How much money do i need to save to buy a flat?

neilsinc

How much money (roughly) do I need to save in order to buy myself a flat?

I've got about £10,000 saved up and have an annual salary or around £17-18000 a year.

I was looking at getting a place costing around £70000. Would I be able to afford this on my current salary?

Is £10,000 enough savings to get a place? Would it be enough to pay for all the additional costs such as tax, insurance, and furnishing the place?

Any advice and help would be very much appreciated

Badger_Lady

Yep, you're fine

Talk to a mortgage broker about your options - for a flat worth £70,000:
- No stamp duty
- Solicitors costs / searches etc come to less than £1,000
- At least 10% deposit (£7,000)
- Less than 4 x salary mortgage

You should find options open, despite the mortgage market being so fickle at the moment. In a normal climate, you'd have no problem at all

neilsinc

Thanks.

How far do you think I could go in terms of price of property with the savings and annual income I have? Could I get a place worth £80,000 or would that be pushing it a bit?

I also have to consider furnishing, and insurance as well as cost of living every month. Do you know how much this would come to per month (roughly), as combined with paying off the mortgage I don't want to be left in a situation that means I'm broke month after month and struggling to pay for things.

Thanks again

beecher

Your mortgage would be over £400/month so you need to work out if that is affordable. As it is more than 1/3 of your take home pay I'd personally find that impossible to live on when you also have to pay council tax, utilities etc.

Badger_Lady

^ It all depends on where you live and what kind of rate you can get on your mortgage. If you want to start playing around with budgets, download Martin's Budget Planner and plug in some of the following:

- Mortgage. There's a mortgage calculator here that can help you work out what your monthly payments would be. If you can get a £63,000 mortgage at 6%, you'll be looking at about £400 a month.

- Council Tax varies according to location and size of property. You can normally claim a 25% discount for living alone. Often, estate agents will give details of tax bandings for your area, but estimate it to be roughly £75 a month for a single person in a small flat.

- TV License / Sky TV etc. You have to have a TV License - payment plans are really odd, so I think it normally works out at £10 a month but you might have to pay double that for the first six months. Add on any extra TV packages you're keen on.

- Landline telephone / broadband - again, deals vary, but for a rough guess put £25 a month in here. If you're likely to use them a lot, up it.

- Electricity and Gas. A lot of flats won't have gas, but some do. Depends on what type of heating you have, how much cooking you do, tumble dryers (aka the Big Evils) etc. Estimate £50 a month for this.

- Insurance, ground rent etc. A leasehold flat will usually have an arrangement for annual ground rent / maintenance contribution and a requirement to arrange buildings insurance (or contribute to a plan). You need to find out how much all this would be. Roughly budget £500 a year.

- Water. Again, based on ratings (unless there's a water meter) - guess £300 a year for a small flat.

- Mobile phone, car, leisure etc - well I guess you know this lot already!

The Budget Planner will tell you whether the above is realistic, and you can also play around with figures - you can choose whether you want to sacrifice nights out or get a cheaper pad.... and whether a more expensive place is realistic!

Also, I don't know where you live and what the local housing market is like there, but it's worth staying well within your comfort zone. Don't overstretch yourself if there's a danger of missing payments (for example, you lose your job), or if you go into negative equity and can't remortgage onto a cheap deal.

ETA: don't worry about furnishing!

timnicebutdim_2

In your situation it really is best to have a chat with a independent mortgage broker who will go through possible scenarios with you.

As a rough guide assuming your mortgage is £80k, deposit £10k, and you want a term of 20 years on a fixed rate (repayment mortgage) you would be looking at paying around £500-600 per month. (this is based on the mortgage calculator on the A&L website)

For other one off costs not mentioned before, think of:
-Mortgage arrangement fee (between £0-£1000 approx)
-Survey (anywhere from £200 to £800)
-Furnishing (from £0 if you use sites like freecycle to however much you want to spend)

For monthly on-going costs think about;
-gas+elec+water
-council tax
-contents/buildings insurance
-telephone/tv license
-food and leisure

LittleMissAspie

I thought it was 3x salary for a mortgage rather than 4x as Badger Lady says. 3x salary plus your deposit is your budget for the house.

Furnishing is as cheap or expensive as you want it to be. Second hand, eBay, Ikea, Argos etc. I'm sure your parents could help you with little stuff like crockery and towels. You could start collecting things like that now. Make a list of each room in a house and what things you would need for it. Check prices by looking at Ikea as a starting point.

Monthly bills would be the following (rough guide for single person in 1-bed):
Mortgage = £?
Council tax = £100 ish depends on value of house and council
Food = £75 less if you budget well, more if you don't
Water = £20 if on meter, more for rates
Gas & Elec = £40 as a vague guess
TV = £11 but more if you want Sky etc
Landline = £11 plus calls
Internet = £20 or more for better service
(can get bundle deals for TV, phone and internet, shop around)
Mobile = £whatever you spend now
Buildings and contents insurance = £no idea sorry

Then there's the cost of running your car or your travel pass. I've probably forgotten a few other things but that's enough to start you off.

_Andy_

4x salary is quite easily achieveable in today's market.

beecher

_Andy_ wrote: »

4x salary is quite easily achieveable in today's market.

I think the OP is more concerned about whether this is affordable to him, rather than whether it is possible to get the mortgage.

As an aside, a major cause of the problems the economy is now in is down to the fact that few people question whether credit is actually affordable - there's been an assumption that if a bank will lend x amount to you, then it must be affordable.

_Andy_

Agreed, was just responding to LMAs post.
Cheers