Let's talk values(9 Posts)
DH and I are currently renting in a very cheap area and are hoping to buy our first home soon.
I want to be sensible about it and want to own a house that I can comfortably afford (ultimate goal is to be mortgage free) AND have savings put aside for a rainy day.
I realise in the current climate this is less likely to happen but I would like to try this anyway.
We don't have any DC's yet but will actively ttc after purchasing our home.
The ideal scenario for me would be the best area with best school's and best location for the least amount of money (I realise this sounds mega naive!)
It's just difficult to find anecdotal evidence/experiences using actual values because we don't have anybody that we are comfortable enough to talk to, about values, in RL
Currently we earn £2800 after tax combined, I would like to live a comfortable (ish) life but don't mind going without if it means a better home. I would like to keep at least £500 a month aside at the very least. Our travel costs are around £350 p/m.
We live in the North near Manchester and would ideally like to stay there. We are young professionals and both hope to be moving up the career ladder over the next 10 years but I want to ignore that for now.
So what price home should we be looking at? And how big? We could but down a £25K deposit, 30 by next year.
What has everyone else's experience been when buying their first home? What advice could you give me?
On your income, I wouldn't want a mortgage of more than about £800 per month. Can you look into what childcare costs in your area? We are in the SE and our child care costs for two children (3 and <1year) are more than our mortgage, just for three days per week. So that's your other big cost to factor in. Right now, we are overpaying the mortgage rather than saving, because interest rates are so low and we already have a decent amount of savings. So make sure it really makes sense to be saving £500 per month or will it be wiped out by inflation?
Exactly what price of house that gets you will depend on your loan to value.
Is delaying another year really worth it to have an extra £5k? Or by next year, do you mean Jan 2017?
Also, my advice is to get the biggest, most future proof house you can reasonably afford now, because moving is a pain and expensive (stamp duty, estate agent fees, solicitors fees, surveys can really add up)
At £125k you would need a £100kish mortgage? That would mean you would probably be paying about £450-500pcm for mortgage on a repayment basis which would leave you plenty of money for necessities, spends and savings. To borrow much more money might mean a higher interest rate as the deposit becomes a lower proportion.
Personally, I think it is a bit unrealistic to buy a house that will last you longer than about five years as your first home - it's generally too big a stretch and, as you point out, you are both young and relatively carefree so may want to relocate to a different area to pursue your careers (or for some other reason) before too long. If you can buy a two-bedroom flat/cottage at that budget, that will get you to your first child being on the threshold of starting school and you can move again if you need to at that point. I'd just look at it as a natural progression. At this point choose somewhere that is good for commuting and in a neighbourhood you really like - if possible, look for something that you can add value to.
Thanks. Ace replies so far.
Tremolo I completely forgot about childcare, we have willing grandparents some days of the week but will need to think about childcare for the rest of the week, it's a really good point about interest rates being low if they stay as low I wouldn't mind overpaying on the mortgage.
We could save an extra £5K before the first half of 2017 is out but the main reason I wanted to wait was to see whether the market improves for buyers. Would that be a silly move? I am slightly worried about buying a house that could depreciate (I know someone this happened to in 2006) and end up in negative equity.
Lala I think you're right about the £125K budget, even though my heart wants a 4 bedroom house in a nice(ish) area costing £250K right now so I dont have to move unless I become a millionaire.
With the market as it is now instability is worrying, it's not like our grandparents generation where they were able to get a mortgage on a labourers wage and feed a full family then make money on the value of their house after reaching retirement
Do not rely on grandparents for any sort of childcare- if they are willing and able when the time comes- bonus, but you just do not know what could be by then.
Get a mortgage based on what would happen if you were paying for all childcare required when you have them.
Am in a different area to you, so wages/house prices are different but my husbands wage is your combined and I wouldn't want to be paying more than £500pm if you need to be paying childcare and trying to save + live nicely too based on those figures.
If the bigger house is too much of a stretch, do the best you can on your budget now comfortably and reassess the house situ if you decide you want / can afford more kids after.
Best of luck ttc and house hunting
I would say get a house in the sort of location you would like but with scope to improve e.g. Size for an extension. As stated, moving is expensive so do it as few times as possible.
If you could manage repayments of £1000 a month (and get approved for the mortgage?) you could have a total budget nearing 250 k. If that buys you your forever home it's worth seriously considering imo as moving is so expensive and stressful. Why don't you start putting £1000 into a savings account every month to see how you can live, then you'd also quickly save for stamp duty and moving costs.
Agree with childcare costs. I also think things can change very quickly (god forbid something happens to the grandparents) so you need to be able to factor it in. Also, we had twins - so 2 lots of childcare when we had anticipated one baby. I went back to work 3 days a week, so was only earning 60% of my salary and yet childcare was £1200 (that was a cheap nursery - by the time number 3 came along, we were paying £820 per month for 1 child 3 days a week).
I agree to buying something (if you can) with scope to extend / do a loft conversion etc at a later date. Means you avoid buying and selling costs in the future.
You really need to look at maybe £800 or £900 as a maximum but have a plan for what you'll do when children come along (you'll have paid the mortgage down quite a bit & can remortgage / your joint income will have increased / you can extend the term maybe so your repayments are not as much.
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