First Time Buyer Budgeting Advice

RobSurreyUK

Okay, so I'm looking around trying to work out a budget and cost out different properties for my first time buyer home.
I have 2 immediate goals right now:

1. Work out what I could actually afford to buy.
2. Budget out each property I look  at so that I can also compare how much it would cost to actually live at each property.

Right now, while there are seemingly endless calculators, pamphlets, informationals, guides etc... I am really struggling to find a singular cohesive way to actually figure out how much it would actually cost to buy anything and how much it would cost to live there. Not to mention that despite the hundreds of calculators available for "mortgage affordability" they all give me different answers every single time I run them so I actually have no idea how much I could actually get a mortgage for and therefore what price range I would need to limit myself to.
Is it just me finding it so difficult? or is the entire system built on so many layers that its impossible to navigate? I surely can't be the first person to say "What would it actually cost to live here?" and want to compare that number between different properties/houses. So there must be a tool somewhere that works out all the things like insurance, utilities, tax, service charge, rent/mortgage payment. For example, I have found that taxes are divided into bands and that somehow translates into some number.
Estate agents seem to be very good at throwing pretty pictures at me, but they all seem to go very quiet and non-specific when I ask about actual running costs. How do you budget for total unknowns?

(Separately ... why is "shared ownership" even a thing? It seems to me that its just someone else offering a mortgage for part of the property without letting your payments actually contribute to buying it.... Essentially just someone else taking the same risk as your mortgage company in the event you are unable to pay for the mortgage?) And trying to piece together how much rent + service charge + mortgage would actually cost, seems to be harder than drawing blood from a stone! 

moneysavinghero

A lot of the figures are unknowns. Your utility bills will depends on how much you use - like the heating on 20 hours a days? Your bills will be high. Hardly ever have the heating on? Your bills will be lower.

Things like council tax will be set in stone and you can look these up online.
http://www.mycounciltax.org.uk/content/index

I agree that shared ownership seems like a waste of time. But as you are even looking at shared ownership means that you probably cant afford to buy a property on a 100% basis, so this is point of shared ownership - it allow's you to get on the property ladder.

Mrs_F_2017

Where do you live at the moment? Surely you have a sense of how much you spend on heating/water etc and how that would translate into if you bought a house?  

Council tax is fixed so once you know the area you are buying in you can check the exact banding. 

Different mortgage provider will take into account different earnings/expenditure depending on their own criteria.  A mortgage advisor can be helpful if you're worried about managing it yourself as they guide you through the process and know the best provider for your circumstances. 

wjr4

Shared ownership is there to help people who cannot afford a property fully. There is nothing wrong with it and it helps people who need to use the scheme. 

numbercruncher8

Don't over-complicate things. 
Most of these inputs can be guessed at with a reasonable degree of accuracy. That's about all you can do. Add some contingency allowance in and that's the budget for unknowns. 

If you want an insurance quote, just go on a site and ask for one - you can guess enough of the details to make it ballpark.
Utilities can be guessed at by usage by similar properties, and plugging those figures into a calcalator.
Council tax, service charges are concrete figures and the EA should be able to tell you.

Mortgage charge, again that is a figure determined by what product you have.

Rightmove has a rudimentary tool which does give some information, but generally few people are going to do this for you. The EA is there to sell houses to make commission, not to help you add up numbers to see if you can afford it or not.

HorseBatteryStapler

As someone currently looking, I have budgeted a worst-case set of bills, that I'm assuming will be the same for all properties. On top of that I'm asking about service charges on a per-property basis. When I find a property I'm particularly interested in, I'll ask for details of the current average bills - at that point maybe I'll be pleasantly surprised and maybe I'll be disappointed, but hopefully it won't be an order of magnitude more than I was expecting for the general case of e.g. "2 people, both home during the day"

[Deleted User]

How much will the bills be is a bit of a "how long is a piece of string" question tbh and depends on so many variables, like how much you consume, how energy efficient the property is and what provider you are with. Its impossible to get an exact amount. The best you can do is estimate. The estate agents won't be able to tell you exactly how much your bills will be for each property you look at. 

