What would you save?

[NotAGolf]

The girlfriend and I are looking to buy a house soon, we've been on a few viewings and got a good idea of what we can borrow and how much the repayments etc are. We like one of the properties but I think it's a little out of our price range, however my dad and my gf don't. Just wondering what you guys would be prepared to pay if you were in a similar situation.

Quick background on us. Both 24, been in our first job out of uni for about a year. Joint salary is a smidge over 33k, so take home is 2150p/m. We've done some calculations and believe our outgoings will be no more than £900 for everything, including about £150 for either repairs or unexpected bills, if there's any left this can be used for 'luxury' things like the odd meal out etc. We're looking to get a 5 year fixed mortgage so will be stable for a while. No kids and not likely to have them within the 5 year term. Salary is not likely to go up much, and certainly not massively in that time frame either.

So if you take 900 from 2150 that gives us 1250p/m for the mortgage and any kind of savings we would have. This would be future savings for things like weddings, kids, pensions, as well as more luxury things such as holidays cars etc.

So, what would be your max limit of that 1250 you'd want to spend on the mortgage itself?

 

[NotAGolf]

Thanks for the input so far.

unless you're looking at a really short term I'm not sure how you'd get to that level of monthly repayments on the salary you're on unless you have 40%+ deposit

We've got a deposit of ~30% on a 200k house. We've seen a 5 year fixed deal at 4.09% which gives payments of £752 a month over 25 years. I think that should be quite easily attainable.

However, the house we've seen is 225k. We can get a few grand together to keep us at ~30% deposit, but that increases the rate and therefore the repayments which enters the 850-900 range. And like you said, that's IF they will lend us that much, which I have a feeling will be tricky. 215 maybe, but 225 is really pushing it.

My view was that 800 was a sensible max, but others seem to think 850-900 is manageable.

Maybe I need to snap out of the idea that I'll have to wait more than a month before being able to buy a new bike/tv etc! Especially as our savings is between 2 of us, ~£200 each doesn't seem like very much.

 

[NotAGolf]

Thanks again all. Three points seem to be coming up here:

1. Our relationship. Obviously I would be stupid to think we're defintely going to live happy ever after, but we're both sensible, been together 5 years, lived together for 2.5 of those (own place at uni, and her living at my parents for last 5 months). She's got more of the deposit than I have so will be sorting this out with the solicitor if something did go wrong that it gets split fairly as we'd almost certainly leave the house and buy our own.

2. Interest rates. Again we have thought about that, and obviously they will be going up, but like everyone else we don't know by how much. I know I said in the OP I don't expect to get a pay rise, but at the end of 5 years, if I was still on my current wage I'd definitely be looking for a new job, which should cover good few percentage points increase. If our wages stayed the same then we still have ~£3-400 buffer p/m as well as savings to tide us over until we found something smaller if the rates really do go mental and we're on the same wage.

3. Asking price. Again we've considered this but I have a feeling that it wont drop by a significant amount. It's been on the market for 4 months and hasn't dropped a penny for that period. According to the estate agents the seller is moving into rented accomodation and obviously doesn't seem to be in much of a rush. She's had a few offers that haven't been high enough for her. I know this is all what the agent has told us though so obviously he wants as much £££ as possible and could be spouting a load of bs...

Thanks again.

 

[NotAGolf]

You'll always not budget for something, and it will be something stupid..

I've got all the things covered you've listed and by including £150 'miscellaneous' outgoings in that £900 so that will hopefully cover anything that I've missed or underestimated, as well as any months where we overspend on anything.

As far as I was aware, I thought that it was pretty standard for banks to lend around 2.5-3 times joint salary. Have you considered this?

Their affordability calculators are a bit more complex from what I've seen. The whole x times salary doesn't really apply any more. After speaking to a broker as well as doing our own research, we've got a range of loans from about 100k-165k. So that's from 3x-5x. Obviously that's subject to credit checks etc but I think 4x is fairly easy to achieve, and 4.5 will hopefully be attainable. As said though, this depends a lot on your deposit.

Lucero, where did you get 145k from? I just tried their calculator and it came out at only 111k.

Thanks again.

 

[NotAGolf]

I did mortgage in joint names, borrower one earns 17.5k no outgoings, borrower 2 the same with a £60k deposit for a first time buyer in the north (believe it or not, living area is part of lending critieria). Came out at £144k

Jeeze I just tried that as well. Why will they give nearly 40k more for living up North??? Surely it should be the other way round! I could buy a massive 4 bed detached up there for the same price as a small 2 bed terraced down here!

 

[NotAGolf]

Why are neither of you expecting any significant pay rise over the next 5 years? Your mid-to-late twenties is where you usually get your first big increase, why would neither of your be progressing in your chosen fields?

My company is small and I know pretty much what everyone else is earning, including the guys in my position that have been there for 4-5 years and it's not a massive amount more than I'm on. If I were to move company then I should jump up quite a bit. But I like working here so for the moment the money doesn't bother me. Missus is in an admin job atm and doesn't know where she's heading so any speculating on her future would just be plucking numbers out the air.

So in summary, yes hopefully our wages will increase, but by saying they'll stay the same we're planning for the worst case scenario which is obvsiously the safest option.

 

[NotAGolf]

Not meaning to hi-jack just reassure, I've worked out my cost of living, for now assuming I don't have a tenant or two for the 2nd or 3rd rooms (assuming I did buy a particular property I'm looking at) I'll have £500 kicking about per month to do with as a wish, save/spend etc (after petrol and everything else car related). So I think spending 7-900 on the mortgage would leave you with a reasonable amount to 'enjoy'.

*Forever alone* should a woman come along then I can spend her salary \o/

Yea I think that should be more than enough for you, as we've got to split our left over between two of us, and you have the option to get tenants in if the money gets tight.

I think it's just the shock as the last few years I've either had no money; being at uni and while travelling, and now jumped to the other end of the scale where I'm saving everything now so can buy a pretty much anything after waiting less than a month for the next paycheck!