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Budgeting for first home

(23 Posts)
Greyhorses Fri 19-Jul-13 23:58:42

Hi special.

We love where we live and it's exactly in the middle of both of our jobs. We also care for a disabled relative that lives with OHs parents and need to be close by in order to do so. I would move closer to my job but the city is expensive, more so than the country and we would hate it :-(

I can't get rid of dogs so not an option really. They are part of the family and we are not willing to part with either of them.

Thanks paint I will definatley look at that,. Thank you!! I wonder how easy it is to be accepted!!

specialsubject Fri 19-Jul-13 21:50:53

...but you don't have to stay in that village, do you? Could you move near to one job, possibly losing one car? That means the other person has a longer commute but they can do less of the house stuff.

With 2 big dogs you would have even more problems renting.

Paintyourbox Fri 19-Jul-13 21:36:27

Grey next year the government is extending the help to buy scheme to "second hand" houses, rather than new builds.

You raise 5% deposit and they will contribute 20% giving a 25% deposit which opens up lower mortgage rates for you.

The 20% is an equity loan which is interest free for the first 5 years, after such time the interest rate is low (can't remember exact figure....) You have 100% ownership of the house.

When you sell the house, you repay the government what they have loaned you. Or you can take equity out in order to pay the loan off.

Mum2Fergus Fri 19-Jul-13 17:52:00

Financial support is available to non new build but please consider them very carefully. In all probability it will be in the form of a loan, secured on the house and with high rates of interest (based on my experience).

Mum2Fergus Fri 19-Jul-13 17:51:57

Financial support is available to non new build but please consider them very carefully. In all probability it will be in the form of a loan, secured on the house and with high rates of interest (based on my experience).

Greyhorses Fri 19-Jul-13 17:46:26

Thanks everyone!

I wish we could wait however we don't live together at the moment and both live with parents. My parents are divorcing and are selling the family home and moving into rented and I couldn't move into his home as there is just not enough space!
It's all quite complicated and renting isn't really an option due to cost of rent being extortionate due to a lack of housing in this area (country villiage so only 3 rentals in the area at 600pcm) and also the fact no landlord will touch us due to the commitments we have!!

The car won't be paid for 3 years which is a long time to stay unhappy with parents although I know it is the most financially viable option. We are looking to save for a minimum of 12 months from now to cover deposit/legal fees/ moving costs.

One car isn't an option as both work 30miles in opposite directions, I wish it was though!!

I would definatley consider help to buy although I assumed it was only for new build properties?? Sounds like it would be a massive help!! Is there anywhere we can find more information on it??

JRmumma Fri 19-Jul-13 17:21:42

Id say pay the car off and then think about buying a house. You need to be able to 'live' as well as survive on your money so paying car off asap and if you can doing a bit of saving for a financial cushion will mean that you will be £300 a month better off when you own your home.

I wouldn't buy now on the numbers you quote.

BackforGood Fri 19-Jul-13 17:13:22

I agree it's going to be tight, but not impossible.
You must be able to get lower prices than what some of us are paying for things like your utilities.
We're "only" paying £160 a month combined, but £20 of that is paying off debt accrued last year, so £140 really, and our house is a big old drafty, Vicotrian house with high ceilings and it's full of teenagers who are never happy unless they've left all the doors open and about 8 electrical items plugged in at one.
We pay £40 a month combined hse/content ins. and our house is worth quite a bit more than £130K (I hope!)
Our phone/broadban/TV is £36 a month
Our mobile contracts (5000 texts, 250 mins, + more internet than I can ever use) are £7.50 a month each.
All these saving can start to help release a bit of cash.

Have you accounted for petrol though if you are driving to work in 2 cars each day? That can add up.

Then, you have to look at what you spend on groceries - it can vary wildly when you read the money saver threads on here.
Of course the cars and the pets are a big commitment financially that you've taken on, but I suppose there's not much you can do about those, it just eats into your outgoings massively.

Mum2Fergus Fri 19-Jul-13 17:06:24

I'd start by working out a proper budget detailing everything that you and the others have mentioned already (I have 2 years of future budget documented) so you know exactly where you stand and when.

If first house then you've deposit/fees/moving expenses to budget for. I got paid today so happened to be looking at my stuff...our expenses are £1400 approximately that includes petrol and childcare...and allows £100pw food etc.

