Can we Afford this?

stuartucw

Hi all,
I need some on buying a property and whether my girlfriend and i are over stretching ourselves.
we are currebtly renting a property for £475 a months with all the added extras on top. We are currently looking at buying a property at auction. The property is a mid terrace 3 bed. We have savings of £30000 and are first time buyers.

Myself

I am a 22 year old GTP (teacher training) who will qualify in 4 months with a dramatic pay rise. My current monthly income is £13399 before taxat present with only £80 outgoing on non property bills (private loan). My income will rise to £22599 before tax in a few months. my gredit history is OK.

The Boss

She is starting up as a freelance makeup artist who earnt roughly £6000 through this work last year and also has a part time job which pay £10000 a year. Her overall income is approx £16000 befroe tax

We have been approved a mortgage of up to £183000 based on my pay rise in a few months at a rate of 6.17% fixed for 5 years.
However the property we are looking at has a guide price of £150000 but we think it will go for £165000. Consequently the interest only paymets would be 745.54.

Now with nowing this my question is with all the other bills, insurance etc can we afford to stretch ourselves this much until i get my pay rise or are we puching ourselfve down a steep hill without and cushioned landing? I think we personally can but i need some reassurance from indepentsObviously this is all based on the property going for £165,000, but what should our absolute limit be? I can't get my head around the numbers!

Thaks for any help it will be much appreciated.

danm

i would budget about £1100 for IO mortgage payments and associated bills. Utility, insurance, 'reserve fund' etc. - so this takes care of the OH's salary.

Out of your salary you therfore need to think about everthing else : travel, food, going out, holidays, food presents, savings, mdeical insurance, gym, car etc. etc. This list goes on.

And the one big thing......how will you pay back the capital on the loan.??

Without looking into too much detail i would say you could manage, but it will probably be tight.

sarkin

I fyou are setting this up on interest only then you cant afford it if you go repayment you will be stretched. Whats the market like in your area you may be able to go in with a lower offer

stuartucw

danm wrote: »

i would budget about £1100 for IO mortgage payments and associated bills. Utility, insurance, 'reserve fund' etc. - so this takes care of the OH's salary.

Out of your salary you therfore need to think about everthing else : travel, food, going out, holidays, food presents, savings, mdeical insurance, gym, car etc. etc. This list goes on.

And the one big thing......how will you pay back the capital on the loan.??

Without looking into too much detail i would say you could manage, but it will probably be tight.

I costed it out at around the same figure. With regard to the repayment questions. as soon as i get my pay rise i will overpay the morgage each month which has no penalty charges with the mortgage we have but obviously a limit. i think it something like £2500 for the first year and steadily rises.

Thanks for the help. What do you make of the mortgage offer? Competitive or slightly high?

stuartucw

sarkin wrote: »

I fyou are setting this up on interest only then you cant afford it if you go repayment you will be stretched. Whats the market like in your area you may be able to go in with a lower offer

As it and auction we'll jave t see what iot goes for on the day but i believe it will go for around £165k.
The market in our area is still on the rise unlike most of the country. Were in southend which is an hour away from london. The property once refurbished will be worth 185K comparing to the houses around it but it needs a good £15k to renovate and moderise it.

Once my pay rise comes into force i will overpay with no penalties.

bandraoi

You will overpay and pay for the renovations?
How have you costed the renovations?