To wonder when to buy our first house? And can we afford it?

[tutoringscience]

Hey, please bare with me on this as it’s long, but ideally looking for some advice if anyone has time to read and give some.

Me (23) and my partner (28) are looking to buy our first house. Currently renting a 1 bed flat for £800/month. We are in South Manchester/East Cheshire area and for a three bed semi are looking at properties around £300,000.

I’m a vet, and make 34k a year, this will rise to 37k at the end of the year. I also tutor part time (hence the username!) and make approx £4-500 a month, although obviously have to pay tax on this at the end of the year, so some needs to be set aside for this. My partner is a lorry driver and has a basic salary of 28k. He does quite a lot of overtime working away so so far his take home pay has been considerably more than this, however he has only been in this current job a couple of months so not sure if this will be the case year round.

Based on our current basic salaries we could borrow £280000, and currently have a deposit of 20k to put down. However, with the current interest rate this would work out as a monthly mortgage payment of at least £1400. This would be on a 40 year mortgage too! Our outgoings are pretty standard, we both have car payments of about £300/month (although these are to family rather than debt in our names so could adjust this if needed). I don’t have a credit card, my partner has one that is close to being maxed out as he worked up a bit of debt when he was off sick due to an injury last year, but he is making regular payments on this, and has fully recovered so no chance of being off for the same reason again. We both have a ‘good’ credit rating.

Anyway, having spoken to a mortgage advisor they think we could be approved to get somewhere relatively soon, once our tenancy on the flat finishes in July. However, I am very unsure about committing to such a large monthly mortgage payment. I don’t know whether it would be better to stay renting and allow ourselves to build up a bigger deposit, and hopefully wait for the interest rates to go down? But then we are ‘wasting’ money renting, which could be going into our own property? I think we could probably afford the payment if we were strict with our finances, but it just seems such a huge amount to commit to.

Thanks for reading such a lengthy post, any advice from anyone who has been in a similar situation would be amazing.

Is the mortgage advisor aware of your DPs debt? That could bring your affordability down and it sounds like you would need the full 280k to make it work.

You will also need to budget for solicitor fees, surveys, moving costs etc too (don't think stamp duty would apply to you if first time buyers) so it may be that you need to save for a bit longer. I wouldn't worry too much , at 23, even saving another year or so, you are well ahead on the average age to buy a house so well done.

I would try and cut back on the car outgoings though if you are serious about buying. I think you can do £1400 a month on your wages but it will be tight. I dont consider £600 on cars a standard outgoing- we have never paid anything like that and our incomings are significantly higher (a lot older than you). Your DP in particular , £300 a month on a 28k salary is such a high proportion.

A 3 bed semi is a nice to have but it's not really a typical first home purchase. Can you look for something smaller/cheaper as your first home?

Did you make your mortgage advisor aware of your partner’s debt and how much it is? It will affect how much you can borrow. Our bank wanted us to wipe all debts prior to taking out our first mortgage.

The first few years of a mortgage are mainly interest unless you overpay massively. We bought because we were living with family and really needed to move out and didn't want to ever be in the position where we have to boomerang back cos landlord sold up.

I was a first time buyer in my 20s but bought in London so bought a small 2 bed flat.. We borrowed £330k and had a 15% deposit, on joint income of £75k at that time, no car and no debt other than dh student loan. 5 years on, we are on £120k joint and mortgage debt is £270k, student loan has whittled down o £4k. However even though I would love a larger flat and would probably pay tens of thousands to get this I don't regret going small.. It was worth it for the peace of mind.. And I have stayed 5 years in my flat and would probably stay another 2 more even if I put my flat on the market this year. So 7 years in one place still means it works out. It would probably be more like 10.

In your position I would get a 2 bed share of freehold maisonette or terraced with stpp.. Then you can do the loft conversion when you need it and hopefully after you have built up some equity or you have increased your earnings.

Hey! So the car payments are to family, we are paying a lot to get them paid as quick as poss then will own the cars outright, rather than a PCP agreement. In another year or so I’ll have paid my granny off😂 so we could cut down on these (realise we are very fortunate to be in this position).

