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

Dimension_

FTB_Help said:

Just out of interest are you looking to buy around the West of London (Uxbridge area)? 
575k-600k can still buy you a decent 2/3 bed terrace in most parts of London.
Even if you do go for the max range of 675k, 1.3k in mortgage a month is actually really decent for someone on your salary so don't worry about "over stretching" yourself as you'll still have approx 2.5k left AFTER mortgage and bills, which is the equivalent of a take home pay for someone earning around 40k a year so you are not over stretching yourself at all.

At the moment you sound ready to settle down and find your forever home right now, but finding a property you want to live in for the rest of you life is going to take time, maybe take the pressure of finding a forever family home and look for a really nice home that you will enjoy, once you get this out of your head, then you'll feel less stressed that you might be making the wrong decision and won't feel like your over stretching your self.
Have you had a look online on properties between 550k-675k? Other than extra bedroom and larger floor space, what is pushing you to go for the 675k mark? Is it the interior design/ fancy furniture? Do you really need 4/5 bedrooms, will 3/4 be enough? The 675k house might have a large kitchen but does the 550k house have potential to extend into the garden etc, etc

I am looking at Ruislip and Eastcote and surrounding areas. You were close - what made you think Uxbridge?

I think you're right, i shouldn't put so much pressure on myself. But i really am ready to buy a place that i could see myself living in for the longer term.

Most 3 bed semi's that i like are going for somewhere between 650-675k in these areas. These are in a good locations, in streets with mostly owner occupied homes and a short walk to one of the local tube stations. I don't need 3 bedrooms but one would be a home office. I'd also want a garage, not only so i have development potential but also for storage. Many of these properties at this price point are a mixed bag - some are nicely decorated whilst others are bare bones - and surprisingly still selling for close to ambitious asking prices. I find that houses up to 650/675 tick most of my boxes, particularly location and size. I would not for example want to spend 575k and live on a street where most houses are rented out or you have difficult neighbours - maybe this is a little pessimistic. But happy to have someone try and change my mind :-)

Dimension_

Crashy_Time said:

Dimension_ said:

@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. 

How do you know? These boards are full of tenant/lodger horror stories. My point is that you don`t need to face financial hardship. London is going into another lockdown as we type, I really don`t get why anyone would be in a hurry to buy into the London property bubble at the moment.

Let me try and make things a little clearer. I am not saying i would deliberately get myself into a position of financial strain and then deal with lodgers/tenants, which i am sure will come with additional stress. I am saying, if i found myself in that situation that could provide some good financial cover and it would be something i would look to do irrespective of the stress that is comes with. 

Re bubble - if house prices began to fall, yes i would consider waiting but the truth is, if i found a property that i liked and could afford, i would more than likely continue to try and buy it.  

Dimension_

lika_86 said:

Have you budgeted for Stamp Duty and fees? You're highlight unlikely to get in before the SDLT holiday ends now. I'd wait until you have an emergency fund in place before you buy, which you should be able to build quickly at home (obviously there will be the time in the conveyancing process but it's good to have a good buffer). In addition you'll likely want around £10k minimum for doing the place up. You're in a privilege position, many people end up paying rent of £1400 in London (i.e. me). 

Yes, thanks i have budgeted for SDLT. If i found a place with a chain free seller in early Jan - do you think it would still be difficult to complete before the relief is withdrawn? Forgive my ignorance here with completion times

AdrianC

Dimension_ said:

lika_86 said:

Have you budgeted for Stamp Duty and fees? You're highlight unlikely to get in before the SDLT holiday ends now. I'd wait until you have an emergency fund in place before you buy, which you should be able to build quickly at home (obviously there will be the time in the conveyancing process but it's good to have a good buffer). In addition you'll likely want around £10k minimum for doing the place up. You're in a privilege position, many people end up paying rent of £1400 in London (i.e. me). 

Yes, thanks i have budgeted for SDLT. If i found a place with a chain free seller in early Jan - do you think it would still be difficult to complete before the relief is withdrawn? Forgive my ignorance here with completion times

By the end of March? It's not impossible. But it's certainly not guaranteed.

Dimension_

Crashy_Time said:

Dimension_ said:

@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. 

It doesn`t add up for me that you are in your mid 30`s, work in finance, and have over a very short space of time, seemingly been convinced by a handful of posts from strangers on the internet, who lets be honest mostly have a strong VI in property,  that "putting all your cash into a house is completely normal"? At the present time especially I would say that could be verging on a possibly abnormal strategy....

I have not been convinced of anything. 

If you read what i wrote - i am saying the way that i feel about putting my life savings into a property is completely normal. I feel very apprehensive about my cash balance going to near zero after all these years of working and saving. I feel worried about having less invested cash. And i wanted to hear from others who have been there and done it, to build up a picture of if how i feel is normal. If some of the responses are anything to go by, i think the way i feel is indeed normal. 

numbercruncher8

You're right, I would think most people who bought first time sunk most of their money into it, albeit at much lower levels.
Money comes back with time.

steampowered

Dimension_ said:

I do feel like 5x income in a mortgage is crazy, particularly as my parents had comparatively much smaller mortgage when compared to income and house prices. I think this is a bit of a psychological weight 

A 5x multiple is perfectly normal and affordable, especially when you are on a high salary with lots of disposable income. It was a bit different in your parent's days when interest rates were approaching 20%. You might be able to get a mortgage on less than 1.5%. The fact that interest rates are so low means that higher salary multiples are much more affordable than they used to be.