Paintyourbox Fri 19-Jul-13 16:54:54

I think you need to try and see the car as a positive thing- it's not costing a fortune to run or tax and it isn't unreliable and giving you massive repair bills.

Would one car be an option for you?

Don't look at it as a bad thing that you would be shortening the time on the loan rather than reducing the payment- it's still a step in the right direction and its really good for your credit rating to pay things off early.

Also, have you considered using Help to Buy when it extends next year to all properties?!

Greyhorses Fri 19-Jul-13 16:10:13

Thank you everyone!

The car was 6 months old when I bought it and I got a really good deal. It is worth approx 3k less then when I paid- not ideal i know but this means I can't just hand it in, unless I keep it another 12 months to bring the capital down. Luckily it is super cheap to run (20per year tax and is a diesel getting 60mpg) which is the only good thing.
I would happily get rid if possible but not sure how to do it.
I have 3k which was earmarked to pay a proportion from the loan however was told it wouldn't help as it would only reduce the term not the monthly payment?
The bank has said the only way to reduce the monthly payment is to refinance but this means paying for at least another year and also more interest as a longer term??
The original plan was to pay off car and own it as it is cheap to run but this hasn't turned out like i had hoped!!
I would love to get rid of this and walk away from the car but can't afford to pay negative equity and then have enough left to pay deposit on a newer cheaper car.

My phone is an iphone contract with 02 with 1 year left, I don't think changing is an option although I can certainly try!!

I have 2 cats and 2 large breed dogs (german shepherds) so the 50 covers food etc for all 4. I work in a vets so no insurance luckily!! In fact it may even be slightly more than 50 now I think about it...they are all rescues and weren't intended to stay, hence not budgeted as heart ruled heads.

As a ftb the rates seem to still be quite high and the quotes we have had have been around the 700pcm figure, will try to haggle this however! The problem is deposits are so expensive it is going to take a year to save the 10% at least, we are estimating we will need about 15k which is a huge amount already! We are doing as much overtime as possible but are struggling to get the deposit as quickly as we would have hoped. We don't want a new build so don't benefit from the 5% ( there are no new builds close to us anyway and the prices are extortionate!)

I know the car(s) are the main issue but I can't see a way out for at least another year maybe more!

Paintyourbox Fri 19-Jul-13 15:32:01

Hi Gray

If you can, I would suggest making extra payments to clear the car loans early and thus free up £400 a month.

Your mobile contracts seem expensive- phone and see what deal you can get. I haggled mine down to £15 a month for 600 mins, unlimited texts and data (and it's an iPhone).

What is the £50 for pets? Is this insurance or food or a combination? Again, time to shop around.

You will get a better mortgage rate with a bigger deposit so if you can scrape an extra 5% from somewhere than that will help.

Remember to consider:
Solicitors fees
Mortgage arrangement fees
Life insurance/wills
Stamp duty

LadyKooKoo Fri 19-Jul-13 15:23:33

A mortgage of £700 on £130k sounds expensive to me. We pay £740 on a mortgage of £175k so may be worth looking for a better mortgage deal (and fix for at least 3 years so you can be free of the car finance) when the fix stops and if rates have gone up).

specialsubject Fri 19-Jul-13 13:45:03

I'm afraid your car has depreciated, massively, like all new cars. At the end of the contract either get rid of it and buy something cheaper to run and insure, or keep it and run it into the ground.

your £800 needs to cover
council tax
car tax
water
electricity and gas
buildings/contents insurance (shop around each and every year)
car repairs
house repairs/improvements
broadband/phone
Tv licence (£12 a month)
food
child expenses; clothes etc
and some fun!

you need to work on building a cushion of savings in case of job loss. You also have a dependent so need life insurance and cover if one of you goes under a bus.

I think you need to look at your inessentials.

QuiteOldGal Fri 19-Jul-13 08:48:21

I think I would go for it if it 130k for a 3 bed semi, the price sound quite reasonable and also you both sound like you have proper jobs and if OH is going to be teaching then you would expect to get regular pay rises.

I'm sure you will afford it and probably if you were privately renting it would be as much and nothing to show for it.

Once you've paid for the car you will have something that will last a good few years already paid for.

The advantage of paying off the bank loan would probably be if is there some affordability thing you have to do now with mortgages where you have to list your outgoings thats one less thing to bother about.

