First time house purchase and finances. Am I being sensible?

Dimension_

Crashy_Time said:

How safe is your job?

I have never been busier since the pandemic started. I hope that is a good yardstick for measuring my job security. I would say it is highly unlikely that i lose my job but its certainly not a guarantee.

If there was a genuine risk to my job and i lost it, then i think i would rent out the house with the lenders permission and move back home to my parents. 

Dimension_

princeofpounds said:

Your LTV of 62% means your equity position is strong. If you can rein in your budget or increase your equity a little then you can fall under 60% and that gives you access to the best deals on the market. Having said that, don't stress too much about it - difference between 65% and 60% LTV is much lower than, say, the difference between 85% and 80%.

You are looking at borrowing 5x income (assuming 50% of bonus). That is a fairly high multiple - certainly in years gone by it would have been considered pushing right against the ceiling. However, with the low rates today it's perhaps more normalised than it used to be.

Obviously in terms of current affordability it's fine. However, you don't say what type of mortgage you are looking for. Even if you don't plan to take a long term fix, you should stress-test the affordability against longer-term fixed mortgages, which incorporate the market's best guess at future interest rates over the period of the fix. From a quick browse It looks like that would be ~2.3% and ~£1770pcm, tighter but still quite affordable I think.

Don't spend too much time worrying about a theoretical future partner. You have no idea where they want to live, how they want to live etc. Your anxiety about not being able to afford a family home at a later date is probably far higher than it should be, though I do understand where it comes from after a 30yr low-rate-fuelled property boom (with the odd brief interruption). Also, don't cut yourself off from other people your own age - you have to actually meet them before they agree to settle down with you!

Nothing wrong with buying something slightly bigger than you need, especially if you plan to take lodgers (and in your situation I would - young, no dependents). No need to go nuts though. 

moneysavinghero said:

Out of personal interest, where does £300 travel cost per month come from - do you have a chauffeur or something?

Am guessing you don't do a London commute? Zone 1-6 annual travelcard is £2640. Add in some ubers late night or to places TFL don't reach, you can get to £300 quite quickly. It's not so bad if you're in the TFL zones, but if you are on one of the commuter rail routes it can get super-expensive.

I just spent 10 minute crafting a response to you and it was flagged as spam or that i am a bot when i hit the "Post Comment" button

The notification disappeared before i got the chance to save the email address - any idea who i need to email to have my post "posted"?

AdrianC

Dimension_ said:
However, part of my concern is also the fact that i am not insulated from house price rises as i am not not he ladder right now.

Equally, you ARE insulated from price falls - and as covid moves people towards WFH and out of the city, they're entirely possible.

You also have a quarter of a million quid invested and working for you right now, whereas after the purchase you'll be paying interest on damn near half a million...

badger09

Cut back elsewhere if you need to but DO NOT stop paying into your pension. Apart from your employer's contribution, you are already paying HR tax so would be mad (IMHO) to turn down 40% tax relief on your contributions.

Crashy_Time

Dimension_ said:

Crashy_Time said:

How safe is your job?

I have never been busier since the pandemic started. I hope that is a good yardstick for measuring my job security. I would say it is highly unlikely that i lose my job but its certainly not a guarantee.

If there was a genuine risk to my job and i lost it, then i think i would rent out the house with the lenders permission and move back home to my parents. 

There are going to be loads of finance jobs lost IMO, income from a house via lodgers or tenants probably won`t be easy or hassle free, why not just cut out the hassle, mortgage and rent payments and move in with the parents now? You would be able to save a load of money and set yourself up to weather any future economic dramas, a mortgaged house is just going to be a lead weight around your neck IMO.

badger09

Crashy_Time said:

Dimension_ said:

Crashy_Time said:

How safe is your job?

I have never been busier since the pandemic started. I hope that is a good yardstick for measuring my job security. I would say it is highly unlikely that i lose my job but its certainly not a guarantee.

If there was a genuine risk to my job and i lost it, then i think i would rent out the house with the lenders permission and move back home to my parents. 

There are going to be loads of finance jobs lost IMO, income from a house via lodgers or tenants probably won`t be easy or hassle free, why not just cut out the hassle, mortgage and rent payments and move in with the parents now? You would be able to save a load of money and set yourself up to weather any future economic dramas, a mortgaged house is just going to be a lead weight around your neck IMO.

If you'd actually read OP's thread, you'd know he/she is already living with parents. Like most adults, he/she wants their own space. But then, you don't want to answer OP's specific questions, just get your tedious point of view across.

Crashy_Time

In that case don`t leave your parents at this time! I don`t think your job is as secure as you think TBH, and the thought of you buying a horrendously overpriced nothing special house in London at the peak of the biggest property scam in history is making my flesh creep! (the seller will be chuffed to bits of course)  The usual suspects are going to pop up and cheerlead you all the way into your new home but think of it this way .....would you rather be siting on a nice cash/investment pile when the next crisis hits, or stuck with a mortgaged house you can`t sell and a lodger who is driving you nuts or non-paying tenants who won`t move out? Don`t opt out of the pension either IMO.

Dimension_

@crashy - possibly, but there will also be plenty of people in my industry that will not be made redundant. We don't know, no one does. Organising lodgers and tenants if i faced financial hardship would be worth the "hassle" as you say. I think i am pretty decided on wanting to buy as soon as i find a home that suits. It is more a question of, am i being finically foolish and stretching myself. 

Based on the really useful POVs shared here, i think the way i feel about putting all my cash into a house is completely normal and i should probably continue as planned. 

As a thirty something year old, I'm not sure i want to wait for dip in house prices - they may never fall by a significant amount. And if they did after i buy, i'm hoping i would be okay to weather the storm, particularly if i had a house that i could grow into and i purchased something i was really happy with. 

Salemicus

Sounds like you have a great plan. You're right to be nervous - it's a massive decision - but I don't think you're overstretching yourself.

You seem to be considering taking a lodger - remember that you can get up to £7500 a year tax free - at your salary, that's the equivalent of a £12,500 pay rise. Something to think about!

Thrugelmir

Shorten the mortgage term to 25 years. That still takes you to 59.  Even if no mortgage overpayments are made. With such a large debt hanging over you interest rate changes, change in employment circumstances etc could have a significant impact. You'll then have flexibility whatever life throws at you.