First time buyer: key worker, how do you afford monthly payments

redrabbit29

I live with my girlfriend, and we rent a 2 bedroom house which is £750 per month.

We are both key workers, although I don't want to use the keyworker scheme as I've heard negative things, such as how much of the home you actually own, etc...

I've looked briefly at some mortgages and I think I used a calculator which said I could borrow up to £180'000. However, the monthly payments on most mortgages are around £1100 a month. That is nearly £400 more than what I am paying now. How would you suggest I could cut this down to no more than £900ish?

My income per year is: £25'000
My girlfriends is: £21'000

We have no debt, and no loans outstanding.

Thanks.

Running_Horse

redrabbit29 wrote: »

How would you suggest I could cut this down to no more than £900ish?

Borrow less than 4 times joint income?

What are your take home pays? If you don't mind my asking.

cattie

Why aren't you interested in the keyworker scheme when most of them offer an interest free loan? It would be the most cost effective way to borrow the money for a place of your own & ok.

Even if the loan is for 25% of the property, when you come to sell you'll have 75% of whatever the place will be worth & would have saved money on interest too, which can all go towards the cost of your next home.

Running_Horse

I don't know much about the Keyworker Scheme (apart from the fact it is discriminatory and unfair), but is this really the best time to be stretching yourselves to own part of a property? Wait a couple of years while saving a deposit, and who knows, maybe you will be able to own a whole property without subsidy from the rest of us.

Lavendyr

redrabbit29 wrote: »

I've looked briefly at some mortgages and I think I used a calculator which said I could borrow up to £180'000. However, the monthly payments on most mortgages are around £1100 a month. That is nearly £400 more than what I am paying now. How would you suggest I could cut this down to no more than £900ish?

We are in a very similar situation and are renting for a similar cost per month. From what you've said, it sounds like you don't have a deposit (at least, you haven't mentioned one) so that should be your first priority - save up for a deposit. Otherwise, my only words of wisdom follow the same lines that we are currently taking:

- Wait & rent cheaply for a couple of years and see whether house prices drop relative to wage inflation
- Save like mad in the meantime towards an even bigger deposit

Alternatively, it's worth mentioning that you could look for a cheaper property - perhaps a repossession or place needing a lot of work (obviously not always possible or worthwhile though).

redrabbit29

Running horse: Our income is in the OP: £25'000 for me, and £21'000 for my partner.

In terms of a deposit. We probably have about £3K available at the minute. Not much. How much would you suggest?

Cattie: I've heard negative things about the keyworker scheme. It's not recommended as ideal anyway. Of course, if you have no money, then it's a great scheme, so maybe I will consider it.

Lavendyr: Thanks for the advice. How much of a deposit are you going to put down? As I said before I have about £3K avialable at the minute, of course it could grow in the next year.

Running_Horse

redrabbit29 wrote: »

Running horse: Our income is in the OP: £25'000 for me, and £21'000 for my partner.

I asked about your take home pay after deductions. The reason being, many mortgages are offered on the basis of affordability and credit history, rather than straight multipliers. Only you can decide what sacrifices you are willing to make in terms of social life, holidays, cars etc. But with a deposit of just £3,000 I would strongly suggest you save up more, and see what prices do in the meantime.

ruggedtoast

Running_Horse wrote: »

I don't know much about the Keyworker Scheme (apart from the fact it is discriminatory and unfair), but is this really the best time to be stretching yourselves to own part of a property? Wait a couple of years while saving a deposit, and who knows, maybe you will be able to own a whole property without subsidy from the rest of us.

You really dont know much about Keyworker schemes do you? You're right in one way though, it is discriminatory and unfair; on the poor saps who are left with it as their only option. Let me explain:

McScrumpy Homes buys a landfill site next to a swamp, possibly with poisonous gas seeping up through it. McScrumpy builds a few hundred New Build units and sells half of them off plan to punters at £200k, outrageously expensive for poorly built rabbit hutches yes, but there are all kinds of discounts on offer for private buyers and anyway, McScrumpy arent done yet because here comes Mister Housing Association. Thanks to being an appendage of all the worst free market PFI corrupt government social policy Nu Labour can offer Mister HA has a budget to pay much more, up to 300k a unit to Gordons' property profiteering 3rd way New Lab donating buddies. What a bargain.

The HA will then flog a third of one of these flats to a desperate teacher, policeman or fireman who is hysterical with worry as the first rung of the housing ladder, and any hope they have of starting a family disappears from their view. So they buy, for example, £100,000 on a third of a cruddily built apartment with cardboard walls and wood panelling theyll be lucky to give away in 15 years time.

