How much can i afford for new home?

macman

To be frank, thinking of somewhere as your 'forever home' at 35 years old is just absurd. Your life circumstances could change dramatically in five years, let alone twenty or thirty. Employment, income, marriage, family, health...

propertyhunter

Buy the house. The one thing I have learned is that you can't predict what will happen tomorrow, let alone in a few years. Just plan for your circumstances today. Imagine if you find someone and you both want to live in Australia! It's not on your radar now, but it damn well could be (and what an amazing adventure that would be!). 

LittleMissDetermined

macman said:

To be frank, thinking of somewhere as your 'forever home' at 35 years old is just absurd. Your life circumstances could change dramatically in five years, let alone twenty or thirty. Employment, income, marriage, family, health...

There are lots of people who have lived in the same house since they were in their late 20's, early 30's. It depends on circumstances and whether they are happy where they are.  My parents have been in their home since late 20's and almost 40 years later have no intention of moving, ever. 

If the OP is looking for (and found) their forever home and can comfortably afford the house they have seen then they should go for it.  Why wait and live somewhere they don't want to any longer. 

Admittedly, as the OP gets older and/or settles with family (not everyone wants or gets a family, we can't have children) things may change. But my advice would be to go for it and enjoy a happy and comfortable life, they have clearly earned that right.

propertyhunter

 But my advice would be to go for it and enjoy a happy and comfortable life, they have clearly earned that right.

So true.

Elliott.T123

Go for it, however I would caution the thinking of this will be my forever home that I will have a family in when it is not a 50/50 decision with a partner. Until you have a settled partner and the two of you together agree it is a forever home then do not think of it as a forever home.

steve866

What other outgoings do you have per month? £1500 seems very affordable for £85k salary. You could probably take in a lodger if you hit hard times. 

MobileSaver

steve866 said:

What other outgoings do you have per month? £1500 seems very affordable for £85k salary.

This was my first thought too on seeing "I could just about afford the monthly repayments of 1.5k". When I was earning just a smidgeon more than the OP, I had more disposable cash than I knew what do with...

Do you have debts OP as this will obviously affect how much you can afford for a new home?

FrugalCat

nick1234 said:

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       

You seem to have prudently amassed some wealth, which is nicely spread across a balanced portfolio.
If you want to stay ahead of the curve, the right call is stay put, pay your mortgage down and keep building wealth, ideally some that builds passive income.
(The curve:https://www.nimblefins.co.uk/savings-accounts/average-household-savings-uk#nogo)

But in the end you need to do what makes you happy - even if that's taking out and servicing a big loan.

nick1234

steve866 said:

What other outgoings do you have per month? £1500 seems very affordable for £85k salary. You could probably take in a lodger if you hit hard times. 

Just the usual bills, council tax, car insurance etc, probably £500 pm on top of the mortgage.  I have got so used to mortgage taking up less than 1/3 of pay and saving the rest (or buying watches!) but of course i could afford to pay more if rates went up etc.  i also get annual bonus of 10-20k.    no other debts.

think i will bide my time for now and keep an eye on the market.  

Thanks

TripleH

Do you overpay your mortgage?

It makes sense to overpay a little as it reduces the interest you pay. There are usually limits to what you can overpay in a year so it doesn't need to eat all your surplus income.