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

propertyhunter

Consider looking at houses and seeing whether you can find what you want at 180k. Sometimes, you go inside these places and realise that you need to up your budget to match the expectations of what you want. I had this realisation after viewing about 10 properties within a certain band, and then realised that I needed to increase it by 50-75k to get what I wanted. It wasn't necessarily the size of the house or type of house that changed for me, but it was the type of street/area. 

getmore4less

maton91 said:

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?

one solution to that is buy a place that can at least accommodate a couple and then you can test out the waters before moving along with joint finances. 
Don't need to have them on the mortgage straight away.

maton91 said:

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?

yes, in a lot of cases that will be the low risk option and cheaper saving money even if rates go up a bit.

 Most people don't seem to understand risk do just say 5y is the low risk, safe option without doing any risk analysis.

maton91 said:

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?

Sound like you have never done a proper budget, worth starting now one for living at home and one with a new house already bought. 
A really good place on here is debtfreewanabee  most of the principles of managing finances to get rid of debt apply to everyone. know where your money is going and where you want it to go.

 read a few threads.
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

You especially need to have a budget for the new place.

As I said top of your purchase power over 25y would be around £1k a month.
base living costs, bills, food, transport say around £900

That leaves £1kpm for long terms savings(ISA) medium term(save for a car), trips away, going out etc.

ok we have not been in normal times but where has the (£2,900*6)   £17,4500 gone in the last 6 months
Some will be savings ISA  spending see if you can work it out.

For in your new house budget you have  £34,800 a year to allocate.



I am not saying buy a £270k(£245k mortgage) house with a £1k a month mortgage I am saying that should be affordable and comfortable.


What will £180k buy you what will £270k buy you.

What do you want now from a property what will you want to grow into. 

I would be looking up to £270k to find at what level the right property will be.

I would also start  living as if I had already bought the place and putting aside all the house costs(less you living at home contributions)  to test out the future budget.

Mortgage ,council tax, bills  all heading into savings now  I would also divert the ISA money into short term saving while going through the process(review just before this years ISA allowance ends) and any surplus can be redirected once settled in.  

Today you can get rates under 2% up to 90% LTV  so here is a little matrix based on 2%
amount borrowed, various terms, payment.

amount/term	10	15	20	25	30	35	40
£150,000	£1,380	£965	£759	£636	£554	£497	£454
£170,000	£1,564	£1,094	£860	£721	£628	£563	£515
£190,000	£1,748	£1,223	£961	£805	£702	£629	£575
£210,000	£1,932	£1,351	£1,062	£890	£776	£696	£636
£230,000	£2,116	£1,480	£1,164	£975	£850	£762	£696
£250,000	£2,300	£1,609	£1,265	£1,060	£924	£828	£757

Shorter term obvious get more expensive but you can go longer term with a view to saving/overpaying.

what that shows is what you can get for your money 
Your starting at say £150k mortgage 35y  ~£500pm   for your £180k place

but if that just buys a 1bed flat, not sure i would be going there
what would another £40k for  £130pm extra buy, if that gets you into a house its probably worth it 
add £200pm that £60k more  might get you a better house with off road parking for your new car.

I have no idea but it the sort of thing you need to be looking at for your area

if where you live a 3 bed detached is £180k this is less of an issue.


One final point you have a lot of cash £50k, that should be growing quite quickly while looking, definitely room for flexibility on LTV 

£180k  80% £36k is well within reach. 
£270k  80% £54k would be a stretch. 85% £40.5k doable.

even at £1k per month, you can rebuild savings 

maton91

getmore4less said:

maton91 said:

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?

one solution to that is buy a place that can at least accommodate a couple and then you can test out the waters before moving along with joint finances. 
Don't need to have them on the mortgage straight away.

maton91 said:

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?

yes, in a lot of cases that will be the low risk option and cheaper saving money even if rates go up a bit.

 Most people don't seem to understand risk do just say 5y is the low risk, safe option without doing any risk analysis.

maton91 said:

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?

Sound like you have never done a proper budget, worth starting now one for living at home and one with a new house already bought. 
A really good place on here is debtfreewanabee  most of the principles of managing finances to get rid of debt apply to everyone. know where your money is going and where you want it to go.

 read a few threads.
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

You especially need to have a budget for the new place.

As I said top of your purchase power over 25y would be around £1k a month.
base living costs, bills, food, transport say around £900

That leaves £1kpm for long terms savings(ISA) medium term(save for a car), trips away, going out etc.

ok we have not been in normal times but where has the (£2,900*6)   £17,4500 gone in the last 6 months
Some will be savings ISA  spending see if you can work it out.

For in your new house budget you have  £34,800 a year to allocate.



I am not saying buy a £270k(£245k mortgage) house with a £1k a month mortgage I am saying that should be affordable and comfortable.


What will £180k buy you what will £270k buy you.

What do you want now from a property what will you want to grow into. 

I would be looking up to £270k to find at what level the right property will be.

I would also start  living as if I had already bought the place and putting aside all the house costs(less you living at home contributions)  to test out the future budget.

Mortgage ,council tax, bills  all heading into savings now  I would also divert the ISA money into short term saving while going through the process(review just before this years ISA allowance ends) and any surplus can be redirected once settled in.  

