Worried First Time Buyer - In Too Deep?

barnaby-bear

seraphina wrote: »

That is utter rubbish. Whether or not you believe that house prices are going to fall substantially (Nationwide figures show that the average price has fallen in the past 4 months in a row), negative equity was a very real problem at the beginning of the 1990's.

Renting is *not* dead money - in fact, in your case it sounds like it would do you the power of good - if you both live at your parents you have no real experience about how much it costs to run your own home, between just the two of you. In many parts of the country renting is much cheaper than buying, so you should be able to save a good deposit whilst you rent. If you really want a place of your own, then surely a year or two of saving isn't such a hardship?

There will always be another house that is just as good. ANd as for renting being dead money, what do you consider the interest on a mortgage to be?

SOrry to sound harsh, but it sounds like you're being pressured into buying.

Actually those mortgage payments sound low for borrowing £130k - are we talking IO or a discount mortgage?

merlinthehappypig

Why not post a list of the costs that you think you will have and how much these will be. We can have a look and let you know how realistic the costs are and what, if anything, you have missed.

We have all been in this situation ourselves and ought to be able to come up with a realistic figure for you. I always over budget for everything now, but I know what it is like when stretching to buy somewhere for the first time.

pinkshoes

seraphina wrote: »

That is utter rubbish. Whether or not you believe that house prices are going to fall substantially (Nationwide figures show that the average price has fallen in the past 4 months in a row), negative equity was a very real problem at the beginning of the 1990's.

Price drops leading to negative equity is only a problem if you plan to sell, but the OP is buying a 3 bed house, which will no doubt become their home for a LONG time... They're not doing this to make a quick profit!!

Amosp, your salary is very low! That's minimum wage isn't it??? Have you considered a career change!?!?! Even the apprentices here (aged 16) get £14k! Perhaps a trip to a career advisor?

dreamalittle

pinkshoes wrote: »

Price drops leading to negative equity is only a problem if you plan to sell, but the OP is buying a 3 bed house, which will no doubt become their home for a LONG time... They're not doing this to make a quick profit!!

But it could also be a problem if negative equity means they can't remortgage/switch to a new product in two years time and have to go to a much higher SVR.

Kez100

House prices do not always rise.

My first house I bought for 52,250. I sold it three years later for 48,000.

There was nothing wrong with the house - in fact we had added new carpets throughout and a new kitchen. That was the market in the early 1990's.

If I had bought that house in 1989 it would have been circa £69,950 and I would have lost even more selling in 1994.

amosp

Again thanks for the replies.

Seraphina, don't worry about being harsh as long as you're being honest This is the reason I posted here as I DO feel pressured.

I am aware that the salaries are very low and I am making progress (albeit slow) toward changing that. I did want to have a better job sorted out prior to investing in a house but as I said we didn't want to miss this one.

Barnaby, it is a fixed 2 year mortgage with RBS at 5.7%.

Here is a list I've come up with (very quickly and off the top of my head, I'm not at my usual PC) as requested by merlin.

Net Monthly Income £1739
Mortgage £688
Life Insurance £29
Home + Contents £20
Gas/Water/Electricity £75
Council Tax £100
Home Phone £15
Mobiles £30
TV License £22
Car Tax £20
Car Ins. £65
Services £10
MOT £10
Petrol £90
Food Shopping £260
Pets (Just fish) £5
Dentistry £2.5
Optical Health £5.5
House/Garden Maintenance £10
Health & Beauty £5

Remaining:277

barnaby-bear

amosp wrote: »

Again thanks for the replies.

Seraphina, don't worry about being harsh as long as you're being honest This is the reason I posted here as I DO feel pressured.

I am aware that the salaries are very low and I am making progress (albeit slow) toward changing that. I did want to have a better job sorted out prior to investing in a house but as I said we didn't want to miss this one.

Barnaby, it is a fixed 2 year mortgage with RBS at 5.7%.

Here is a list I've come up with (very quickly and off the top of my head, I'm not at my usual PC) as requested by merlin.

Net Monthly Income £1739
Mortgage £688
Life Insurance £29
Home + Contents £20
Gas/Water/Electricity £75
Council Tax £100
Home Phone £15
Mobiles £30
TV License £22
Car Tax £20
Car Ins. £65
Services £10
MOT £10
Petrol £90
Food Shopping £260
Pets (Just fish) £5
Dentistry £2.5
Optical Health £5.5
House/Garden Maintenance £10
Health & Beauty £5

Remaining:277

I'd try this on DFW/old style boards as they are far better than us at this - but food looks high for two - buying lunch at work? Car servicing seems low/ what when the car needs replacing? Gas/water/electric seems a bit low especially if new build so water meter - house+contents seems a bit low as does house maintenance. Life insurance seems a bit high. TV licence bit high.
One car? If so insurance high.

A second/job or lodger for the first year would make a huge difference.

Badger_Lady

Hia,

The price of house / level of mortgage you're talking about is very similar to mine... but I earn £32k and only have one mouth to feed, plus the option of bringing in a lodger or two if necessary.

It sounds on the face of it like you two will really be stretching yourself here, with no guarantee of a secure financial future... are you really willing to sacrifice your lifestyle for the next 2 years on the risk that your wages may increase, or that your mortgage rate may go down?

Assuming the answer is "no" (I wouldn't be), do you really need such a large, perfectly kitted-out house? A newbuild 3-bed semi with a garage sounds very luxurious for a first home - would you consider getting something more affordable for now, until you have more money to spend?

amosp

Barnaby,

We both take bait boxes to work with sandwiches so there are no costs for lunch at work but it does bump the weekly shopping bill up which I guess would answer both of those questions?

We have a car each, a service costs £60 and an MOT costs £40 which I’ve spread out over a monthly basis. Of course there may be additional costs for any repairs that are required which is something I can’t really hazard a guess at. As for insurance, we are 22 and 21 so it is a little high at the moment but is dropping each year.

GWE are probably the things we are least clued up on. The House and Contents insurance is a quote we’ve been offered through the mortgage advisory company we’ve been speaking to (New Homes). The Life Insurance is the same, we’ve been told that’s Life + Critical Illness so it could be less.

House maintenance I’m only really accounting for cleaning and gardening gear which I don’t suppose we’ll have to buy that regularly? I really don’t know. =S

I agree, it would be a massive stretch and I am worried that we may have made the wrong decision.

No, I don’t suppose we require something so luxurious, but value for money wise it’s the best thing we’ve seen. One would argue that value for money is irrelevant if you can’t afford it. Which again, I’m not sure we can.

There isn’t much of a lifestyle to give up, and I am rather careful with my money and have saved up quite a bit thus far. However my girlfriend can be irresponsible with her money. Which also worries me.

VFR-Rider

Also (just playing devils advocate!) how long have you 2 been together? What would happen if you were to split?

As my signature says, I have a decent deposit which is increasing by a little over £1k a month and I have taken the decision not to buy. This is purely my opinion, however I rent so do not feel any pressure "for my own space". Also it means I should have a reasonable idea of bills etc...