting the mortgage in the first place. Joint earnings are £26k from employment and i also have self employment of £5-10k year but don't have 3 years books yet.
We are looking at moving down the road to a much cheaper area, where currently prices are around £110,000 for 2 bed flat or £180,000 for 3 bed house. Where we are now we'd be lucky to get a 2 bed flat for £180,000. I know we'd have a better chance of getting a mortgage on a flat and that would be fine for us now but the issue is by the time we actually moved we'd be getting to the point of wanting a house for a family.
Just trying to figure out realistically what our chances are of getting something in a year or 2 and if they are terrible, what we can do to make it happen. I've used the mortgage calculators etc but they all give varying amounts of lending and also been researching what we'd need to save for fees but again it varies massively.
He is currently looking for a better paid job. I am weighing up the decision to get a better paid full time job or take the plunge and grow my self employment full time but i think thats only going to make getting a mortgage harder. I am planning/hoping that within 6 months of job hunting our combined income could increase to 35-40k. My credit rating is pretty good - nothing bad but haven't had a huge amount of credit. His isn't great but hopefully not bad enough to affect us too much.
So, say we aim for the £180,000 property, manage to scrape together 10% deposit of £18,000 and an extra £5k for fees, (is that acceptable or am i underestimating?!) and up our combined income to around 35-40k.. do we have a chance?
Alternatively if it's not looking like thats going to happen, how realistic is £110,000 flat with 10% deposit and 26-30k salary?
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Comments
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username_user wrote: »The issue is we are on low incomes and don't have a great deposit. We get by now but can't save much.
I have around £13k saved but my partner has pretty much nothing. He is struggling to have anything left at the end of the month to save with our current housing costs. With what we spend on rent now i suspect mortgage payment would be less so we'd be ok, it's just getting the mortgage in the first place. Joint earnings are £26k from employment and i also have self employment of £5-10k year but don't have 3 years books yet.
We are looking at moving down the road to a much cheaper area, where currently prices are around £110,000 for 2 bed flat or £180,000 for 3 bed house. Where we are now we'd be lucky to get a 2 bed flat for £180,000.
OK, let's look at a typical mortgage calculator, shall we?
http://www.moneysavingexpert.com/mortgages/how-much-mortgage-borrowing
With your £26k joint income split evenly between you, you can afford £65-91k. The upper end of that would cost you £430/mo in repayments. It still isn't enough, though, unless you can increase your deposit rapidly.
Factor in £5k of your other income, and the affordability rises to £77-109k. You're there. But the repayments are now more than your rent, for a cheaper area.
Factor in £10k of your other income, and the affordability rises to £90-126k, but of course the repayments are even higher. £600/mo at the upper end.
Then what happens when - not if - interest rates rise?
And let's not forget that when the boiler dies or you get a service charge bill, it's now your problem, not your landlord's.
Just to compare apples with apples, how much are rents in that cheaper area?0 -
Start by moving into a cheaper rental so that you can save more. You have a two bed flat and this means that you are paying rent for a bedroom that you don't need. Look at moving to a one bed flat or studio flat in a cheaper area so that you can save more. At the moment you aren't able to save enough to put down a big enough deposit to get a small enough mortgage so that you can carry on saving. When you buy a house it won't mean that it will be cheaper than renting. Owning a house is often more expensive than renting because you become responsible for paying for all bills and all repairs as well as the mortgage so this means that you have to be very good at saving. The savings ate then put aside to pay for emergency repairs to the house that you own.
Someone who wants to buy a house has to understand that they may not be able to afford to go on holiday, have expensive phone contracts, buy cars on finance, or have lots of meals out. Budgeting is very very important because you have got to be able to pay the mortgage even if you get a bill for replacing the boiler which could easily be over £1000 depending on the size of the house. Owning a house is much more expensive than renting one because you become responsible for all of the upkeep of it so you always have to have a lot of savings0 -
rented for 14 years before buying a house, I'm older than either of you, there is no shame in renting. I am below 35
Don't spend beyond your means"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
I should have maybe made it clear that other than our rent/bills and his transport costs to work our outgoings are very low. We have no debts, credit cards etc. Cake guts - we haven't had a holiday in years and we have one (old!) car. I'm not being unrealistic and blowing all my money and still hoping to own a house. I appreciate the fact that we will need savings for the upkeep of a property.
There are no cheaper rental options in our area, renting is extortionate anywhere around here. We actually do need a 2 bed flat as i work from home part time and need an office so a smaller flat is not an option. The cheaper area - the place where we will eventually buy is farther away from our current jobs so ore time/cost commuting and wouldn't make sense for us right now with family commitments. But the rent is considerably cheaper there.
Adrain, maybe I'm missing something but not sure how you're getting mortgage payments more than our £800 rent?0 -
rented for 14 years before buying a house, I'm older than either of you, there is no shame in renting.
Don't spend beyond your means
Definitely not if it works for you. It's a personal thing i guess. I wouldn't want to raise kids in a rented flat and we're getting to the point where we have to think about things like that. Plus i just want something of my own and i wouldn't be happy not having that as i get older.0 -
username_user wrote: »I should have maybe made it clear that other than our rent/bills and his transport costs to work our outgoings are very low.
And yet you're still struggling to save.