What I did is I put together a spreadsheet with all our income, then listed all of our personal expenditure (car insurance, petrol, car maintenance, any loans, hobbies etc), then I listed all standard household expenditure putting an estimate on each line - house insurance, gas, electric, broadband etc. Trying to give a fair assessment of what everything will cost and in hindsight I probably overestimated our expenditure as I was conscious of under-budgeting. 

The end calculation will give you an idea of what money you will have left after all of your expenditure is taken out and then its up to you to decide how much of what is remaining you want to commit to your monthly mortgage payments. 

In terms of your affordability, I would suggest speaking with a mortgage advisor. They will be able to give you an idea of how much you will be able to borrow and how much your monthly payments will be based on what rates the banks are offering and how long of a term you want to pay it off over. 

EasyToAssemble01

I'm in the same boat, re. hopefully getting a FTB mortgage later this year.
- What can you afford to pay?: Calculate both what you can afford each month and also what  you have saved thusfar. This will give you a figure either to work out monthly mortgage and bills payments and/or how long you'll need to save the deposit.
- Calculating the deposit you'll need: look at the prices of entry-level flats and houses in your preferred area. What are the starting prices for the bare minimum you'd be happy with? Normally you'll need 10% of whatever that is, as your deposit. Remember, you'll need to add some extra for solicitors fees and conveyancing / survey fees too.
- Council Tax: The bands can be found online (normally by typing in your preferred area - it should bring up the local council's published tax bands by postcode or area).
- Services charges and bills: you won't know unless you've sometimes had to pay those. Does the property have gas, or is it all electric? Does it have storage heaters or central heating? Even then, the rates fluctuate, as does the usage between summer and winter. It's often all dependent on the place you end up buying. So, when househunting, it's worth keeping an eye on what has been done to make the house energy efficient. Or what it might cost you to install that.

Ultimately, the knowns will get you most of the way there, and the unknowns you'll have to try and leave some room for in your budgeting.

getmore4less

If you are at the level of  If i buy this place the electric will be £5 less a month I can afford £5 more on the mortgage you are overthinking.

Look at the big numbers and it drops out fairly quickly.

4.5 * income give or take bit get rough amount you can borrow.

Start will the longest term you can get and  LTV and that will give a rough rate and rough cost for the big one the mortgage.
Cost per £100k  for rate and term will get you close.

rate/term	10	15	20	25	30	35	40
1%	£876.04	£598.49	£459.89	£376.87	£321.64	£282.29	£252.86
2%	£920.13	£643.51	£505.88	£423.85	£369.62	£331.26	£302.83
3%	£965.61	£690.58	£554.60	£474.21	£421.60	£384.85	£357.98
4%	£1,012.45	£739.69	£605.98	£527.84	£477.42	£442.77	£417.94
5%	£1,060.66	£790.79	£659.96	£584.59	£536.82	£504.69	£482.20

High LTV looking at 3% that  makes 25years  ~£475 over  40 years is ~£360
if you had  £1kpm for the mortgage that's  £210k  to £280k just adjusting term

Most of the time you will be in a range for the type of place you want.

Rachel*

Deleted_User said:

What I did is I put together a spreadsheet with all our income, then listed all of our personal expenditure (car insurance, petrol, car maintenance, any loans, hobbies etc), then I listed all standard household expenditure putting an estimate on each line - house insurance, gas, electric, broadband etc. Trying to give a fair assessment of what everything will cost and in hindsight I probably overestimated our expenditure as I was conscious of under-budgeting. 

The end calculation will give you an idea of what money you will have left after all of your expenditure is taken out and then its up to you to decide how much of what is remaining you want to commit to your monthly mortgage payments. 

I second this! I have just purchased my first property and I made a spreadsheet as soon as I found a property I liked to work out average costings (probably overestimated) and whether I could actually afford it day-to-day and still have a social life as well. I also asked the previous owners how much they were paying for electricity etc. 

In regards to mortgage calculators, you’re best off working from an average figure from a few different calculators. Then going to a mortgage broker and seeing what they offer (be aware of fees upfront if you don’t want to commit) - I personally found my mortgage broker got me a much better deal than any of the online calculators did.