Cant decide whether i can afford a house

danlightbulb

I have had an offer accepted on a house and am having 2nd thoughts.

I just cant decide if i can take the financial risk.

Im by myself and its took me years to save the deposit. I rent now (£570 pm) and mortgage would be £620 pm. Council tax would be £30 pm higher. Everything else pretty similar except of course for maintenance costs which I dont have to worry about now.

But now i have the deposit, I dont want to spend it. Its a massive safety net. If I buy a house its gone, even though thats whst i was saving for in the first place.

The house is lovely, loads better than what Im renting now. It just locks me in and that is scaring me as well as losing my safety net.

Ben8282

But at the end of it you will own your own home.

tacpot12

There is really very little risk involved in buying a house in the UK. You are converting your deposit (which is safe) to something that is only very slightly less safe. The main risk you are facing is that you can't repay the mortgage due to illness.

You should look at getting Income Protection insurance in place for when the sale completes. This form of insurance will pay you an income that will allow you to continue to pay the mortgage if you cannot work. State benefits will not pay your mortgage if you cannot work, so you really need this insurance. The key to getting it cheaply is to defer it for a long period (e.g. 52 weeks). You will need to have an emergency fund to cover the period between the end of Statutory Sick Pay (which ends after 28 weeks) and when the Income Protection Insurance kicks in. You can defer saving this emergency fund until you have settled in your new home, because it is very unlikely that ill health will strike while you are young.

Owning your own home will ultimately give you a great deal of security, and you will save money in the long run as rents will go up but your mortgage will not increase as much.

I appreciate that it is scary taking on the responsibility for paying a mortgage but many millions of people have bought their home in this way. Feel the fear and do it anyway!

DCFC79

Id say go for it, you will have a property that's worth x amount.

danlightbulb

The house is stretching my budget. if rates were to rise, that would be a problem (but no more so than probably half the country would be in). Id struggle to rebuild my safety net because the house needs some upgrading as well.

fatbelly

Are you in private rented accommodation on an assured shorthold tenancy? That's really not very secure. There are plans to change the law, but as things stand the landlord can just issue you a s21 notice requiring you to be out in 2 months. I'd definitely go for ownership if that's the case.

If you're in a Housing Association place you're a bit safer.

It sounds like you're worried about your budgeting. What about filling in a statement of affairs (link is to a calculator, please format for mse) and posting it on the debt free wannabe board?

danlightbulb

Ive done my budgeting but what i think im most worried about is a loss of flexibility. At the moment i am free to go on little holidays, nights out etc. I know thats not money saving but as a single persom i dont want to isolate myself. I worry that in committing to this house i am isolating myself and have to be a fair bit more careful with my money.

Zero_Sum

danlightbulb wrote: »

The house is stretching my budget. if rates were to rise, that would be a problem (but no more so than probably half the country would be in). Id struggle to rebuild my safety net because the house needs some upgrading as well.

In which case get a 5 year fixed rate.
Try & overpay where you can. After a few years with pay rises it does get easier.

The other thing is try to be a bit cleverer with money. Theres a few ways you can make a few quid here & there by playing the banks with cashback & switching bonuses.

Many of the things you might not think are worth it for £2 or £3 here & there but they do add it. Its a case of looking after pennies & pounds looks after themselves

fatbelly

Yes, so you have to budget for little holidays, nights out etc. Tons of info on this site for getting the max out of small sums. Moneysaving doesn't mean living like a monk (nun?).

scalextric

danlightbulb wrote: »

Ive done my budgeting but what i think im most worried about is a loss of flexibility. At the moment i am free to go on little holidays, nights out etc. I know thats not money saving but as a single persom i dont want to isolate myself. I worry that in committing to this house i am isolating myself and have to be a fair bit more careful with my money.

Continue as you are then, paying someone elses mortgage for them on the place you are renting and have nothing to show for it. Enjoy your little holidays and nights out, good luck!

danlightbulb

Thanks all.

im nearly 40, so feeling the pressure on this a little now. Id be taking a 30 year mortgage to keep repayments down in the early years.

Ideally I would buy a little cheaper, but in all honesty the cheaper houses just dont have much about them. Perhaps im being too picky, this is more house than i really need and perhaps thats also contributing to my worries.