Either way, though - £26k/year is just under £2,200/mo. If you're each earning £13k, there's very little off that for tax. So where's your other £1k+/mo going?There are no cheaper rental options in our area, renting is extortionate anywhere around here.
So you're renting a £180k property for £800/mo - a property you have no hope on your current incomes of buying - and complaining that's extortionate...? It's cheaper than the mortgage payments would be, if you were able to get a 100% mortgage. And that doesn't even take into account the landlord paying the service charge on the flat, and any maintenance/repairs/voids/fees.
Frankly, £800/mo doesn't sound like a great investment on his part.The cheaper area - the place where we will eventually buy is farther away from our current jobs so ore time/cost commuting and wouldn't make sense for us right now with family commitments. But the rent is considerably cheaper there.
Yet you're clearly happy to live there.
If you'd be happy to buy there, why are you not happy to rent there...?Adrain, maybe I'm missing something but not sure how you're getting mortgage payments more than our £800 rent?
That's easy. I mis-remembered your rent as £500. 'pologies.0 -
username_user wrote: »
There are no cheaper rental options in our area, renting is extortionate anywhere around here. We actually do need a 2 bed flat as i work from home part time and need an office so a smaller flat is not an option. The cheaper area - the place where we will eventually buy is farther away from our current jobs so ore time/cost commuting and wouldn't make sense for us right now with family commitments. But the rent is considerably cheaper there.
Adrain, maybe I'm missing something but not sure how you're getting mortgage payments more than our £800 rent?
So let me get this right. You don't want to move to the cheaper area where you would pay considerably less in rent because of the commuting but you need two bedrooms because you work part time from home? Have you even considered that if you lived in the area where it is cheaper to rent you could perhaps save enough to move back to the area you are in now?
When you want to buy somewhere you have to make compromises it sounds as if you aren't really willing to do this.0 -
And yet you're still struggling to save.
Either way, though - £26k/year is just under £2,200/mo. If you're each earning £13k, there's very little off that for tax. So where's your other £1k+/mo going?
Yes because of the low income. I was just making the point that we aren't going out and wasting our money on holidays etc as was mentioned. It's not an even split and is more complicated with my self employment. After rent, bills, food, transport/car costs there isn't much left. Anything left is saved but it's not going to mount up very quickly. We don't just have 1k lying around.So you're renting a £180k property for £800/mo - a property you have no hope on your current incomes of buying - and complaining that's extortionate...? It's cheaper than the mortgage payments would be, if you were able to get a 100% mortgage. And that doesn't even take into account the landlord paying the service charge on the flat, and any maintenance/repairs/voids/fees.
Frankly, £800/mo doesn't sound like a great investment on his part.
Again don't understand why you're saying rent is cheaper than mortgage? £800/m is a lot for a 2 bed flat compared to other areas and compared to the mortgage they are probably paying on it. House prices have risen hugely here and rent continues to rise. I'm sure he is making more than a tidy profit.Yet you're clearly happy to live there.
If you'd be happy to buy there, why are you not happy to rent there...?
That's easy. I mis-remembered your rent as £500. 'pologies.
I wouldn't say that. It's not where i want to live but its much cheaper than here so it's one of very few options. We'd be saving on rent but losing on time and money commuting and fees to move again.0 -
So let me get this right. You don't want to move to the cheaper area where you would pay considerably less in rent because of the commuting but you need two bedrooms because you work part time from home? Have you even considered that if you lived in the area where it is cheaper to rent you could perhaps save enough to move back to the area you are in now?
When you want to buy somewhere you have to make compromises it sounds as if you aren't really willing to do this.
There are 2 of us. 2 people commuting, 2 different places of work. A lot of my work is done evenings and weekends, commuting still happens. Still need somewhere to work/fit the things i need to work. On our current incomes no, that would still take an age to save enough. But one day maybe.
If i wasn't willing to compromise i wouldn't be considering buying a house and trying to figure out the best way to do so!0 -
You said your household income is £26k/yr.username_user wrote: »Yes because of the low income. I was just making the point that we aren't going out and wasting our money on holidays etc as was mentioned. It's not an even split and is more complicated with my self employment. After rent, bills, food, transport/car costs there isn't much left. Anything left is saved but it's not going to mount up very quickly. We don't just have 1k lying around.
Divide that by 12.
£2,270/mo.
Tax is going to be low. Let's call it take-home of £2000/mo - https://www.incometaxcalculator.org.uk suggests that's about right.
Actually, then there's the £5-10k of other income. So let's call it £300-600/mo after tax from that source.
£2,300-2,600/mo income.
£800/mo rent.
Looks like £1,500-1,800/mo for those other expenses to me.
Please, feel free to correct my misunderstanding with more appropriate figures.Again don't understand why you're saying rent is cheaper than mortgage?
http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator
£180k mortgage. £853/mo repayments.£800/m is a lot for a 2 bed flat compared to other areas
So move to those other areas.and compared to the mortgage they are probably paying on it. House prices have risen hugely here and rent continues to rise. I'm sure he is making more than a tidy profit.
And...?I wouldn't say that. It's not where i want to live
So you're happy to own a property somewhere you don't want to live? Sounds like a shortcut to longer-term resentment and unhappiness to me.0
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