First time buyer - how much will I need?

Exodi

@OP, sorry to say, but this is why there's a stigma attached to the difficulty of getting on the housing ladder. With your income you'll be limited to a mortgage of ~£133,000 + Deposit (as per Lloyds).

Sadly I think you live in the land of make believe, even if you could get a £270,000 mortgage, plugging the numbers into the MSE mortgage calculator (4% interest) states the repayments on this would be £1400+ per month. Include £100-£200 for council tax, £150+ for bills, £200 for food, clothing, entertainment, a car, well I think you can work it out.

Also, I noticed you said about transferring the full sum into a LISA (Lifetime ISA) to take advantage of the maturity bonus. I really think you've confused yourself here...

a) you can put up to £4,000 per year into a LISA. This is precisely to stop what you just suggested:- people smashing 80% of a houses value into the LISA the day before exchanging to enjoy the rest of the house being financed by the tax payer (you could even go one step further and then immediately sell the house - free money!!! !). I hope I misunderstood you thinking you could do this lol.

b) the LISA has to have been open for at least a year before purchasing a property. This again is to remedy the above.

For reference: https://www.gov.uk/lifetime-isa

You should either look at properties for £150,000 which are a lot more realistic and make your way up the ladder, or bunch together with someone.

Sadly the truth hurts.

I couldn't even get the mortgage you're after, and I'm on £48,000 p/a...

marliepanda

bp5678 wrote: »

I have 2 questions:

1) How much money will I need to have saved?
2) When do you think I will realistically have the money?

To give you some background, I have £2600 in my Help To Buy ISA and I'm adding £200 into it per month.

I have £8500 in my current account. I am averaging saving £850 a month.

I also have a Lifetime ISA. When I come to buying my first home, I will move the majority of my money from my current account as well as that in my Help To Buy ISA over into the Lifetime ISA.

I'm not sure who has told you you can do this, because you can't. You can put in 4k a year into a lifetime ISA, so on your current savings it would take you 2.5 years to get that into the LifeTime ISA

My credit score is pretty good.

I would like to take out a 10% mortgage. I'm assuming you mean 90% mortgage.

I expect the home I move into to be in the region of £300,000. Your salary does not support that. Even if you find a lender to go to 5x your salary you are going to be lending 150k, not 270k.

EDIT: I'm only earning £28k however I live very frugally. Would I be able to get a mortgage based on this salary do you think?

So regarding my 2 questions:
1) How much money will I need to have saved? For a 300k house you will need to save £150,000.
2) When do you think I will realistically have enough money to meet question 1? Based on your current savings and saving amount per month, 18 years...

My points in red... Unfortauntely despite you saving well each month your numbers are far far too high for what you can achieve currently, and you cannot use the Lifetime ISA the way you think you can.

MaxiRobriguez

A £300k house isn't a FTB house anyway unless you live in central London.

You have two options to get yourself towards affording a £300k house in the near(ish) future.

1) Buy a £150k house as you'll be limited to as others have explained, but choose the house based on ability to let out rooms to others so that you can use their rent to pay your mortgage whilst you save EVERYTHING you have over the next few years to build up even bigger deposit.

2) Find a partner and use their salary as well to help obtain bigger mortgage.

...

3) Get your parents to help if it's an option.

DD265

We have a combined income of £60k and can't get a mortgage of that value either, though we didn't try, and also have a bit of credit card debt.

On a more helpful note, the fees for setting up our mortgage are under £100 (with Skipton), the survey is looking about £500, and our solicitor fees, inc searches, are coming to about £1100.

You'll find a H2B ISA more flexible than a LISA, but you can pay more into a LISA annually therefore you can get a bigger bonus in the LISA. You can pay into both ISAs annually, but you can only take the bonus from one of them, and once the money is in the LISA it's committed either until you purchase the house or until you retire; there's a penalty to withdraw for any other reason.

I'd be tempted to max out the LISA each year, and find one or more high interest savings accounts for the rest. There's no point paying into a H2B ISA if you think you'll take the bonus from the LISA instead. If there's any likelihood that you might buy with another person, and they're also a FTB, then you can each use a H2B ISA or LISA.

Jane_B

MaxiRobriguez wrote: »

A £300k house isn't a FTB house anyway unless you live in central London.

You have two options to get yourself towards affording a £300k house in the near(ish) future.

1) Buy a £150k house as you'll be limited to as others have explained, but choose the house based on ability to let out rooms to others so that you can use their rent to pay your mortgage whilst you save EVERYTHING you have over the next few years to build up even bigger deposit.

2) Find a partner and use their salary as well to help obtain bigger mortgage.

...

3) Get your parents to help if it's an option.

Not sure what you're on, but most places in the south east (not just London) will be £300k+ for a regular home/apartment.

Jane_B

Most lenders will max allow 4.5x salary, so on £28k you're going to need a lot more of a deposit to get a £300k house - more than 50%!

If you are not planning on going in with a partner down the line, it might be worth looking into shared ownership properties.

MaxiRobriguez

Jane_B wrote: »

Not sure what you're on, but most places in the south east (not just London) will be £300k+ for a regular home/apartment.

A very quick search for property in Reading and Cambridge shows plenty of decent enough looking two bed apartments for £220k.

This is a FTB remember, expectation shouldn't be to automatically move into a decent home first time round. It might take a bit of doing up or not getting the nicest house in the area if your budget is severely limited.

Exodi

MaxiRobriguez wrote: »

A very quick search for property in Reading and Cambridge shows plenty of decent enough looking two bed apartments for £220k.

This is a FTB remember, expectation shouldn't be to automatically move into a decent home first time round. It might take a bit of doing up or not getting the nicest house in the area if your budget is severely limited.

They did say the south east, but that said, I live in Kent and yeah, £300k would get you a decent 3 bed semi detached house anywhere except Canterbury. Certainly not a house you'd expect a FTB to purchase on a sole mortgage. £200k is really the starting point if you're opposed to owning a flat.

CornwallFTB

MaxiRobriguez wrote: »

A £300k house isn't a FTB house anyway unless you live in central London.

Why isn't it? Really dislike these sweeping assumptions that are often seen on this forum. Based in the SW here, FTB and just bought a house for exactly £300k.

CornwallFTB

MaxiRobriguez wrote: »

A very quick search for property in Reading and Cambridge shows plenty of decent enough looking two bed apartments for £220k.

This is a FTB remember, expectation shouldn't be to automatically move into a decent home first time round. It might take a bit of doing up or not getting the nicest house in the area if your budget is severely limited.

Why shouldn't the expectation be to move into a "decent home" first time round? Just because someone is a FTB it doesn't automatically mean they have to start at the bottom of the housing ladder.