Advice needed please - buying a house - can i afford it?

jennyred

Hi there

cant comment on your budget per say, but my partner and I are also going through people for places and the co-op for our mortgage. (we are both key workers)
have found people for places very prompt but the co-op less so. also over the past couple of days co-op have withdrawn there 3 year fee free fixed rate and there 3 year tracker so choices are limited. have a appt with co-op next week as they have cancelled our last couple of appt due to staff sickness. but - I have heard nothing but positive remarks regarding their customer care so it could just be our branch.

will be going for the 10 year fixed at 5.99% - 899 fee. the mortgage is portable so we are not too worried.

we have secured £36k from people for places, hake £10k deposit ourselves, have £3k for fees, stamp duty etc, house we are negotiating on - on market for £145k - hoping to get for approx £135k.
have combined income of £50k.

would definately recommend to any key worker to look into it. you pay back nothing bar the interest but then only after 5 years. you dont have to pay the loan off until you sell (earlier if wish - we have worked out what we save in interest, if we put in ISA, will have enough to pay off loan in 5 years) and if value goes down - so does the amount you pay back - on the flip side, any equity when you sell they get 40% - so good idea to pay off ASAP.

jenny

londongirl

Thank you all for taking the time and trouble to reply.

Stalwart - I am confident that my job is safe as i work for a charity which is funded by government funding and is in no danger of losing this funding. I know you can never be 100% confident but i don't feel i am particulary at risk. I would also look at getting redundancy cover or whatever is needed for the mortgage which i know costs more and is something i have'nt factored in just yet. With my 2 other self employed jobs and my 3rd job doing sessional work at my current work place i also know i could up the money from any of these at any point in time if god forbid i did lose my job and so would be able to tide myself over until i found something else. I do know i need to have at least 2 months mortgage payments behind me incase of this though - but i am hoping to have 5k in the bank if i don't use it as a deposit.

Boinging - i kind of agree with you and if it wasn't for the possibility of funding from people for places not being available for me in 6 to 12 months time then i wouldn't consider what i am proposing. I would quite happily stay at home another 12 months and save as hard as i can if i could guarentee i could still get the equity loan but i know it is a popular scheme even in the falling market. The truth of it is even if prices fall 30% and even if i save £10k in the next 12 months i still wouldn't be able to afford a flat on the open market. So "ownhome" scheme feels like it is my only option. Either that or i feel like i am going to be staying with my parents until i am 40.

Pastures new - Thank you so much for breaking down my budget in a different way. It is very useful to see it like that. It has mostly made me think more positively actually as i can see that if i need to cut down i quite easily can. Things like hair cuts - when i was a student my mum used to do it so i would have no problem doing that again. Could definatley cut down on drinks at pub (and in fact i don't spend anywhere near £30 a month now i just wanted to think of worst case scenario). Similarly with eating out i would be just as happy to have a friend over for dinner rather than go out. Things i wouldn't want to give up would be my salsa lessons and other going out that actually has me leaving the house other wise life would be a bit depressing!
I know i could cut down on food if necessary too - i used to spend £17 a week when i was on my own before - and quite often when living with fiance i could feed us both for a week for £25 or £30 so i know it can be done, i am just a bit fed up of having to always think like that and needing to have done this for the last 6 years. On the other hand sometimes i enjoyed it and i probably ate healthier too so again i know i could cut down if necessary.

Bogof babe - i think reading your post made me think - yes you are right i do want to do it otherwise i wouldn't spend nearly every day trying to make the sums work! I'd love to do it and do want to make it work, but am also worried about being miserable having all my wages go on a flat that i spend my spare time staring at its 4 walls. On the other hand i also know that i could still socialise with friends and go for a diet coke rather than a glass of wine but still have a social life! I think i want someone to say yes go for it - but at the same time i keep being cautious because i would hate to get myself into financial trouble.

Thanks for all other suggestoins - i am going to phone the coop this week anyway just to see where i stand for sure. Pasturesnew - i will definately try putting at least £850 a month in savings account - i think i am doing that now but i am not 100% keeping track i jsut know i have managed to save a few thousand since being at my parents and that is still with a lot of socialising currently being done to mend my broken heart!! (indicidentally i split with my fiance in February and we postponed the wedding in November and so i think i am ready to move on as it had been a long time coming in my book).


I am just worried that if i don't do this then even if house prices fall i am still going to be living at my parents in two or 3 or 5 years time and will have missed out on a good opportunity. Its not awful at my parents but i do crave my own space - I even went out on a couple of dates a few weeks ago and the guy came back for a cup of tea but i felt so uncomfortable it being my parents house and knowing they were in bed (even though it was just a cup of tea he came back for!!). I just miss being able to do what i want, come and go without 20 questions(they mean well i know but its hard adapting!!).

hethmar

Youve had some excellent advice on here (well impressed by PN) and of course at your age you dont want to be living with mum and dad. Have you looked at cheaper areas to buy in, taking account of the travel costs? Or is it possible to move to another branch of your charity where property would cost less? And yes, if you got a 2 bed flat, you can get up to £90 a week tax free for a lodger.

londongirl

Sadly can't afford a two bed flat so no possibilty of a lodger - even further out without huge travel costs.

