Help! - How much should I spend on my 1st house

juniordoc

With a £37.5K deposit you could get a 15% LTV mortgage on a 250K house.
If you go for a more expensive house and so have less than 15% deposit you'll get a less favourable rate and it will cost you more in the long run so up to 250K seems like a reasonable line in the sand.
I'd keep looking and keep saving, and make sure you're in a good position to move when you do find the right property.

hazyjo

If you can afford it, I'd go for it. You're likely to have pay increases. I'd say get used to paying it before kids come along (if they do) and stay put in as big a place as you can afford so you can stay there long term.


£65k-ish sounds like a very good joint salary for the area. I had a slightly higher joint income with my ex and we had a bigger mortgage. We had put down a large deposit though so maybe the rate was slightly better, although this was 7 years ago, so maybe not. Life was pretty comfortable. We were out a lot and had several breaks/holidays a year.


What do those who gasped earn? Maybe they were on around the £20k mark each, or thinking of a single salary rather than the fact there's two of you. Some people thought our mortgage was high, but when we split we both ended up with roughly half the mortgage we'd had when it was joint and nobody batted an eyelid.


I would work out what you have left after roughly accounting for mortgage, bills, food, holidays, car, etc. If it's tight, go for less as there's always an unexpected expense or an increase in rates further down the line. We paid roughly £1200-1300 each into the account to cover mortgage, bills, etc, but had a grand or so each left.


I may be in the minority with my view as people often go for the lower side of affordable. I have always tended to go for higher (apart from my last move).


Be warned though - when househunting, you ALWAYS say 'if we just had another £30k-ish we could get what we wanted'...

need_an_answer

Are you willing to move your search are just a little,maybe to the BS15 postcodes?

The areas you have been concentrating your search on are quite expensive and I expect very difficult to find something in the 3 bed range let alone even newish built.

By extending your search it may throw up some slightly more achievable prices and what you get for your money and not compromise the area you want to live in too much.

Presumably this would be the top end of your budget in your preferred area
http://www.rightmove.co.uk/property-for-sale/property-62139490.html

It possibly reinforces that your expectation and budget are not quite together as yet.

I suppose the question is,what have you seen for £270k that you like?
In going to that figure does it give you a lot more choice and the ability to stay in the property longer (not a forever home,but one you may be happy with in the medium term)
If that is the case then maybe you need to push for the next level, as you clearly arn't finding "the place" on the current budget.

ReadingTim

I wish I'd stretched myself more than I did when I bought back in 2006 - my job was secure, my salary was going up as I gained skills and experience, and also had no major life-changing events planned such as getting married or having kids.

You (and your partner) will need to take a view on future levels of income and expenditure to determine the level of risk you're willing to take now - whilst things usually get easier, events post-financial crash suggest this hasn't necessarily been the case over recent years.

getmore4less

how much can you afford?

The bigger the mortgage the less there is for lifestyle

Do SOA for now and with a house bought at various price points to see where your sweet spot is trading lifestyle for more expensive house.

The current savings rate+rent will give you a rough idea what you could afford now with no changes

Rules of thumb are useless they don't scale for disposable income.

With £65k that's net £3,790-£4,230pm

£1,500pm is more than enough for a couple to live on

£2kpm will support a £370k mortgage @ 5% over 30 years(£300k @ 7%)

Still some left for saving/spending.

Affordability is not the problem with an appropriate lifestyle changes getting a lender to let you have the money might be.


Another option is to go even bigger with HTB this will give a far better interest rate at the higher end and you can plan an exit using the savings you make.

Down side is new build premium.

if you can get big enough to skip a move up the ladder this may be a reasonable trade off it costs a lot to move house.

£300k 30y @ 2% £1,100 plenty of headroom to take rate rises and save till they happen.

With your deposit and HTB you have a far bigger pot to play with than the £230k you have been looking at

steampowered

I wouldn't be too worried about stretching yourself slightly for a first property.

The lending criteria applied by the banks at the moment is pretty conservative and gives a lot of leeway for interest rate rises.

If the worst came to the worst you'd just have to cut back on expenses a bit if interest rates rise. That should be easier to do when you are in your twenties.