Buying a £180k house alone on £55k income pre-tax, is this comfortable?

propertyhunter

It might be worth speaking to a mortgage advisor about your options. A good yardstick of the maximum amount you can borrow if you have an excellent credit rating (no debts, dependents, etc.) is 4.5 x net income for a single applicant. Some lenders allow 5.5 x net income or more, but some will say it's best to not put yourself into this situation because it's a high level of debt. 

With respect to fixing long-term or not - that's a tough one because you say you might want to move in 2 years. Porting is an option and a mortgage advisor can discuss the pros and cons specific to your circumstances. Most people buying at the moment are choosing 5 year fixes because they're not planning on moving in that time and they want to take advantage of historically low interest rates, which we know are going to increase (and some already have in anticipation of the BOEs likely next move). 

MysteryMe

It's about the right house for you, if you can find one you like that meets your requirements for £180,000 then there is no need to be spending more. Having said that it always helps to consider possible changes in personal circumstances or giving yourself options such as a spare room to take in a lodger if need be etc.

getmore4less

Buying with someone else in 2 years?

Do you have someone in mind?

Moving is expensive buying somewhere affordable that can remove a future move can make a lot of sense.

Where are you living now what's that costing?


Do you have extra money for fees etc?

£27k on a £180k is 85%  theLTV.
Check rates for that and 90% which gets you to £270k, £245k mortgage within a 4.5x limit

Find the right property.

On £2,900 take home and decent pension already in place.
£1kpm should be affordable
That would cover £250k over 25y.

£1k mortgage, £900 living, £1k discretionary spends.

Find the right property.

Maybe do a SOA and work out where you money is going and where it would go once you buy

https://www.lemonfool.co.uk/financecalculators/soa.php



As for the fixed term, 2 year rates  are lower  than 5y your LTV will  improve in 2 years for lower rates.
When you look at how much rates need to go up in 2y to be better off with a 5y it is often more than most are predicting.

maton91

getmore4less said:

Buying with someone else in 2 years?

Do you have someone in mind?

I would be buying by myself but who knows what might happen in the future. I may meet someone and then become more serious.

Having said that if a 5yr fixed mortgage is portable then it would make sense to go with that. Also meeting someone may not happen! Is it a minor inconvenience to change mortgage terms half way through?

maton91

getmore4less said:

As for the fixed term, 2 year rates  are lower  than 5y your LTV will  improve in 2 years for lower rates.
When you look at how much rates need to go up in 2y to be better off with a 5y it is often more than most are predicting.

Are you suggesting a 2yr fixed term then remortgage with another 2yr fixed term afterwards? I have seen the interest rates are lower for 2yr than 5yr, guessing that's to cover any improbability between years 3-5?

maton91

getmore4less said:

Where are you living now what's that costing?


Do you have extra money for fees etc?

£27k on a £180k is 85%  theLTV.
Check rates for that and 90% which gets you to £270k, £245k mortgage within a 4.5x limit

Living at home at the moment so been saving a lot! I have £25k in a LISA (Inc bonus) and about £18k for fees, additional deposit, home improvements. I then have £10k emergency fund in premium bonds

I err on the side of caution more than take risks, so high level thinking of a £180k property means I can continue saving into a S&S ISA (£200pm + round ups), trips away, possibly a new car etc... This being by myself and not with a partner so if that changes at any point (see above) then I would reassess

If from experience I could stretch to a £200k property then maybe I should consider that of its right?

GDB2222

This is a rather odd thread, as you are asking how much to spend on a house, without saying what your needs are and what you can get for a certain amount of money.

The unspoken assumption is that a house is an investment that will appreciate faster than what you pay in mortgage interest, so the more you spend the more profits you will make. That certainly reflects past experience.

 However, bear in mind that a house is also a liability. The larger it is, the more repairs it needs, the more heating it needs, and the more time you have to spend cleaning it. The loan interest is just one of many costs associated with ownership of your home. 

So, I would not discourage you from taking on a larger mortgage, but make sure that you are getting something you want/need for the extra money you are spending and the other liabilities you are taking on. 

maton91

GDB2222 said:

This is a rather odd thread, as you are asking how much to spend on a house, without saying what your needs are and what you can get for a certain amount of money.

The unspoken assumption is that a house is an investment that will appreciate faster than what you pay in mortgage interest, so the more you spend the more profits you will make. That certainly reflects past experience.

 However, bear in mind that a house is also a liability. The larger it is, the more repairs it needs, the more heating it needs, and the more time you have to spend cleaning it. The loan interest is just one of many costs associated with ownership of your home. 

So, I would not discourage you from taking on a larger mortgage, but make sure that you are getting something you want/need for the extra money you are spending and the other liabilities you are taking on. 

I'm just looking for some advice based on perople's experiences. It's been concluded that I will be comfortable buying a £180k house

It's a good point regarding upkeep, no point buying a mansion when there is only me living in it!

GDB2222

You can borrow way more than £150k, but you seem to be asking for advice about whether you should. Other people will have different priorities, so you need to decide for yourself whether you are comfortable spending the extra.

I suggest that you do that based on interest rates much higher than now, say 5-6%. Then ask yourself what you are getting if you borrow say an extra £20k to buy a bigger house than you need. Currently, that will cost around £400 a year in interest, but ask yourself how you will feel if it’s costing £1000 a year in interest. Will you be pleased with the extra house you have have bought  and happy enough with that cost? Or would you rather have the £1000 to spend on a better car or a bigger pension?

benson1980

I would just concentrate on buying a house around your ballpark figures that represents a good deal. In the months leading up to a house purchase I'd be literally glued to rightmove, saving properties, seeing how quickly similar types of property that I would be interested in would sell, so I knew exactly what represented a good deal when one came up, when we were ready to go. Yes its a home, but it's also an investment and it pays to get it right, if circs change, or just having the best house you can, on your budget.

I also know it's flavour of the month at the moment, but genuinely we have also paid a lot of attention to EPC ratings, and council tax bands. A more valuable property doesn't necessarily mean higher running costs. Anyone can see a slightly ropey property, versus a tidy one that isn't going to need too much aside from basic renovations perhaps- quite often this aligns with a decent EPC but again we've always gone for C and above. Again, council tax bands- on new builds they can be completely mis aligned to other houses in the area, and again between some bands you are looking at a difference of £500 a year. Our latest purchase also has a FIT- it's worth almost £2k a year and yet for some bizarre reason it wasn't really promoted by the agent. It's basically worth 26k over the remaining lifetime, so a significant amount of money.

Lastly- the figures you are looking at look comfortable to me.