Your opening comment that "as I feel if I don’t buy now, I may never be able to buy a family home" is not true. Perhaps that was true at the start of the 1990s when house prices were increasing rapidly. These days house prices are plodding along and growing by less than 2% a year, in fact house prices are likely to drop next year.

You might be getting too influenced by what happened in your parent's generation, remember that this was 30+ years ago and that the economic outlook for the next decade or two is very different.

jimbog

Dimension_ said:

FTB_Help said:

Just out of interest are you looking to buy around the West of London (Uxbridge area)? 
575k-600k can still buy you a decent 2/3 bed terrace in most parts of London.
Even if you do go for the max range of 675k, 1.3k in mortgage a month is actually really decent for someone on your salary so don't worry about "over stretching" yourself as you'll still have approx 2.5k left AFTER mortgage and bills, which is the equivalent of a take home pay for someone earning around 40k a year so you are not over stretching yourself at all.

At the moment you sound ready to settle down and find your forever home right now, but finding a property you want to live in for the rest of you life is going to take time, maybe take the pressure of finding a forever family home and look for a really nice home that you will enjoy, once you get this out of your head, then you'll feel less stressed that you might be making the wrong decision and won't feel like your over stretching your self.
Have you had a look online on properties between 550k-675k? Other than extra bedroom and larger floor space, what is pushing you to go for the 675k mark? Is it the interior design/ fancy furniture? Do you really need 4/5 bedrooms, will 3/4 be enough? The 675k house might have a large kitchen but does the 550k house have potential to extend into the garden etc, etc

I am looking at Ruislip and Eastcote and surrounding areas. You were close - what made you think Uxbridge?

I grew up in west London and even though I now live out of town I still pass through Ruislip regularly. It would be my first choice if I was to ever move back

MovingForwards

@Dimension_ I'm now on about a quarter of your income, so feel free to take my 'story' with a pinch of salt.

It took me 3.5 years to save up my 15% deposit, while clearing historic debts following a failed marriage and starting over. Upon moving to my home I had about £750 (if that) of savings after paying everything out connected to my purchase, that money started to go down as there were a few trees which needed felling in my garden. Each payday I started building up my savings and emergency fund, in 7 months I've a fifth of my income in the bank. In a few years I will start the modernising / renovations, for now it's trade white paint.

50 years ago my mom's 3 bed house cost £4.5k, I think, she couldn't believe how much my flat cost, but I didn't spend as much as I could have due to health issues. 

I'm making overpayments, saving, paying into a private pension (early retirement dreams) and my work pension, never stop paying into one as your future self won't thank you!

If you weigh up everything, on paper it doesn't sound like you are stretching yourself, just make sure you have contingency plans.

FTB_Help

Dimension_ said:

FTB_Help said:

Just out of interest are you looking to buy around the West of London (Uxbridge area)? 
575k-600k can still buy you a decent 2/3 bed terrace in most parts of London.
Even if you do go for the max range of 675k, 1.3k in mortgage a month is actually really decent for someone on your salary so don't worry about "over stretching" yourself as you'll still have approx 2.5k left AFTER mortgage and bills, which is the equivalent of a take home pay for someone earning around 40k a year so you are not over stretching yourself at all.

At the moment you sound ready to settle down and find your forever home right now, but finding a property you want to live in for the rest of you life is going to take time, maybe take the pressure of finding a forever family home and look for a really nice home that you will enjoy, once you get this out of your head, then you'll feel less stressed that you might be making the wrong decision and won't feel like your over stretching your self.
Have you had a look online on properties between 550k-675k? Other than extra bedroom and larger floor space, what is pushing you to go for the 675k mark? Is it the interior design/ fancy furniture? Do you really need 4/5 bedrooms, will 3/4 be enough? The 675k house might have a large kitchen but does the 550k house have potential to extend into the garden etc, etc

I am looking at Ruislip and Eastcote and surrounding areas. You were close - what made you think Uxbridge?

I think you're right, i shouldn't put so much pressure on myself. But i really am ready to buy a place that i could see myself living in for the longer term.

Most 3 bed semi's that i like are going for somewhere between 650-675k in these areas. These are in a good locations, in streets with mostly owner occupied homes and a short walk to one of the local tube stations. I don't need 3 bedrooms but one would be a home office. I'd also want a garage, not only so i have development potential but also for storage. Many of these properties at this price point are a mixed bag - some are nicely decorated whilst others are bare bones - and surprisingly still selling for close to ambitious asking prices. I find that houses up to 650/675 tick most of my boxes, particularly location and size. I would not for example want to spend 575k and live on a street where most houses are rented out or you have difficult neighbours - maybe this is a little pessimistic. But happy to have someone try and change my mind :-)

When you mentioned zone 6 it just automatically popped in my head to be around the Uxbridge area!
Just having a very quick search on RM I found:

https://www.rightmove.co.uk/properties/86828971#/ - £600k - 4 bed and office, and even lower in your budget range:

https://www.rightmove.co.uk/properties/97238315#/ - £550k - 3 bed.

Both are located less than 1/2 a mile away from the Ruislip station (the £600k is literally round the corner) and both are well under your max budget range, both look to be in good condition, just a lick of pain and some re-tiling but both very spacious and fit your criteria, they don't have garage but both are spacious enough to forgo garage

Of course if you're looking at ones around £675k, they probably tend to be owned by people with money so will have fancy decor and furniture on display or nice tiles etc, but don't be swayed by things that won't be left when they move out anyway (except the tiles!)
So if you're really worried about over stretching yourself these 2 that I've just found after 2 mins on RM are well under budget.

Edit: actually the £550k one does have a garage access to the rear, not shown in pictures - so extra storage space - there you go!