It was just a quick chat with a mortgage advisor who we know, I did mention the credit card (think he has about £2500 left on it), agree it would be sensible to pay this all off first as I think we would then be in a better position. We ran up the debt as he was injured so out of work temporarily and I was a student at the time so had 0 income!!

Also, thank you!! Five years at uni and a lot of hard work to get me to this point at this age. I’m not really in a rush, my partner is more keen to try to buy sooner than me (which I understand as he is older than me), but I agree there isn’t a rush.

We could do potentially, however having lived in flats for a long time now I really do want a house rather than a flat. My thoughts were it would be better to try to get somewhere we will be able to settle in long term, but maybe that’s just out of our budget!

A terraced house or a two bed house is still a house and not a flat. You could stay there 5 years or so and then move up a step. If you find you can afford it, your can overpay your mortgage.

It may be different in Manchester but I found many of the two bed houses within our budget were the same size as the flats in terms of square footage and had the premium of a house! But I guess if it's marginally cheaper than a 3 bed every bit helps.

If my maths is right that's a 4.5 times multiplier of salaries. I get that you both earn more than your basic salaries, but I wouldn't be wanting to borrow that sort of amount.
We were offered it (15 years ago - when interest rates were similar to now) and bought way below. It's a massive amount.
But something cheaper - either smaller, or further out or needing work - and build up equity.

Personally, having just bought, I wouldn't want to stretch myself to the absolute max for my first house. Don't forget as well, you need to budget for fees and moving costs- depending on the property and how much you have to move, these could easily be £3k+, perhaps a bit more.

I would look at 2 bed houses and terraces, which should be a little bit cheaper and therefore will also give you a more affordable monthly payment as well.

If it were me, based on what you mentioned about your partner needing time off work previously, I'd want to be confident I could cover the monthly mortgage payment myself.

Could you have a look for a doer upper or something smaller?
also, what term (years) was the payment calculated on? It’s worth extending as long as you can to start with and this will bring the monthly payments down.
imo it’s a great idea to buy sooner rather than later though, it’s almost always a good investment.

don't want to hijack this thread but to you, what would be an ideal multiplier of joint salaries?

I don’t think the figures look too bad but I
would be concerned if you start a family how you could afford childcare.

yes, 280k is 4.5x our basic salaries, we could potentially look at more in the region of 200-250, although in our area (and we already have ruled out a lot of areas for being too expensive), all that’s going to get is a two bed terrace which probably needs a lot doing to it. However if that’s what we can afford then that’s that! Probably need to be more patient and work my way up, it’s just depressing how expensive everything is, and I’m in the North!

Yes, I’m thinking that might be the best bet. He shouldn’t need any more time off, he unfortunately had a head injury last year and due to the nature of his job had to be signed off for a few months as a precaution. He’s absolutely fine now though and has been for a good while. Was just very unfortunate timing as I wasn’t earning at the time.

I'd think about somewhere cheaper in Manchester personally. Your money would go further elsewhere. Maybe East Manchester areas, but it may not work for you with work etc.

OP you could try and live as if you were paying a mortgage of that size plus the increased bills and see if it’s manageable for you.

Have you spoken to a mortgage adviser and can definitely borrow the 4.5x? I am curious as I am in a ‘stable’ career (accountancy) and had almost a 40% deposit and still only got just over 4x my salary. It’s definitely worth checking if you haven’t already.

Make sure you have cash for solicitors, stamp duty, furniture, curtains, small repairs etc.

Also for your first property - make sure you love it but don’t expect too much. There is more than enough time to find your forever home in 15-20 years!

Good luck, how exciting!

Unfortunately with work we are stuck south Manchester/East cheshire. Currently living and looking in Macclesfield, I work south Manchester and my partner is Congleton so seems a happy medium, already ruled out poynton/wilmslow/Cheadle Hulme (near my work) for being too expensive.

I think you're in a great position at age 23 firstly. I think I'd be nervous at that size of mortgage. For context our mortgage is £260k (monthly repayment of £1445) but our combined income is £160k - we're 46 so a bit ahead of you career wise. We are about to start paying school fees and have 2 kids so to be fair our outgoings will be higher. The devil is in the detail here so write down all your outgoings. If you think you have enough to live how you both at 23 then great. At your age I had a lot of disposable income and lived the high life a bit before kids came along. I'm boring now! So just be comfortable with your priorities.