Good luck

Greyhorses Fri 19-Jul-13 08:03:10

Hi, thanks very much everyone!

My car has 3 years left to run. Luckily mine has not really depreciated much but costs the best part of £300 PCM. It is a brand new audi however so i would like to keep it the full 3 years so I own a car worth X rather than swapping in a year (which I can do in 12 months) but then having to start the 5 years again?? Not sure if this is the best plan?

OHs is a classic so bought with a bank loan which we are debating paying off which will free up 100pcm.

My car insurance is up for renewal so may be able to get a better deal, although I was hit by an uninsured driver last year and lost my no claims hence it has shot up! We are both quite young also so not easy to get insured cheap but I am definatley going to shop around.

Both phones have about a year or so to run and I don't plan on getting a new one although OH needs one as his is broken, hopefully he can get a cheap deal though!

Luckily OH is a teacher (or will be once his Nqt year is over) so may get a more regular pay rise than most although I don't know the exact figures which may help. I am unfortunately in the private sector and have not had a pay rise in years!!

Thanks again, it is scary as I'm not sure if we can afford it!

We live in a small village so not many houses available. The average price for a 3bed semi is 130k, we could proberbly get a 2 bed terrace for 100k but will have to move in a year or two so think it will be better going for the long term house rather than the costs of selling/moving so soon?

We have a 10% house deposit so hopefully can get a 90% mortgage!

QuiteOldGal Fri 19-Jul-13 05:40:56

If your phones are near the end of their contract don't upgrade. I had a year contract on an iphone and at the end rang up Tesco mobile who I was with and managed to get a contract for £7.50 a month which I will stay with until the phone dies.

If you are a new customer with buildings/contents insurance you should get something for about £300. We were paying way, way over the odds for this, so I rang up, moaned a lot and managed to get ours down to about £350 which was not a basic one.

I imagine your car insurance is expensive if you are quite young but it may be worth shopping around for that when its up for renewal.

Sorry don't know how you could reduce anything else, but that mortgage sounds scary on £2400 a month, but people do do it and are your wages likely to go up, and how long have the car loans got to run because don't they take that into account with getting a mortgage. I'm guessing your FTB.

It does sound like a tough budget, I'm afraid.

Your car insurance does sound expensive.

Ours is 500 per year (one car- 2 litre tdi) including breakdown although with car tax it might be a similar amount to yours thinking about it.

Once you loose the car finance I think things will look a lot better.

Good luck

Cindy34 Thu 18-Jul-13 22:32:37

I don't know how people manage these days, my small flat (would love to move to a house with a garden) is worth £120k - a few in the block have sold for that (and a bit more) in the last year. So count yourself lucky that you can get a house or that, though you will need a hefty deposit to get a mortgage at a reasonable rate I would expect.

Cindy34 Thu 18-Jul-13 22:30:03

Consider what happens when the mortgage rate goes up. I feel that is likely within the next 5 years, certainly next 10, so will be during the life of the mortgage - typical mortgage is over around 25 years.

In the past salaries have gone up but these days they seem to remain the same in a lot of industries.

Greyhorses Thu 18-Jul-13 21:10:18

Thank you!

So realistically we will struggle to manage!
We live up north, average house price at 130k

Not sure how we can reduce our outgoings further either (obviously the cars but can't get out of finance and need cars for work!), how do people manage!

You need to consider

Home buildings and contents insurance (ours is about 600 a year)

Council Tax

Water Rates (varies greatly, your screwed if you are in the South West)

Phone/broadband (40pcm)

TV licence (15pcm)

Electricity/Gas (we put by £150 a month for this, usually some leftover at year end- 4bed detached house)

And then money to live on.

Greyhorses Thu 18-Jul-13 20:37:22

Hi everyone,

I have no idea about the costs of running a home so any advice would be appreciated.

Income: 2400 PCM

Outgoings:
Car finance x2. £400 (both got stupidly years ago and now negative equity so can't get out!!)
Pets £50
Mobile phone contract x2 £60
Car insurance £150
Mortgage £600-£700
Petrol £250

This would leave us roughly £800 for everything else, is this doable? Would be be comfortable on this amount?
How much does everyone else spend on household bills (2 adults and 1 child)

How much does the normal household have spare each month? Is £0 the norm?

Thanks!

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