At the moment i drive to a station only a couple of miles away where there is free parking and it takes me 1 hour door to door to get to work and costs £3.60 per day. Where i was living before it was taking an hour and a half and costing £7 a day - that was on the tube, now i get the overground and my quality of life feels so much better just with that small change! Would consider living further out - have been looking at Watford but then i'm looking at least £9 a day travel (almost £200 a month instead of £71) and prices aren't THAT much cheaper it would seem. Aylesbury is quite a lot cheaper but again travel costs are loads and i'm not sure i would cope having about an hour and 45 minute commute daily plus trying to do a 2nd or 3rd job. Whereas at least if my work journey is only an hour each way i have time to do the 2nd job without being totally shattered. Hmmm i just don't know.

Having heard what previous poster said about co-op withdrawing their 3 year fixed rate mortgage i'm not sure about it so much now anyway - i definately would need a fixed rate mortgage for sense of security but don't know if i could commit to 10 years as i would be buying a tiny 1 bed flat so even if it was portable i'm not sure how that would work if i met someone i wanted to live with again and move house or start a family.

I could feel depressed about this as all my friends bar one are settled in houses either they bought on their own or with partners and some have kids etc and i feel like i'm in exactly the same position as i was when i was 22! In fact at age 23 i was earning £16.5k and could actually have afforded a studio flat outright near where i'm looking now! Now i'm on about £6k more and can't afford anything!! Benefit of hindsight! I think thats why i'm worried about missing the boat with this equity loan. Don't want to find in 5 years that prices didn't fall as much as predicted and that i missed the funding for the equity loan and still can't afford anything.

Its so tricky to know what to do.

The charity i work for is a local charity - though the biggest local charity in England i think or somethng like that but it only operates in one London borough so no chance of transferring to a cheaper area. I also work in a very small department so not a lot of chance of a promotion - but my salary will go up about another £1k by next July. Not a lot though!

RecoveringAlcoholic

Just posting to say congratulations on actually sitting down and working out a budget.

Good luck with whatever you decide to do.

tuggy

You sound very sensible - I think you have though through it all enough and should go for it. People say house prices will plummit further but at the end of the day its supply and demand. And with more people entering the country demand will rocket - pushing prices up again.

Unless you wanted to sell in the next 2 years you'l be fine, as prices will have risen up before you want to sell.

I think you should go for it.

PasturesNew

tuggy wrote: »

You sound very sensible - I think you have though through it all enough and should go for it. People say house prices will plummit further but at the end of the day its supply and demand. And with more people entering the country demand will rocket - pushing prices up again.

Unless you wanted to sell in the next 2 years you'l be fine, as prices will have risen up before you want to sell.

I think you should go for it.

I'd like some of those pills.
Is there a link to a supplier?

Lotus-eater

Personally I don't think you should go for it, it seems right on the edge financially and smacks of desperation.
Agree with making big life changing decisions just after emotional turmoil.

Whats all this, planning you might be single for the rest of your life? You're 30, not bleeding 80!
All the probabilities are, you will meet someone in the next few years and settle down.

I definitely admire all your figures and the fact you have actually sat down to work them out, but your best direction seems to be, stay with Mum and Dad for a while, enjoy yourself and go out with friends, work hard on the 2nd jobs and try to build them up. Start saving in a short while. Tell your parents, that if you stay, you need space and to have the privacy to run your own life.
Best of luck

PasturesNew

Lotus-eater wrote: »

Whats all this, planning you might be single for the rest of your life? You're 30, not bleeding 80!
All the probabilities are, you will meet someone in the next few years and settle down.

On the other hand, it is good to bear in mind it might not happen and keep an eye on what you will have to do; plan for a future living alone.

I never met anybody, never settled down. However, it is VERY rare that I meet anybody EVER who is in my position. Most people do seem to have met somebody at some point.

londongirl

Thanks for these replies - i'm probably not any closer to deciding what i should do - lots of people saying no, and some saying go for it! My heart wants to go for it but my head won't necessarily let me. Its all to do with the ownhome government loan. My head says wait until prices fall but the other part of my head says that if i wait 6 months to a year for prices to fall i still won't be able to afford anythinng because i might have missed out on the government loan by then ( a distinct possibility).

Does anyone else have an income similar to mine and how do you manage if you own your own home? Or even if you rent? I can't actually afford to rent around here - it would be cheaper for me to get this mortgage with the equity loan - probably even after the first 5 years. I don't want to be skint all the time eitehr though - such a huge decision!!