How much can we afford for a house?

[cantthinkofagoodone]

I'm hoping that if I list our income/expenditure that you lovely people may be able to suggest how much we could borrow and realistically repay?

Income: £3300
Outgoings;
Cars and insurance - £400
Petrol - £200
Food - £300
Phones & internet/TV - £100
Loan - £235

I think that's everything we have at the moment so £1235. If we round up to 2k to allow for our disposable cash, how much will we need to leave for house insurance, council tax, mortgage, life insurance? Is there anything I'm leaving off? It would all need to come in for about a grand I think.

THank you for any help you're able to offer!

Ok, I don't know what area your in but i'd allow £150 per month for council tax, £30 for house insurance (although it's cheaper to just pay it once a year if you have the cash which you seem to) and about £40 for life insurance (this is a complete guess as we don't have any) which leaves you about £1000 per month for your mortgage which I think would mean you could borrow about 150K?

Mortgage, council tax, gas electric, water rates, tv lisejce, house ins, life ins as a basic.

There is loads missing off your outgoings list.
At the moment, if you add up: rent, any savings and what is left over at the end of the month, what do you have?
Then if you add in what you fritter away, and would sacrifice readily, thats what your mortgage payments can be.
CT is really variable by council. Look it up on the council website, and then look at the type of house your interested in to see what band it is in.

You also need to look at how much deposit you can collect together. That will massively effect what interest rate you can get, so what you repayments will be, and also what you will be lent.

Might be worth going to somewhere like money supermarket, and seeing what the repayments are like.

Don't forget to factor in £ for repairs and maintenance etc.

Utilities! Gas, electric, water ...

Does your 'cars' figure include servicing, repalcement tyres etc? An amount put aside for replacing a car?

Hair cuts, tolietries, dentists, opticians etc

Holidays, xmas presents, etc

How much are you saving at present? And how much are you paying in rent?

If you buy a house you pick up all sots of costs you don't get with renting - house insurance, boiler repairs, repainting the outside, redecorating the inside, replacing carpets etc etc.

When will your loan be paid off?

House insurance varies massively by area. I pay about £200 pa for contents and buildings, but. Friend with a smaller house pays £500 because of her postcode.

I pay £10/month for £300k life insurance.

Agree with Manzanilla that you've left loads of expenditure off your list.

We're currently living with the in laws saving up and putting away about £1700 a month for our deposit but our income has improved since we moved in and stopped renting and as one of you said, the outgoings are different for owning rather than renting.

We used to save £100 a month for car costs and a bit of emergency money and utilities were also £100 a month to keep us in credit.

We have 4 years left on the loan.

We have £600 a month for our clothing/haircuts and the food budget covers smellies (I'm not too fussy about those!)

Thank you for your help so far!

I was thinking of a 5% deposit which looks like 5.5% interest rate. I can't really stand the thought of staying with them long enough to save 10%, nor do I think we're really welcome!

"We have £600 a month for our clothing/haircuts"

gulp. That is an astonishing amount of money for a couple hoping to buy their first house to be spending.

That combined income certainly looks enough to be able to afford a mortgage on a modest house & not have to belt tighten too much.

When will the loan be paid off btw?

Don't forget to factor in that interest rates are low at the moment, even a 1% rise can make a big difference.

£600!! That's my mortgage, council tax and my gas/electric total for month!!'

The 600 does cover all gifts, eating out, anything for ds and flights to our family. Whilst it could be trimmed back slightly, there is very little spent on clothes for us.

I think with everything I listed together with all the stuff I forgot, a mortgage of 130 should be doable, maybe a tad more?

Depends how much deposit you've got saved up, and the mortgage deal you get. I pay £630 a month on a 98k mortgage , so I think a 130k mortgage would be doable. But it should be simple enough to plug your numbers into a mortgage calculator.

"anything for ds" well that is as long as a piece of string. If DS is 3, he will be needing school uniform in the next few years. If he is 10, he will be coming up to the age where he wants a nice mobile and to go on sometimes expensive school trips...

I think you need to draw up a proper, detailed budget. This one is a pretty good one to start with www.moneyadviceservice.org.uk/en/tools/budget-planner/budget/edit/income

What are your two credit records like?

I think you need to figure out what sort of house you want first as outgoings will entirely depend on size of house and area. Once you have that worked out you will have a rough idea for gas/electric/water/house insurance and will know exactly what the council tax is. Then you have tv licence, landline/mobiles, TV package(?), internet. If you have DC then life insurance should be a must anyway, regardless of having a mortgage or not. You are not going to get a ‘good’ rate if you only have a 5% deposit so if it were me (and living with the in-laws was not a realistic longer term option) then I would buy the smallest house I could live in happily (to keep outgoings at a minimum) with a fixed rate for two years and then upsize after a couple of years. In addition, I think you could be saving a lot more based on your list of income and expenditure. If I were you I would track your spending for the next month and figure out where all your money is going and where you can cut back further.