First time buyer - my situation .

Exodi

FrancisBegbie said:

Hi,

I am 35 years old and no children . 

Between hard work & saving plus a leg up from my Father I have 50k for a house

I currently earn 30k although this is expected not to last forever which is the nature of my work. 

My Dad is adamant I buy a 3 bedroom house with resale value however this sounds like a brilliant idea however when I crunch the numbers it’s a tough ask to have a quality of life on my own being single.

I take home £1700 after tax NI and student loan. 

The house would cost £1000 to run.

My personal bills are £500 - which includes things like paying off a small credit card gym membership and dog

Leaving me with £200 to live on make house repairs etc. 

I feel I want to play safe and buy a flat but everyone I know who has one can’t sell it . 

Cheaper houses where I live aren’t really there or in run down and dangerous areas ( where I’ve lived before so I know )

I’ve had various relationships and no doubt will again when I want but I’ve made the mistake of being frivolous with money and never securing my living, now is the time , does anyone have any advise ?

thank you in advance 

We may be letting the tail wag the dog here.

If you earn 30k, a lender might offer you a mortgage of around £135k (generally, lenders top out around 4.5x annual salary).

Add your £50k deposit to this and you have a £185k budget, at a bit under 75% LTV. As an example, on this Nationwide are offering a 5 year fix (30 year term) mortgage at 3.99%, which a monthly payment of £650. This is expected to dramatically increase in the next couple of months after the absolute blinder our government has played in the last couple of days.

But this is largely irrelevant, as borrowers don't dictate to lenders what is affordable, the lender decides this. They won't lend to you if they believe the mortgage is unaffordable (hence lending 4.5x).

Realistically speaking, if you're buying in the south east, you'd be lucky to buy a wheelie bin to live in for £135k (OK some exaggeration, but even 1 bed flats would not be affordable). The further up north you go, the better your buying prospects become. Look on Rightmove, see what is within your budget.

Unfortunately your dad may be part of the older generation who still think that a single person on an average salary can buy a decent house, as was the case in their generation. I'd say this is virtually impossible nowadays, and most people buy as couples and/or with significant leg ups.

You almost certainly will not be buying a 3 bed detached 'forever home', sorry.

Exodi

FrancisBegbie said:

I agree I need to look cheaper . 

Mortgage £500 - more likely £650+
Council tax £140 - reasonable
Sky / Wi-Fi £100 - hard to justify Sky, most superfast broadband details are less than £25 p/m
Energy £200 - you are assuming that you will use the same energy as 'the average household'. In reality you will likely use half of this
Insurance £60 - what insurance is this? If Buildings and contents insurance, this is very high, I pay 1/5th of this.

£1000 - £650+£140+£25+£100+£12 = £927.

+ water
+ transport
+ groceries

As above in bold, but to my previous point - you're looking at this the wrong way round.

Getting_greyer

I'd check you've got correct tax threshold listed as £1700 net seems low for 30k. Unless you have PG loan too?

You're covering your expenses currently so what does difference  does a mortgage make to this? Or is it that you don't currently need to budget for house repairs and the like or along those lines? 

Money is currently expensive to borrow so makes even more difficult.

C1996

I think having £200 disposable income seems a bit too tight for me? Have you factored in the cost for food and petrol/money for public transport? I’d recommend looking at a property which allows you to have extra cash, especially when buying a house as it’s always advisable to save for a rainy day incase something breaks down/ needs replacing.

[Deleted User]

Don't let your dad decide what you do with your life! He probably bought a 2 or 3 bed house when he was young which is why he thinks it's a good idea for you to do the same, but the housing market now is totally different to what it was when he was young.

Also, you're buying at a time of expected house price declines ,war, inflation, rising interest rates & various other crises. Leaving yourself some legroom if you can is a sensible idea.

Or don't, but at the very least, do take in a couple of lodgers.

FrancisBegbie

SensibleSarah said:

FrancisBegbie said:

I’m in Liverpool. 

It doesn’t look good doing this on my own even with £50k and £30k salary . 

It looks like I’ll need a partner / lodger . 

The problem is a partner won’t match my deposit etc . 

It’s weird I naively thought I was in a great situation . 

The more I think of it though I don’t actually know anyone who lived on their own anymore they are all with family or their partner or in a flat or house share . 

I live alone in a 2-bed house in Liverpool. You might have to compromise a little on the area you want to live in but although house prices here have rocketed in the last few years, it's still definitely one of the more affordable parts of the country.
I bought my house in 2010, so can't really offer much up to date advice. I was then on a salary of about £25k, had a £9k deposit thanks to my Mum, so was able to buy a bit of a fixer-upper for £90k in an area that is middling. Several houses in my street have sold in the last year for anywhere between 120k - 160k (most are 3-beds) so it is possible for you to find a decent 2-3 bed in your price range, but stock is low and demand is high so things tend to move really quickly and the move-in-ready houses often get sold within hours or days at most. One of the best and worst things about Liverpool is that one street can be completely different to the next and varies widely in the same postcode area, so don't discount a whole area on the strength of past experience without taking a walk/drive by a specific house again. 

