New home, but is this living too close to the edge financially?

[massiopler]

I recently made the decision to buy alone (became single in February and have struggled to get my confidence back and control in my life). I am 28.

I have worked out that if I go ahead with this plan, for the first year, I will be left with about 110 pounds a month after paying out for everything - mortgage, food, bills, car, travel to work etc. After the first year, my salary is due to increase, meaning I should be left with around 350-400 a month. If I carry on renting between now and then, (ie to wait until the pay increase before I buy), I will be spending the same on rent, but will obviously not have the pressure of home-owning and having the liability for it. If I were to buy and then lose my job in the next year and not get the pay rise, I would take a job in the area and would be able to pay the mortgage which ironically is low (around 450 a month), even on a small salary.

I am just worried about the initial time frame where I will be left with very little month to month. Is this a silly thing to do, or do people do it to get on the ladder and then things settle down?

Thanks.

[Twinklestein]

Do you have any savings? Or are all your savings going on your deposit?

You'll need a fund for things that go wrong/need to be replaced round the house.

[sunshineandshowers]

Do you have children? If not go for it. Could you get a second job. It's only 12 months. Things will beak tho, so you need to be careful to not get into debt x

[massiopler]

All my savings will go on the deposit. So I will be living on income from the first time ever, which is quite daunting! My other concern is that I am no longer saving - it is impossible with how high rental has gone up, as a result, I don't think this property would be in reach in a year's time, as if it went up by even 1500, I would not have the money for it.

[mrssnodge]

What about the possbility of taking the same mortage over a longer term, i.e. you wil be paying less per month than maybe if/when your finances are beter you can overpay and the mortage term will be paid off in approx same time??

[massiopler]

sunshine I could get a second job but I won't be home until 8pm so week days are off the cards. Could look into weekend work though.

[massiopler]

mrsnodge thanks for that advice, unfortunately this is already at the maximum term.

[reynoldsnumber]

You sound very well organised and like you are carefully considering the risks.

I do think that people stretch themselves to buy a house - it's a bit of a leap of faith sometimes. I did, although my salary hike which came around 1 year later, was almost guaranteed by the time we bought.

I would double check all your calculations of bills and food - see if there is anything you could cut if you had to (sky, broadband?) and anything you have missed that would be covered if you were renting (service charge, building insurance, council tax (you should get a 25% discount, water)

I think I would do it, as long as you have a good deal on the house and it's not falling down. It's only a year and then you will be pretty comfortable.

[Hobby2014]

As long as you have some emergency money for car repairs / replacing a washing machine if it breaks for example then you should be able to do it.
Do you have many to buy for for birthdays / Christmas?

[slithytove]

So you will have around £25 a week for socialing and buying presents and clothes?

It's tight, but doable, especially if it's temporary.

Have you looked at all mortgage options to see if you can get one which is a smaller monthly payment for the first year or so, then remortgage when you have a higher salary? A broker might be able to help. Even getting it down to £400 would give you some more wiggle room.

[MorrisZapp]

I would do it. You sound like owning a home is really important to you, and prices are only going to go in one direction.

When I bought my first flat, the prices continued to fly upwards and even six months later I would have been priced out for life.

You might be on tight margins for a short while but you'll survive.

And I've never heard of needing a fund to cover things going wrong! Most people, owners or renters, meet financial crises as and when they arise.

[massiopler]

Thanks everyone.

I have no emergency money but I have looked into buying things on interest free finance if needed, which would obviously free up my remaining money. It is definitely temporary, and even if I lost the job and dint get the higher salary (fingers crossed that doesnt happen!), I would get a local job which would cancel out the travel anyway and automatically save 250 a month.

I'm just anxious of this being the first time I have been in this situation, I usually always have a 'float' of some sort! Family are encouraging me to go for it, on the basis that it is better to be on the ladder than not, and rent money is basically dead money.

[goddessofsmallthings]

Are you planning to buy a 1 or 2 bed property? If it's 2 bed you will have a spare room to rent out if the financial going gets tough.

I have no doubt that a lot of individuals/families would consider themselves fortunate to have £100 a month left after all outgoings have been met, but will your remaining income be expected to cover socialising/entertaining, clothing and holidays?

If you wait a year how likely are you to find a property where the mortgage repayment will only be £450 a month?

[whattodoforthebest2]

It sounds as if you're organised and have thought about all the pros and cons.

I did what you're thinking of doing and was made redundant within a few months - it could have been a disaster, but it wasn't. I worked 2/3 jobs until I was more stable, moved into one room and rented the other out to a friend.

It was definitely worth it in the long run. Just have a plan B in case it all goes pear-shaped.

[goddessofsmallthings]

Having read your subsequent posts my vote would be go for it - living on cheese/eggs/beans on toast is far more bearable in your own property than in a rental

[Twinklestein]

The reality is that without savings you will run up some credit card debt, however, I still think it's worth it as property prices are set to surge now the election's over.

If the worst came to the worst you could always rent it out and rent a room in a houseshare or housesit via a reputable housesitters' website.

[wednesdayblues]

I would say go for it if it's just you ? 12 months isn't that long and renting out any spare rooms is a really good idea.

[Twinklestein]

I would assume if she were getting a 2 bed she would have already factored in the income.

[massiopler]

I have looked into getting a 2,000 loan (interest is only 150), which would give me my savings back and I would pay off about 100 a month over 2 years...

is this a good idea do you think?

[Twinklestein]

I would take a chance with your credit card, because it may not be as much as 2000 and a 100 a month is a lot given your margins.

[goddessofsmallthings]

Duh! As per whattos post, if it's a one bed you can use either the living room or the bedroom as your sanctuary and rent the other out.

There's a house further along my road where all of the rooms are rented out with the kitchen being the only 'communal' space for the tenants to congregate and, judging from ads on gumtree, this is not uncommon.

[LonnyVonnyWilsonFrickett]

Don't get a loan, it all goes in the 'affordability' check list and will count against you when you apply for your mortgage.

I would however get a credit card and just have that in my back pocket for emergencies.

What are you going to do for furniture and things like that though?

[whattodoforthebest2]

The mortgage company will know about the loan and may tell you to pay it off before they'll lend to you.

I wouldn't worry about replacing your savings until the need arises, especially if you'll only be keeping it in the bank at practically zero interest rates.

[massiopler]

I would get the loan a few months later if I needed it. For furniture, I would do interest-free credit for 4 years - only need a sofa and a bed and a table... I've looked into it and it would come to about 1,300 in total so I'm not mega worried about this at this point.

[hereandtherex]

What is your salary and what is the mortgage?

I'm guessing you have not took out the loan yet.
You may find that a bank/BS will not lend you the amount you want. Using your figures, your finances do not appear to have much slack in them.

[Aussiemum78]

If you are single with no kids you have options if things get tight

• 2nd job
  
• boarder
  
• rent out entire place and live elsewhere (share house or family)
  
• sell property.
  

First year is always the hardest. Mortgage stays same or goes down, hopefully pay goes up. Pay a little extra each month and hopefully you will build a buffer quickly, put all bonuses, tax returns etc on the loan too.