But its not over yet, oh no! The Housing Association will charge them rent on the other two thirds of the property on top of their mortgage, thus ensuring they never will escape the poverty trap. And the best bit is that it doesnt matter what happens to house prices now as they can never win. Why? Well if prices go up the unpaid for part of their property goes ever further out of reach, if it goes down they have to pay the HA valuation on something that had them in negative equity at the moment they bought, or try and sell, but whos going to buy? And if they stay put they get to live somewhere with a building life of about 2 decades with all the disadvantages of renting and all the disadvantages of owning rolled into one.

But our sticky fingered PM, the Housing Association, and their pals in the building industry are happy and thats really what matters, to them anyway.

Running_Horse

ruggedtoast wrote: »

You really dont know much about Keyworker schemes do you? You're right in one way though, it is discriminatory and unfair; on the poor saps who are left with it as their only option. Let me explain:

McScrumpy Homes buys a landfill site next to a swamp, possibly with poisonous gas seeping up through it. McScrumpy builds a few hundred New Build units and sells half of them off plan to punters at £200k, outrageously expensive for poorly built rabbit hutches yes, but there are all kinds of discounts on offer for private buyers and anyway, McScrumpy arent done yet because here comes Mister Housing Association. Thanks to being an appendage of all the worst free market PFI corrupt government social policy Nu Labour can offer Mister HA has a budget to pay much more, up to 300k a unit to Gordons' property profiteering 3rd way New Lab donating buddies. What a bargain.

The HA will then flog a third of one of these flats to a desperate teacher, policeman or fireman who is hysterical with worry as the first rung of the housing ladder, and any hope they have of starting a family disappears from their view. So they buy, for example, £100,000 on a third of a cruddily built apartment with cardboard walls and wood panelling theyll be lucky to give away in 15 years time.

But its not over yet, oh no! The Housing Association will charge them rent on the other two thirds of the property on top of their mortgage, thus ensuring they never will escape the poverty trap. And the best bit is that it doesnt matter what happens to house prices now as they can never win. Why? Well if prices go up the unpaid for part of their property goes ever further out of reach, if it goes down they have to pay the HA valuation on something that had them in negative equity at the moment they bought, or try and sell, but whos going to buy? And if they stay put they get to live somewhere with a building life of about 2 decades with all the disadvantages of renting and all the disadvantages of owning rolled into one.

But our sticky fingered PM, the Housing Association, and their pals in the building industry are happy and thats really what matters, to them anyway.

The unfairness come from the random designation "Keyworker". I do not work for the public sector, but the NHS could not survive without the products I make, yet I do not qualify for discounted housing.

As for the quality, nobody is forcing anyone to buy these shoddy rabbit hutches, but you can be sure they are exactly the same quality as the privately bought ones which go for a higher price to support the "affordable" element.

The fact that one section of society is helped to buy homes, just fuels prices in general, making the problem worse, not better. There should be affordable homes for everyone, not just government employees.

PasturesNew

You don't HAVE to own a home.
It's not compulsory.
It's a 'new thing' really, invented not long ago.

Also, £3k isn't a deposit. That must be about a month's takehome salary between you. How long have you been saving?

My dad was 40 when he bought his first house.
So was I.

I'd set my sights on buying a house when I was about 20. Took me 20 years to manage it.

Is there any way you can rent somewhere cheaper to save a bigger deposit? Or relocate to somewhere cheaper; that's what I did to own a home ....

And then I found out owning a home isn't good at all. It's expensive and pretty much stops you affording a life because of the bills and ongoing commitment; and you're stuck with it. Unable to move quickly if you want to. When you sit in your own home and see something you want to change it: cost. When you go out you spot something to buy for it: cost. It's never ending.

Lavendyr

redrabbit29 wrote: »

Lavendyr: Thanks for the advice. How much of a deposit are you going to put down? As I said before I have about £3K avialable at the minute, of course it could grow in the next year.

For our deposit, we are looking to have at least 10% of the value of any house, if not more. We actually have around 10% already, but we are not happy about the current market situation, and with rent being so much cheaper than a mortgage, we are in a good position to keep on saving and hopefully have an even bigger deposit in a couple of years' time, especially if house prices take a dip. To be perfectly honest, I would say that £3k really won't get you very far - remember that you also have to pay solicitors fees, surveys and stamp duty, so in effect that will eat up all your £3k before you even start. So I would therefore recommend continuing to rent & saving up even more strongly.