FTB needing advice and reassurance

dippa

We're first time buyers and have been saving like mad. We currently have £17k saved and continue to put away £2k minimum p/m. Our jointly (minimum) income is £3700. We can afford a mortgage of 1k p/m and over calculated our bills with mortgage to be £2k, which would leave us £1700 p/m to live on. Does this sound reasonable ?

The properties we like are coming in at the £300k, which means extended saving time for deposit. By July 2020 We'll roughly have £43k so more than doable.

Our dilemma is, we have a H2B isa that can't be used if we purchase a property more than £250k, meaning we miss out on the governments 25% for each ISA. Also, we don't want to take on too much and over stretch ourselves being first time buyers. Would we be best to go for a property at £250k allowing us to use the H2B, be more affordable and allow us to over pay the mortgage and allowing us to get a property much sooner. Or, are the properties at 300k within our reach and more than doable , meaning we can hang on in there and go for the properties that we much prefer

Just after some advice and reassurance

letitbe90

Personally, I think having a house I want is more important than the H2B bonus, as nice as it is.

It really depends how different the houses are between the 250k and 300k mark to see if it’s worth losing the bonus over. If you are potentially buying a place for the very long term, the bonus would matter even less.

As for affordability, speak to a broker with all your income and liability details (L&C provide a free service) if you want to get an idea of how much you can afford.

Note that once you exceed 300k, there will be stamp duty payable.

dippa

Thanks for your reply, it makes a lot of sense! We have got another appointment with a mortgage advisor this week who will be able to go through everything with us. Thanks for your advice!

Housebuy12345

£1700 would depend on your living expenses/lifestyle.

Go through all your spending now and work out exactly what you spend.

My gut is that you are both on a low income so why push yourselves with a big mortgage. Pregnancy and redundancy - but I’m making assumptions about your lifestyle.

dippa

Housebuy12345 wrote: »

£1700 would depend on your living expenses/lifestyle.

Go through all your spending now and work out exactly what you spend.

My gut is that you are both on a low income so why push yourselves with a big mortgage. Pregnancy and redundancy - but I’m making assumptions about your lifestyle.

Thanks for your reply,

A low income in comparison to what? What a lot of money is to some, isn’t as much to another.

I appreciate your help and advice and will take what you’ve said on board

Housebuy12345

Yeah I know what you mean and when making a comparison to what you want to buy, with what you have to buy it with. It would also be valid to make the same assumption if you were wanting a million pound home with a take home pay of £150k.

I’m assuming the figures above are take home pay. I’m also assuming a job around the £22/25k mark isn’t ‘skilled’. If there is scope for actual development that a skilled graduate would experience I would encourage you to get the house, but i really don’t know your situation.

My income is £22k, I pay a fixed room rental price of just shy of £600pm and I’m struggling to maintain my lifestyle. I guess when I think about it, I’m aiming for £150k house and you are doing the same, just double income. I however won’t have children, pets etc.

If I was you I would make a list of everything you spend your money on, and see how much you have a month to play around with.

I personally think a house worth £300k is a lot. But depends where you live etc.

Housebuy12345

^im on the FTB roller coaster as well.

I would rather have £2k a year to go on holiday than a nicer home.

dippa

Fortunately I am in a skilled profession with opportunities for progression. My income is £32k without overtime. Overtime I earn an extra £700-£1300 p/m. I pay nearly £300 into my pension and £350 into shares, which is all pre-take home. I’ve not included any additional extras in my calculations as I’m trying to working from my absolute minimum take home after pre-deductions ie pensions, shares etc, which is roughly £2000 p/m

My partner has an annual take home of £25k without overtime. She earns an average £300 p/m over time, which isn’t included with our calculations. She is currently in the process of doing her masters and will then proceed to complete her doctorate if all goes well. Her take home after all deductions without overtime is £1700.

We have no kids as of yet and won’t be having any pets if I can help it lol We live in the midlands so no London prices.

I feel you with the holiday each year. Always need that get away regardless!

I think our biggest concern is how scary it is to owe such a large amount over a long period. I don't wan't to struggle and would rather be in a position to overpay and reduce it down quickly. I'll take your advice and closely monitor our spendings to see what we have left.

Are you in a position to buy your property yet or still saving towards the deposit ?

Housebuy12345

So you minimal contractual take home pay is up to £25k and £20k according to an online calculator.

£300k in the midlands, must be special?

Have you visited a mortgage advisor just to get a mortgage in principle. Lasts for three months but will give you a firmer idea of what you can borrow.

Personally I wouldn’t want the hassle of having a big mortgage just yet, because you can always sell and buy a better house when you need to. Perhaps get a house that requires some work, use your disposable income?

Have you viewed houses? I’ve viewed one and it put it into a bit more perspective that it’s not a rental and a ‘forever home’ with a ball and chain.

kinger101

Housebuy12345 wrote: »

Personally I wouldn’t want the hassle of having a big mortgage just yet, because you can always sell and buy a better house when you need to. Perhaps get a house that requires some work, use your disposable income?

I think paying a load more money for stamp duty, estate agents, surveyors, legal, mortgage and removal van fees needs to be considered.

It's good to take a long view.

DrSpendLittle

How will you cover PhD fees and will your partner be able to maintain a £25K income whilst doing the PhD i.e. will she be doing it part time? What is her field of expertise?

If she gets a 'full time' scholarship to cover fees and provide a stipend, she typically wouldn't be able to generate a £25K salary too as most funding organisations don't allow you to work alongside your PhD or restrict the amount of hours you can do, but I'm only au fait with my particular area of specialism. I know for example clinical psychology is totally different than arts and humanities or STEM subjects. In any case, you may want to consider a change in her financial circumstances if she decides to do the doctorate and what impact this may have on her net take home pay / scholarship amount.

As regards how much to spend, where do you see yourself living in 8-10 years time? Are your jobs 'sticky' to a particular place or are you more footloose? The transaction costs of selling / buying are more than just buying so do bear in mind that if you think you may want to move in the next 5-7 years. If you partner wants to go into academia as a career, she may have to move for her first post-doc or lectureship as it's so bloody competitive nowadays. Again, that's all subject dependent, but worth bearing in mind if you're making a big investment decision today that will be subject to decisions yet to be made by your future selves.

Good luck with whatever you choose to do!