Anxious First Time Buyer

A_Forlorn_Hope

Hi everyone!
Currently looking at acquiring my first home and I'm torn between choosing with my head or my heart. I currently have £30k saved up as a deposit for a 2 bed property but the prices vary wildly. I tend to side with cheaper options (as I can pay them off quickly) and expensive options (as I would see them as a forever home). The middle ground doesn't really do anything for me. My current options, as an example, are as follows:

-£90k property: Decent but it doesn't blow my socks off. Safe area, everything I need, but on the small side. Can be paid off in around 6 years if I overpay. Mortgage is around £200 a month.

-£170 property: Obviously much more expensive but is exactly the kind of thing I would want as an end goal. Very spacious, safe area etc. Can be paid off in around 14 years if I overpay. More risk of going mad due to the length of time however! Mortgage is around £500 a month.

These are rough figures. Currently on £30k a year and can safely put away £1k a month towards my mortgage. I really want the second property but I'm fearful of what ifs (losing my job etc). Has anyone been in a similar situation? My options are

A) Cheaper option, pay off mortgage quicker on a property I only feel ok about, save up for pension

Expensive option, happier with choice but tied to overpayments for longer. Can't really change car/go on holiday any time soon

C) Expensive option, just overpay when I can and enjoy life doing what I want within reason

I'm overly sensible usually but I'm trying to be more selfish and just enjoy life a bit more. As this is the biggest financial decision of my life, I'm a bit hesitant to go either way. Can anyone give me a push?

Apologies for the incoherent rant

A_Frayed_Knot

Depends on a lot of different scenarios -

How old are you, how secure is your job, do you have savings as well as a deposit,
how long are you taking out a mortgage for, etc,etc,etc.

If you feel you can throw £1000 a month at your mortgage, then bottom dollar, you will find more than you think to o/p, and that 14 years will become a lot less.

What are your plans, exotic holidays, kids, expensive cars - all need to be taken into consideration.

All that said, if you can expect to become MF in 14 years without all the MF knowledge on this board, then I would go for the more expensive property as you will be able to clear off a lot sooner than you think if you keep your focus.

A_Forlorn_Hope

Thanks for your reply! Sorry, I missed quite a lot of info!

-29 years old
-Single
-Job is secure. Currently working for a small, but rapidly growing company
-I'll have around £5k on savings to stay on the safe side
-Looking to take out a mortgage for as long as possible to give me some flexibility (around 35 years) but with the plan to overpay every month/most months
-No plans for kids or marriage (sad, I know)
-Not too fussed with expensive holidays and cars until after the mortgage is out the way

I hope this helps! Thanks for your insight; I would hope to clear it within the 14 years or even 20 at a push which seems to put me on track as a lot of people appear to be MF at 45-50+

A_Frayed_Knot

Always good to keep options open as real life will no doubt get in the way at some point, and throw you off the rails for a while, that said, if you have enough savings - you'll pull through.

So hopefully, I've given you the shove you need however you need to feel comfortable in yourselfto what you are about to embark on.

All I can say (not comparing) is I wish I had pushed myself even more along my journey,
eg - Took out mortgage for 18 yrs - should have pushed myself to 14 yrs, then on my next fix,
I had 14 years left - so this time was going to reduce to 10 but pushed myself and reduced to
8 years, after that had 6 years left - paid that 6 years off in 18 months by pushing myself

It's amazing what you can do with the good advice and support on this thread and keeping your focus.

I am now sitting in a 3 bed house MF (for the last 3 months) and can't actually believe "I've done it"
and on a last note, the property has increased by 70% :eek:

Well worth the push, but please make up your own mind and choice, it could be I was just lucky.

A_Forlorn_Hope

Wow that is impressive! Glad to hear you're MF with an incredible profit too! Looking at my finances I think overpaying by £500 would be my limit due to bills and other outgoings. I guess that's my concern as there isn't as much leeway for any other expenditures.

Then again, that's if I'm constantly overpaying. If I wanted holidays/a new car etc I could always forego OPing a few times...

lisyloo

I would say push yourself and get what you want.
Mortgages are nominal so will diminish relative to earnings as you get promotions and pay rises.
Also how motivated will you be about something you don’t love?

I’ve lost jobs 3 times in the last 30 years.
The first 2 I got a job easily straight away (the second time I have 5 offers).
The 3rd time I had 3 months off but that was partly out of choice (I was exhausted and felt I deserved a break after 26 years) and partly because I decided to make a change of role.

Have an emergency fund of ideally 6 months living costs (some say income, I say living costs).
Concentrate on being employable with your skills.
Be assertive at reviews and take ownership of your career progression.

Don’t forget about pensions especially if your employer does salary sacrifice where there are NI as well as tax breaks.
You might be better off slowing the overpayment and building a pension (you can still do both just have a balance).
Salary sacrifice mean relief of 20% income tax and 12% NI at basic rate so a real boost and out performs overpayment but do bear in mind the money is put away until 55 (and probably 57 in your case as the age is increasing). There is no way to get at your pension even if you fall on hard times, so a balance is required.

A_Forlorn_Hope

Thank you for your wisdom! I guess it really comes down to going for what I truly want and fighting for it. If I really concentrate on my worth and continue to build on my stellar track record, I should remain on the right path work-wise. Hopefully this will lead to pay rises, especially in a growing company.

Great to hear you've been so resilient over the years

Yup, definitely want to ensure I remain financially safe so I'll definitely keep that safety net in place.

Thanks for the advice regarding pensions. I think once I get a mortgage sorted I'll definitely start looking into achieving a good balance so my pension doesn't get ignored!

Smellyonion

I would personally go for the more expensive forever home and not worry about paying off too much so quickly. Your attitude is outstanding and aiming to pay off a mortgage so quick is admirable but don't sacrifice your quality of life. You can easily find the balance between the two.


Moving is expensive.
Stamp duty is expensive.
Selling is expensive.
Buying is expensive.
expensive properties increase in value greater than cheaper properties (as a sheer amount not %).


You would save thousands by going for the forever home early on and gain thousand in greater property value growth as well as remove later stressors. As people mentioned, Mortgages are relatively static (unless the economy goes crazy), inflation will reduce your mortgage payments as time progresses.


Will the bigger property facilitate a lodger - would this help you on your way to dual property ownership?


All my opinion.

BookmobileBadGirl

I echo onion, moving is expensive and an absolute pain in the !!!

I would go for the second option, but could you get an mortgage for this based on your income?

You wouldn't go mad over a 14 year mortgage, mine was 35 when I took it out and it still only at 32 years

A_Forlorn_Hope

Thanks for the advice! What you're saying makes a lot of sense and if I can profit by moving to my preferred home, even better!

I worry too much for my own good, to be fair

A_Forlorn_Hope

BookmobileBadGirl wrote: »

I echo onion, moving is expensive and an absolute pain in the !!!

I would go for the second option, but could you get an mortgage for this based on your income?

You wouldn't go mad over a 14 year mortgage, mine was 35 when I took it out and it still only at 32 years

According to mortgage calculators and after doing some research into my chosen provider, it looks like I can get a decent 80% LTV

I think I'm probably too fixated on shifting it quick. As Onion said above, I should really focus on living comfortably and overpaying where possible