FTB Advice Please - Would Mean a lot.

tomstickland

The way things are looking at the moment I'd be tempted to watch to see what affect the tightening of lending has on prices.

zippygeorgeandben

Thanks for the replies guys.

I keep thinking that at nearly 30, I don't want to be renting forever! Although I don't mind renting at all.
The other option is not to get a 2 bedroomed house/flat as we dont need one an we could get a really nice 1 bedroom flat in a nice area for around £170-190K

Ben

RedTomato

Hi Ben, firstly, I feel sorry for you and this country when a person of your age, with a perfectly good salary and no major debt has been priced out of owning. I do hope that changes.

Anyway, to your question. As you say, when you own a place you are responsible if anything "blows up", you are also responsible for longterm upkeep of the property (roof, brickwork, fences etc. etc.) either as a freeholder or leaseholder (and as a leaseholder you may have no say when things get done) so don't forget to allow a sum each month for maintenance/building up a sinking fund for repairs. Also you will have to pay buildings insurance.

Rent is not necessarily dead money if you are paying considerably less than you would be to the bank in interest. However, there is a psychological barrier to get over. It's true that you might be paying the repayment mortgage for someone who was lucky enough to buy before prices shot up. However, don't let resentment at this cloud your judgement of what return you might be making on your savings.

People have certainly been seeing interest on their savings not keeping up in any way with houseprice rises so yes, there is a risk that, if you don't buy, houseprices will keep moving away from the average although one has to ask how much longer this situation can continue?

Another thing I'd ask myself is if it is really sensible to borrow so much based on a joint salary. What if having a baby meant that your partner couldn't work for a while? Should you rather factor in her income at a possible lower, part-time level?

Finally, I'd say, once you have a mortgage, it is prudent to keep enough money stashed away to survive for 6 months should some sort of disaster strike - unemployment, ill-health (or have a water tight mortgage insurance policy). You would not want to risk losing a property having put in a lot of money in fees and taxes to secure it - and of course it is not unknown in this country to see price drops and you wouldn't want to risk having to sell in a falling market either.

Good luck!

zippygeorgeandben

Hi Red Tomato,
Many thanks for the advice and for taking the time to post. You are quite right. It is unfortunate that I can't own a property but having said that, unfortunately I live in quite an expensive area of the country (and not necessarily one of the nicest). I'm always hearing about how much debt the country is in and it's one of the things this country worries about the most but I have never got into that state. The only credit cards I have are ones where I get something back in return. I think a Mortgage Lender would be extremely surprised If I told them I haven't got any credit card debt.
By the way, a point I forgot were student loans from my university days. I think these total around £4000 and I have always deferred them but I will have to pay them back in July of next year when they come round as I am now over the threshold for deferrment.
Perhaps this is maybe a year too early, my partner isn't really looking into buying as much as me but perhaps that is because I like to see what the market is doing etc.
Oh and one final thing, unless my partner has a baby out of their stomach, I don't see this happening as 'she' is actually a 'he'. Children aren't on the agenda so no need to worry about extra costs like that!

Thanks for reading, I feel that you understand my situation guys.

Ben

RedTomato

If you stay together you might end up adopting!

Yes, East London is very expensive. I know people say it will go up even more due to the Olympics but apart from the added transport infrastructure I don't really understand why, it is not as if this city doesn't have major international events all of the time.

Another thing to think about is that a one bed is much less flexible and if a two bed isn't that much more, then you have the possibility of renting out a room if things get tough.

zippygeorgeandben

Hi Red Tomato,

Apologies for not replying quicker. Yes I agree about the one bedroom side of things. Perhaps it's just best to save an amount each month and see what happens at the end of the tenancy.
When would you seriously consider looking at purchasing if a tenancy ran out on 31st July? I suppose the first thing would be for me and partner to book a meeting with a mortgage broker to see how much we could borrow. Or do we find the house and then ask that question?

Cheers,

Ben

gemma.zhang

defintely need to talk to your broker first, knowing exactly how much you can afford, and your budget before looking at properties.

Good Luck :-D

pinkkaz

Hiya Ben,

You seem exactly the same as me and my boyfriend. We earn just under 50k between us and we are in the process of buying a £220k flat in East London (due to complete early next month)! It was actually advertised as £235k but remember you can get that down. In fact, you are in a better position as you actually have a deposit whereas we went for 100% mortgage - we only have £5k for fees and moving costs (and a bed for the new flat!)

However, luckily we got our mortgage sorted literally the night before the first rate rise so it is at 4.9%. Interest only, but we are planning on overpaying each month and then hopefully moving to a new fixed rate in a couple of years. So yes, it is totally do-able - at least I hope so!