Today you can get rates under 2% up to 90% LTV  so here is a little matrix based on 2%
amount borrowed, various terms, payment.

amount/term	10	15	20	25	30	35	40
£150,000	£1,380	£965	£759	£636	£554	£497	£454
£170,000	£1,564	£1,094	£860	£721	£628	£563	£515
£190,000	£1,748	£1,223	£961	£805	£702	£629	£575
£210,000	£1,932	£1,351	£1,062	£890	£776	£696	£636
£230,000	£2,116	£1,480	£1,164	£975	£850	£762	£696
£250,000	£2,300	£1,609	£1,265	£1,060	£924	£828	£757

Shorter term obvious get more expensive but you can go longer term with a view to saving/overpaying.

what that shows is what you can get for your money 
Your starting at say £150k mortgage 35y  ~£500pm   for your £180k place

but if that just buys a 1bed flat, not sure i would be going there
what would another £40k for  £130pm extra buy, if that gets you into a house its probably worth it 
add £200pm that £60k more  might get you a better house with off road parking for your new car.

I have no idea but it the sort of thing you need to be looking at for your area

if where you live a 3 bed detached is £180k this is less of an issue.


One final point you have a lot of cash £50k, that should be growing quite quickly while looking, definitely room for flexibility on LTV 

£180k  80% £36k is well within reach. 
£270k  80% £54k would be a stretch. 85% £40.5k doable.

even at £1k per month, you can rebuild savings 

Wow, what an incredible post, thank you for your time with this!

To answer some of your questions:

getmore4less said:

ok we have not been in normal times but where has the (£2,900*6)   £17,4500 gone in the last 6 months
Some will be savings ISA  spending see if you can work it out.

I put away £1500 a month for my house fund which is a standard current account with little interest but easily accessible. £300 board and about £200 to help with shopping and extras. So that's £2000 gone straight away (it would be less living by myself as it wouldn't be essentially a £1800 mortgage and I haven't saved for any trips away this year, not got a car on finance etc...)

This leaves £900, in which approx £250 goes into a MoneyBox S&S ISA (as of this morning I have just over £5.2k and making 18% at  unbelieveably!), £40 on phone bill. The rest I spend on meals, the pub, football matches, the gym, off purchases on Amazon etc.. Most of the time I don't have to 'borrow' from my £1500 fund however times around birthdays, car service, professional membership fees I've had to dip in. I am oversaving though at this moment so the £2k outgoing will probably be more like £1.2k outgoing which gives me an extra £800 to play with each month

£4000 went into my LISA last month so should get the bonus within the next few weeks.

getmore4less said:

Today you can get rates under 2% up to 90% LTV  so here is a little matrix based on 2%
amount borrowed, various terms, payment.

amount/term	10	15	20	25	30	35	40
£150,000	£1,380	£965	£759	£636	£554	£497	£454
£170,000	£1,564	£1,094	£860	£721	£628	£563	£515
£190,000	£1,748	£1,223	£961	£805	£702	£629	£575
£210,000	£1,932	£1,351	£1,062	£890	£776	£696	£636
£230,000	£2,116	£1,480	£1,164	£975	£850	£762	£696
£250,000	£2,300	£1,609	£1,265	£1,060	£924	£828	£757

Shorter term obvious get more expensive but you can go longer term with a view to saving/overpaying

You know what it's bad but didn't even consider a shorter mortage! For a £180k house I have an 85% LTV (£153k), at 20years it's going to be approx £780pm and 15 years at £1000pm. Surely it's better in the long run to have a smaller mortgage and therefore pay less interest?

Can this change in the future? For example a bigger house (e.g. £230k) extend the mortgage to 25 years at the same monthly payment as a 15 year mortgage on a £180k house? These are the things I don't know enough of in regards to portability, early exit fees, changing banks etc... Sounds like everything is doable but at a cost

getmore4less said:

what that shows is what you can get for your money 
Your starting at say £150k mortgage 35y  ~£500pm   for your £180k place

but if that just buys a 1bed flat, not sure i would be going there
what would another £40k for  £130pm extra buy, if that gets you into a house its probably worth it 
add £200pm that £60k more  might get you a better house with off road parking for your new car.

I have no idea but it the sort of thing you need to be looking at for your area

if where you live a 3 bed detached is £180k this is less of an issue.

In my area a £180k house in a relatively decent area would get me a 3 bed terrace with a drive, no garage. You are looking at around £230k for a 3 bed semi with a garage.

Do I really need that at this moment? I know a house is an investment but I want to get onto the ladder but not start right at the bottom in a 2 up/2 down doer-upper which could require £10k's worth of work which the bank may not lend to me.

getmore4less said:

One final point you have a lot of cash £50k, that should be growing quite quickly while looking, definitely room for flexibility on LTV 

£180k  80% £36k is well within reach. 
£270k  80% £54k would be a stretch. 85% £40.5k doable.

even at £1k per month, you can rebuild savings

How do I get over the fear of potentially not paying the mortgage? Who knows, I may be made redundant, hate my job so much that I need to take a pay cut.

Are these normal fears? Is mortgage protection wise? Can I change the term from 15/20 years to 25 years to give me breathing space albeit pay more interest overall?

Thanks again for your help!

RAS

Whatever you do need to have an emergency fund.

Something that you don't touch ever unless you get made redundant, become unable to work for a while. 6 months mortgage payments at a higher APR or 6 months living costs if possible.  

And with a spare room for a lodger, you'll survive until you can get back to work, or bite the bullet and sell up.

GDB2222

On your question about redundancy, etc, this link may help, at least as a starting point.

https://www.moneysupermarket.com/income-protection/mortgage-protection/