First time buyer with deposit, what can I afford?

rocklee

Hi,

I'm keen in buying my first home as a single and was wondering what I can hope for. Following are my circumstances :

- I've just returned to UK after 20 years
- no debts (I have a complimentary credit card that I don't even use)
- 25 to 30++k salary
- 40,000 GBP savings (more if I ask my parents nicely)
- not all that interested in BTL/STR etc., just want a 1-2 bedroom place until I need a bigger place for a family
- not interested in moving places too often

What can I afford with the above? I need some help on what prices I should be looking at and what type of housing I should be going for.

Thanks!

Zammo

You will be able to afford substantially more if you wait a year or two. Prices are plummeting at the moment.

http://www.home.co.uk/asking_price_index/HAPIndex_FEB08.pdf

The mix adjusted average price for homes on the market in England and
Wales dropped sharply this month by 1.5%, which equates to an average
reduction of £3,870.

PasturesNew

I did a spread sheet last night.
Based on: cost to buy a house at whatever price it is at that point (stamp duty + misc), house prices dropping slowly, rents rising steadily and how much rent I will fork out, interest rate on savings not changing, me not saving a thing extra.

Question was: Should I buy now, in a year or later?

It said if I buy a house today I will be £5k short.
If I wait 3 years and buy the same house I will have £70k in the bank

Nuff said.

If I wait 4 years, it turns out to be over £90k in the bank.

It's an interesting spreadsheet model to throw together (only takes 4 minutes too).

carpetbelly

is that prices dropping at what rate over that period of time? rents rising at what rate? where the figures for this came from and can you PM me the weekends lottery numbers at the same time?

I'm not saying you're wrong but I am not saying you're right either. I personally think you're not taking all factors into account and one of the main ones is you're thinking about money returns/savings rather than I want a house to live in.

People need to do what's right for them. To see what you can afford I'd go see a whole of market mortgage broker and speak with them. If you feel buying is right for you and you're buying a home and somewhere to settle down for a bit then why not buy. Some people think of a house as somewhere to live and not an investment.

I also prefer the fact at the end of 6months I'm not going to be asked to move or sign another contract. The peace I have in my own home in my mind is worth a lot more money than what some people predict by renting. Also, with a family and pets it was better for me to have a stable base for the children starting school rather than moving around to much. Individual circumstances should decide if you buy, not just the thought of money. If you can afford it then what is the problem?

dannyboycey

PasturesNew wrote: »

I did a spread sheet last night......It said if I buy a house today I will be £5k short.
If I wait 3 years and buy the same house I will have £70k in the bank

Nuff said.

Would perhaps be a good one to share - if you're willing. Could 'enlighten' a few people.

adr0ck

pastures new ........... can you also pm me the lottery numbers for this Saturday

thanks :beer:

Debt_Free_Chick

Zammo wrote: »

You will be able to afford substantially more if you wait a year or two. Prices are plummeting at the moment.

http://www.home.co.uk/asking_price_index/HAPIndex_FEB08.pdf

Current prices might be less than they were 12 months ago, but will prices in a year or two be even lower? Who knows ....

Some believe that there's a one point cut in interest rates due this year - what will that do?

And some people buy a house as a home - honestly, they do - so the "investment" theory is of little interest.

carpetbelly

adr0ck wrote: »

pastures new ........... can you also pm me the lottery numbers for this Saturday

thanks :beer:

oi, I asked first!

teabelly

The STR brigade have been saying it's all going to crash since 2002. It hasn't. They have been wrong for the last 5 years so why believe them now? RICS were all gloomy this time last year too. Interest rates are coming down. GB owns several properties and all the rich people have their money in property - do you honestly think this bunch of self interested over paid windbags that is our beloved Govt are going to let property prices fall too far?!

Average prices falling don't necessarily the falls are even. Small percentage falls in larger price tag houses will have a much larger effect on average prices than falls in smaller priced properties. The property indices need to reflect average prices across house types to give a more accurate picture.

Keep an eye on your local market and asking prices there. What is going on in other parts of the country will depend on local conditions so can't necessarily applied to where you are. Agents put on at what they think they'll get. In tough times they're hardly likely to put a house on substantially more than it is worth as they know it will just sit there. Some stuff just isn't selling at any price, it's mostly the dregs ie poor houses in poor areas next to kebab shops or ex council houses. Good stuff in good areas is still selling. As a buyer you can afford to be fussy and not just buy anything with a roof.

While you are renting you are paying someone else's mortgage. If they get into trouble then you are out on your ear. If you are buying your own house and keep enough cash to cover any potential difficulties eg redundancy then in that 3 years time you'll have a house worth just as much if not more and some savings to boot. If you can't save and pay the mortgage at the same time then you are over stretching yourself anyway.

Ignore all advice and do what you think is best for you and your future happiness.

dannyboycey

Debt_Free_Chick wrote: »

Current prices might be less than they were 12 months ago, but will prices in a year or two be even lower? Who knows ....

You don't know anything for certain, even that the sun will come up tomorrow. However, there's a really, reeeaallly, reeeaaaaallly strong chance that prices in 2 years will be lower than they are now!

Debt_Free_Chick wrote: »

And some people buy a house as a home - honestly, they do - so the "investment" theory is of little interest.

Sorry. A house is always an investment, good or bad, whether you choose to look at it that way or not. Extreme example, but say you buy a house and a few years later you lose your job, interest rates are 10% and your fixed rate has come to an end. You can't say to the repo company "it's ok.... It's a home, not an investment."

dannyboycey

teabelly wrote: »

The STR brigade have been saying it's all going to crash since 2002. It hasn't.

It is.... Now. In fact the price of your house has probably dropped a couple of quid since you made your ill-informed ramble of a post.

teabelly wrote: »

Ignore all advice.

Great philosophy on life.


It's amazing how people can deny what's happening right before there eyes. A classic case of believing what you want to. Selective perception. A psychologist would have a field day with someone like you.