When is the right time to buy a flat?

windoworange

Hi all,

I’m just looking for advice on the best time to buy given a number of current variables.

My partner of 4 years and I want to buy a place together and are ready to make this commitment. However at the same time he has a inheritance which I do not and I would want him to protect his interests - I.e via a deed of trust.

My partner has £30k inheritance, no other savings and isn’t currently saving anything. I don’t have a penny of inheritance, but have £5k saved at the moment and am growing my savings at £300 a month (this will increase if I get my promotion as discussed below). £3k of the savings are in HTB ISA.

My current salary is £43k and I am permanently full time employed. I am likely to be promoted to a £55k salary in August - this is not a foregone conclusion but definitely far more likely than not (and obviously could be a factor of timing of buying hence mentioning it).

My partner’s industry means he is, although not technically self employed, not permanently employed and goes through on one short term (3-4 months typically) contract to another getting paid on a PAYE basis. In between contracts he might be out of work 3-4 weeks. He earns about £25k doing this.

We both have excellent credit ratings and no history of bad credit.

We would be hoping to buy in a suburb of London where currently you can get a 2 bed flat for around £300k. I’m not sure if realistically this is going to be achievable in this area for much longer.

So the question is, when do you think would be a good time to start thinking about buying a place or seeing a mortgage advisor? I’m not sure if realistically our savings + my salary is enough at the moment - and I know my partner’s earnings are likely to be mainly or wholly disregarded. But then if it IS enough, not sure if we should get a move on before pricing ourselves out of the area - we are also sinking so much money into rent at the moment! Or if I would be better off increasing my savings pot first.

Re the potential deed of trust - aware that my partner is putting up the vast majority of the deposit, but I currently pay 60:40 rent and this as a minimum would continue if we got a mortgage (probably increase to 70:30 if I got my promotion).

Thanks all!

nicmyles

Without going into your specific circumstances, I would say in general:

If you want to buy, buy when you can. It's almost always better to have the house and be paying it off than not. You could go mad trying to perfectly align your own circumstances with an unpredictable market.

There are things about my property buying history I might have done differently with the benefit of hindsight, but all you can do is the right thing for you at the time and figure the next step out when you get to it.

westernpromise

At current mortgage rates you pay off 15% of the loan in the first five years. Between this and a typical 10% deposit this means you're insulated against a price fall (which will be temporary) of 25%. You're also paying down your mortgage rather than your landlord's.

The deed of mistrust route makes sense but if you marry then divorce a court can set it aside of course.

There is a common misconception that divorce law is sexist against men, but this is inaccurate. It is truer to say they are socialist and always penalise the better-off partner. In your case, that looks like you. Just a thought.

Candyapple

If you are on £43k, a take home salary of roughly £2.7k per month, why are you only saving £300 per month?

If your partner is bringing home £1.7k after tax, why is he not saving anything or has been saving?

Do you both have lots of credit card debts/loans or something?

There is nothing stopping you now from speaking to a broker about your situation, but I would probably wait until August once your pay rise has actually been confirmed and you have been paid for that month as a lot of things could change between now and then. What happens if you started looking now and found somewhere you liked next week and wanted to put an offer in, that would mean you would not be able to do anything about it until August time and no vendor is going to wait around that long.

Will you be looking to buy a new build/use Help to Buy, or were you looking to buy a flat the old fashioned way?

How old are you and your partner?

The below implies that both of you have zero debt at the time of applying.

If you did it the old fashioned way, your partners inheritance would give you 10% deposit (based on £300k price) and you use your £5k to pay for any legal fees/house moving costs etc.

If you were working on your salaries together (£55k and £25k) you could easily get a mortgage for £320k (based on x4 multiples) so £270k which is what you would need, is achievable.

If you were going to do it based on your salary alone, you might run into affordability issues. (£55k x 4 = £220k) or lets say the bank did it based on 4.7 multiple (which is what my bank have used for me) that would be £55k x 4.7 = £258.5k they would be willing to lend, which once you add the £30k deposit on top, would mean you could look properties up to £288.5k.

windoworange

hey Candyapple,

Thanks so much for your reply.

Neither of us have any kind of long term debt other than our student loans. I have a credit card which I do most of my monthly spending on but each month pay off in full. I take home £2400 after tax, student loan and pension - the first £1.1k goes on rent, bills and travel (depressing yet true), I save £300 for house fund and then from remainder, around £200 goes on a saving account for holidays with rest for my general lifestyle/paying off credit card from previous month. I must admit until writing it out like that for you I didn’t realise how ridiculous that sounds and I should cut back!

My boyfriend doesn’t have as busy a social life as me and doesn’t spend anywhere near as much on lifestyle stuff - he doesn’t have as high rent and bills as I pay more, but he tends to just leave the excess cash in his current account, so he is never low on money in the periods he is out of work.

We’re both 28.

No big preference either way with HTB but we would not get a 2 bed new build for 300k in our area.

I think will prob take your advice and wait for my (hopeful) promotion and assuming all goes well make an appt after that. And in a meantime reassess how much money am spending on non essentials!