First time buyer with deposit, what can I afford?

dannyboycey

Skyhigh wrote: »

"House crash" wise, prices rise every 7 years

That's a new one on me. If it were that simple, we'd all be millionaires.

brit1234

I've got a £25k deposit and a salary about £35k, still can't afford in London.

I would wait there is increasing surplus of properties on the estate agents books just like America before the big falls.

neverdespairgirl

teabelly wrote: »

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?

In the borough where I live, the BBC says that prices dropped by nearly 10% last quarter - which strikes me as quite a lot! "Change in last quarter: -9.7%"

cowbutt

rocklee wrote: »

- 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.

OK, let's assume you don't want to plough all your savings into the deposit. Keeping at least 3 months salary (say £5.5k) is probably the minimum you want to keep by. Allow upto £6k for legal fees, stamp duty, moving costs and so on. Assuming you aren't buying a new-build, you'll probably want to allow an average of £1k/room for redecoration/appliances/furniture, and that knocks another £6k (2 bedrooms, bathroom, living room, dining room, kitchen) out of your savings, leaving you with a maximum deposit of a respectable £22.5k.

I'm of the opinion that about 3x gross salary is a safe amount to borrow, rather than the new-fangled 'affordability' measures. That would give you a maximum mortgage of £75k-£97.5k (3.25 x £30k gross). That gives you around £120k to play with. I'd be looking at terraced houses, maisonettes and flats in that order.

kingkano

dannyboycey wrote: »

Sorry. A house is always an investment, good or bad, whether you choose to look at it that way or not.

I wasn't able to live inside my ISA the last time I tried. And the company I have shares in moved me on pretty sharpish.

Therefore to me a house is a home and NOT an investment. Its a place for me to live, whether you choose to look at it that way or not. My 'rent' is more expensive than a renter but it allows me the extra rights of decoration and free will to express myself as I wish within my HOME.

rocklee

Thanks guys.

I think for London, I would look at apartments as the houses seem to be all a bit pricey for me. Or are prices coming down?

dannyboycey

rocklee wrote: »

Thanks guys.

I think for London, I would look at apartments as the houses seem to be all a bit pricey for me. Or are prices coming down?

Did you actually read the responses?

chriz1000

The funny thing is, the people who don’t want to buy a property today for the above reasons are often the same people who will go and buy a new car and have no issue with this whatsoever. Or go on holidays abroad, eat out in fairly expensive restaurants or buy expensive clothes. Buying a property is only a negative thing if you view it as an asset. If you view it as a liability the same way as any other expense you don’t have this problem.
Ask yourself, would you rather lease a car as it saves money? Even though it is only a little bit cheaper but never belongs to you? Why do you go on holidays abroad, buy expensive clothing and eat out in expensive restaurants when there are much cheaper alternatives?
At the end of the day if you are buying a home, in the long term it certainly going to retain a larger percentage of its value than any of the other items I have listed above.

A home is not an asset is a liability just as a car or anything else you buy. The sooner people adapted to this way of thinking the better.

Kez100

Skyhigh wrote: »

I'm in a similar position, almost.


"House crash" wise, prices rise every 7 years so if you're not planning on moving anytime soon then you'll be fine with avoiding negative equity, etc, if/and/or/when you come to sell up.


:!:

Where were you in 1989 to 1996?

Do you appreciate, based on evidence from the past crash, just how bad your advice could prove to be?

PasturesNew

Oops, I see a few people wanted the spreadsheet. Unfortunately this thread became buried in the volume of threads until just now.

My situation is different to most people's. I sold my house last year and my savings are the only money I have in the world and when I buy a house it will be for life. And I won't ever have a well paid job and I don't want a mortgage.

So I need to make the most out of what I have and try to judge the market in the next few years to make the most of it. Yes a house is a home first, but if you've ONE shot at getting it right (like I have), there's no point in paying, say, £40k more for a house today than I could do in 3-4 years, while losing £40k interest in that time. I have NO pension plan and am too old/poor to ever start one. So whatever I can squeeze out of my savings/house purchase is vital to being a bit secure as I will be on State Basic Pension when I retire.

If you plan to trade up in the next 10 years, you need to also think like this I believe. Or you're throwing your savings/deposit away.

The figures I used in my personal spreadsheet did start with a big pile of savings, but the spreadsheet worked monthly and assumed:

Decrease in house prices at .006667/month
Rent increasing by .003/month
Buying cost would be 3% of cost (stamp duty, solicitor, searches, VAT, tarting it up a bit [I have ZERO belongings/furniture to my name])
Savings interest was calculated at .045/12 (rough, I know - I am a basic rate taxpayer too)

Based on those figures it could then calculate 'cost to buy now' and 'savings account' on any month.

It wasn't a rocket science solution. Just chucking formulae about in Excel.