Your house running costs probably aren't too far off compared to mine - but obviously mortgage interest rates at the time you take yours out will play a big part in that specific cost. I currently pay about £110 a month council tax (Including 25% sole occupancy discount) for a Band A property, my energy costs will be around £100 a month (after Oct increase - but I don't use the heating much) and TV/Broadband costs me £85 including sports channels. so could be considerably cheaper if needed. Home insurance is way cheaper than £60 a month. I pay annually but would work out as less than £20 a month for building and contents. I managed my running costs fine when I was earning under 30k a year, but saving was difficult/impossible until I started earning more. 

Thank you dear very informative post I appreciate it . 

I agree Liverpool is a lottery and always based on neighbours . 

I’ve lived all over including high rise flats in the infamous blocks in Cannibal Farm - Stockbridge Village. 

My leaning is towards a three bed for the sale aspect . 

I know as I said previously I genuinely thought with £50k I’d be in a great position and could pick up a house for £100,000 , how wrong I was . 

Rachelredwood16

Exodi said:

FrancisBegbie said:

I agree I need to look cheaper . 

Mortgage £500 - more likely £650+
Council tax £140 - reasonable
Sky / Wi-Fi £100 - hard to justify Sky, most superfast broadband details are less than £25 p/m
Energy £200 - you are assuming that you will use the same energy as 'the average household'. In reality you will likely use half of this
Insurance £60 - what insurance is this? If Buildings and contents insurance, this is very high, I pay 1/5th of this.

£1000 - £650+£140+£25+£100+£12 = £927.

+ water
+ transport
+ groceries

As above in bold, but to my previous point - you're looking at this the wrong way round.

How could I forget about water?! Insurance could well be home, life and car which then £60 makes sense.

Sarah1Mitty2

[Deleted User] said:

Mortgage costs are very likely to increase significantly, so ever if you were willing to take a chance with £200 left over, that could easily be eaten up by interest rate rises in the next few months.

Ignore all this "sell your iPhone" nonsense, that's not going to reduce your outgoings enough to make buying a 3 bed house a good idea. If interest rates reach 6%, which is likely and what the BoE is hinting at, you would be paying £600/month more on a £200k mortgage. Clearly that's not going to work for you.

Yes, mortgage costs are going to be your main cost and they are rising rapidly, I don`t think now is a good time to be looking to be honest.

SensibleSarah

FrancisBegbie said:

Thank you dear very informative post I appreciate it . 

I agree Liverpool is a lottery and always based on neighbours . 

I’ve lived all over including high rise flats in the infamous blocks in Cannibal Farm - Stockbridge Village. 

My leaning is towards a three bed for the sale aspect . 

I know as I said previously I genuinely thought with £50k I’d be in a great position and could pick up a house for £100,000 , how wrong I was . 

Picking up a decent house for 100k in Liverpool was totally possible 5 years ago - not any more. 

I never expected that I'd still be in my little house 12 years after buying it and it doesn't really meet my needs anymore at all - but with the way things are going then I may have to stay a while longer! Not the worst position to be in so I'm not complaining. 

I think looking at it as an investment is probably the wrong move - it's a place to live first and foremost. You can't control the market and prices could fall as easily as they could rise. Buy the place you want to live in - it's your property not your father's. 

Sarah1Mitty2

FrancisBegbie said:

SensibleSarah said:

FrancisBegbie said:

I’m in Liverpool. 

It doesn’t look good doing this on my own even with £50k and £30k salary . 

It looks like I’ll need a partner / lodger . 

The problem is a partner won’t match my deposit etc . 

It’s weird I naively thought I was in a great situation . 

The more I think of it though I don’t actually know anyone who lived on their own anymore they are all with family or their partner or in a flat or house share . 

I live alone in a 2-bed house in Liverpool. You might have to compromise a little on the area you want to live in but although house prices here have rocketed in the last few years, it's still definitely one of the more affordable parts of the country.
I bought my house in 2010, so can't really offer much up to date advice. I was then on a salary of about £25k, had a £9k deposit thanks to my Mum, so was able to buy a bit of a fixer-upper for £90k in an area that is middling. Several houses in my street have sold in the last year for anywhere between 120k - 160k (most are 3-beds) so it is possible for you to find a decent 2-3 bed in your price range, but stock is low and demand is high so things tend to move really quickly and the move-in-ready houses often get sold within hours or days at most. One of the best and worst things about Liverpool is that one street can be completely different to the next and varies widely in the same postcode area, so don't discount a whole area on the strength of past experience without taking a walk/drive by a specific house again. 

Your house running costs probably aren't too far off compared to mine - but obviously mortgage interest rates at the time you take yours out will play a big part in that specific cost. I currently pay about £110 a month council tax (Including 25% sole occupancy discount) for a Band A property, my energy costs will be around £100 a month (after Oct increase - but I don't use the heating much) and TV/Broadband costs me £85 including sports channels. so could be considerably cheaper if needed. Home insurance is way cheaper than £60 a month. I pay annually but would work out as less than £20 a month for building and contents. I managed my running costs fine when I was earning under 30k a year, but saving was difficult/impossible until I started earning more. 

Thank you dear very informative post I appreciate it . 

I agree Liverpool is a lottery and always based on neighbours . 

I’ve lived all over including high rise flats in the infamous blocks in Cannibal Farm - Stockbridge Village. 

My leaning is towards a three bed for the sale aspect . 

I know as I said previously I genuinely thought with £50k I’d be in a great position and could pick up a house for £100,000 , how wrong I was . 

What do you mean the sale aspect, do you expect to make a profit on it?