How much can i afford for new home?

nick1234

Hi guys

I am looking to buy a house next year and struggling to decide how big a mortgage i should take and what is realistic without pushing myself an excessive amount, as i am buying alone. 

I earn 85k and a fairly stable job, my current flat has c140k equity (360k market value) and i have about 75k saved in liquid investment funds, 15k cash, 10k crypto and 35k in Gold/watches.  I am looking to buy in 12 months so can realistically save another 30k in that time which includes some investment growth and 12 months of additional mortgage payments.

When i put a deposit amount of 200k (140k+60k from savings) and my salary into a mortgage calculator, it says i can afford properties up to 580k.  Taking on such a large mortgage seems quite risky as i am solo and having used some of my savings for the deposit, would only give me a safety buffer of 20-40k in stocks (excluding crypto/gold which i wont touch) and 5-10k in cash.  I could just about afford the monthly repayments of 1.5k, but in case of job loss or large rate increases, would struggle. 

Should I therefore set a limit of max 500k (1.2k pm), as that means a mortgage of 300k (200k deposit), id be borrowing slightly above what i currently owe and i am comfortable, or as this would be a forever home, push to the max (580k) given the lower interest rates and 25 year mortgage term?  I am 35 years old. 

Just wondering what others would do in this situation?

thanks       

anotheruser

Buy a cheaper home?

With your dosh, you could buy a house outright where there are people on these boards struggling to save for a deposit, let alone thinking about buying a half a million pound house

Alternatively, stay where you are, keep paying the mortgage and saving.
Then when you've paid off the current mortgage, think about buying another house with pretty much pure cash.

nick1234

anotheruser said:

Buy a cheaper home?

With your dosh, you could buy a house outright where there are people on these boards struggling to save for a deposit, let alone thinking about buying a half a million pound house

Alternatively, stay where you are, keep paying the mortgage and saving.
Then when you've paid off the current mortgage, think about buying another house with pretty much pure cash.

thanks, i am in the south east so 450-500k only gets you a nice 3 bed semi on the outskirts of London.   It is between a 3 bed and 4 bed, as if i have a family a 3 bed may be too small in the future.   

My current mortgage has 19 years left and i see no benefit from trying to pay that off as i am on a 1.5% rate and my investments earn 10%.  But i agree staying where I am a bit longer and building up the equity/savings is also an option.        

Sistergold

Are you wanting to buy because you need the space or are you wanting to upgrade so that when you have a family you have somewhere bigger? To be honest if I were you and with no family yet I would stay put. Like you said you are getting 10% interest in investments so that good.

ka7e

What exactly is your motivation for moving? Do you need more space to WFH or entertain? Do you need better parking or are you hankering for a garden? If you are currently single, a prospective partner may want a say in what they require from a family home - proximity to relatives/work/schools etc.

If you get to view some properties that meet your criteria now, you may find one that you really love, but if you don't, you are lucky to have the option to save and wait for your ideal "forever" home.

TripleH

Agree with the above, why are you looking to move?

What are you wanting from a new home?

There is no point moving if you don't have to, likewise don't fret over how much you can borrow if you don't know what you want.

We could have had a bigger mortgage than we do (hence more expensive property), but we found somewhere that meets our needs and still gives us a comfortable buffer zone.

When buying, look at what you need on a day to day basis, don't go for a 5 bed house for the rare (every 4 years) scenario of having a house full of guests if the rest of the time it's just you (for example).

p00hsticks

nick1234 said:

anotheruser said:

Buy a cheaper home?

With your dosh, you could buy a house outright where there are people on these boards struggling to save for a deposit, let alone thinking about buying a half a million pound house

Alternatively, stay where you are, keep paying the mortgage and saving.
Then when you've paid off the current mortgage, think about buying another house with pretty much pure cash.

thanks, i am in the south east so 450-500k only gets you a nice 3 bed semi on the outskirts of London.   It is between a 3 bed and 4 bed, as if i have a family a 3 bed may be too small in the future.   

My current mortgage has 19 years left and i see no benefit from trying to pay that off as i am on a 1.5% rate and my investments earn 10%.  But i agree staying where I am a bit longer and building up the equity/savings is also an option.        

You are talking about family and a 'forever home', yet you do not mention a partner or children.

If you already have a partner, what do they think ?

If you don't,  then wait until you get one and take their opinions into account - a family's 'forever home' really should be chosen together

diggingdude

Are you employing a cleaner? Larger houses take more effort as well, especially when on your own. Maintenance? If you don't need the larger property I would keep saving and investing for now. 

Ignore the fact others can't afford homes etc. That's not relevant. What is relevant is what you want/need and can afford 

propertyhunter

Congrats on getting yourself into a good financial position.I can understand why a single person wants a house vs a flat - more space for entertaining, car parking, no communal areas, no service charge or ground rent, garden etc. 

The issue is you say you want to buy a family home - you can't plan for a family home until you have one. Your future partner could have different idea of what makes a perfect home for them. Also they could feel that the home you have is 'your home' - and not yours together. Buy the house if you want it - but have cash reserves in place for 6 months of bills before you do so - not in investments (you want to keep those for the long-term). You seem to be financially savvy, so I don't believe that you'd be the kind of person to get themselves into a hole when making decisions such as this. You just need to be mindful of reason why you want to move might not actually mean this becomes the long-term family home in future. 

nick1234

thanks for the responses, the main motivations for moving are to have a house/garden and before prices increase even more, plus the area i am looking to move to (NE London/Essex) makes it easier for me to get to the Midlands where family/friends live.  I dont need the space but living in a flat for 5 years and paying service charges etc gets tiring plus the block is badly managed and old. 

I am currently seeing someone but still early days, i didn't think about buying with a partner, but with the costs of moving and difficultly in getting decent property in the South East, this would likely be my forever home so they would have to decide if location/type of house is a factor early on in the relationship, as i would likely be paying for most of it.  

nick1234

diggingdude said:

Are you employing a cleaner? Larger houses take more effort as well, especially when on your own. Maintenance? If you don't need the larger property I would keep saving and investing for now. 

Ignore the fact others can't afford homes etc. That's not relevant. What is relevant is what you want/need and can afford 

Good point i would need a cleaner, i currently have one that comes fortnightly and that is for a small 2 bed flat.   

Also like the idea of looking, saving in the meantime and seeing if anything comes up I really love.