Low income - do I have chance of buying?

Becca_4

Hi everyone, in about 6 months I am hoping to buy my first house. I'm after some advice about whether I'm being realistic or need to save up for longer first.

My basic income is £16850, I get overtime every month but generally only around £50-£100. I'm looking at houses betwee £75000-£80000. I have a 5% deposit - £4000 in a HTB ISA. Currently have £1500 on a credit card and a £1000 interest free overdraft but both would be cleared before I applied.

I'm 23 years old and would be looking at a 30 year mortgage term. Do I have any chance of borrowing this much in my circumstances?

Zizou

That is realistic!

Have a lodger to help you out but you'll need a permission from bank to do so! Do this after few months in!!!

Make sure the property does not require work which is more than £5-7k!!

Mortgage amount is basically 4.9 x your Income

Good luck!

hazyjo

Wouldn't want to borrow more than 4x income. Not sure what they're lending these days.


I think you're a bit short still. You'll also need money for solicitors, survey, etc.


A lodger might help, but the lender won't count that as income.


You'll need your credit card/overdraft to be clear for around 3 months. They usually ask for the max that's been on it in the last 3 months. May be longer for a FTB.


Good luck.

ReadingTim

6 months from now is the middle of winter when the market is usually pretty slow. You might want to put off the search of a few more months and use the additional time to save for a bigger deposit: the housing market doesn't really come out of its annual hibernation until the spring, and there is no such things as having too large a deposit.

kingstreet

£69,800 over 30 years is the output from one high street lender's affordability calculator.

You need to do more yourself, making sure you enter the right figures in the right boxes.

Failing that, consult an independent broker who will do affordability and formal cost illustrations for your consideration.

Viking_mfw

Definitely consider the fees for conveyancing, surveying and the mortgage application fee - they could easily take up the whole of your £4k by themselves.

I would echo the depths of winter as a good time to get a bargain. But I would be very wary of attempting to buy a house with only £4k cash in hand.

[Deleted User]

Remember to consider this - could you afford mortgage repayments if the rates went back up to 4%?

Becca_4

Thanks for the replies everyone lots to think about. I'm currently owed £1500 from a family member which will pay off the credit card as soon as I get it back. Will just carry on saving for 6 months and reassess when I get there. Think my parents are giving me about £1000 to help with fees but how much should I aim to have for these overall?

ST1991

Certainly looks do-able

I would recommend saving up to make sure that you have more than enough (e.g an extra 2k on top of your deposit + legal fees etc) and paying off your credit cards first.

Never know what you might run into during the buying process, extra legal fees if the process takes a long time, mortgage fees etc.

If you end up not needing the extra you have, at least you then have a buffer for when you move in, to buy new furniture or keep as an emergency fund (in case of boiler breakdown!)

armchaireconomist

I first applied for mine while earning £18k and the max they would lend me was £58,000 on a 25 year term so you're probably pushing it.


Can you realistically afford a mortgage and a house? I knew I would struggle, but I had guaranteed pay rises every 6 month and worked out my own "affordability" from those.


Personally I would continue to save and clear the debt. Look again in maybe a year.

TBagpuss

I think you probably need to save a little bit more - I would have thought your borrowing capacity on that income (assuming no debt) would be in the region of £60K - £65K, so you aren't a huge way off.
Costs of buying:
you will have:
your solicitor's or conveyancer's fees, plus VAT.
your searches - probably £300 - £350
your survey - cost dependent on what type of survey you chose, but probably £300-£500 +VAT
mortgage application fee (you may be able to ad this to your mortgage, but if you do, remember that means you'll be paying interest on it for 30 years)

I don't think your overtime will be taken into account in terms of your mortgage capacity, but of course you can use it to boost your savings!

Well done for getting on track.

You could consider whether it would be practical for you to do more overtime, or to get a second short term job, to boost your savings over the next few months, so you have a bigger deposit and a but if an emergency fund should you need it.