Can my daughter afford to buy a house?

[hollyberrytree]

My daughter brings home just under £3000 per month. Steady job. No risk of unemployment really.
Shes in a house share at the moment but unhappy
I think she should buy, she has a good deposit (15k or more)

2 bed terrace is over £220k. Nothing cheaper

These are her figures
“Mortgage is £1150 ish
Council tax £180
Home insurance £20
Gas water electric £100 absolute minimum
WiFi £25
Phone £24

= £1499

Not to mention… petrol, food, clothes, car insurance, MOT/services”

She thinks it’s too much of a percentage of her take home. She’s got a mortgage offer but has lost her nerve.
I think she can get a lodger to help ( she’s ok with this)

My knowledge of mortgages and household costs are out of date. But I don’t think there’s much point in waiting as it would be ages to get a bigger deposit and house prices may rise by then and more years of rent down the drain.

What are other people’s thoughts? Am I out of touch? It looks affordable to me.

I think the lodger idea is a good one

Or maybe she is waiting until she meets a man to split it all with?

Unfortunately it’s so expensive now to even rent let alone buy your own home - maybe she should just keep saving for a bigger deposit and enjoy her disposable income before life gets too serious!

I should add she’s 27. No long relationship at the moment. She enjoys her work and wants to stay where she is.

It's a big proportion of her take home salary. Can she get a flat instead?

This is possible. She’ll have almost £1500 left for everything else. I had no where near that much when I bought my first place! She’ll need to budget food etc and get some savings for house maintenance. The lodger is a good idea as this will give her more flexibility.

Seems affordable to me.

She can afford it, but will need to budget and save out of her remaining money for house emergencies.

Very reluctant to look at flats due to service charges etc ( don’t blame her) and very few where she is.

Firstly, it is up to her not you. If she isn't comfortable and is paying a lot less in a flat share, then I can see why she might hesitate.

But assuming it is what she wants, it seems doable. What length of mortgage term is it? Can it be reduced by taking out a longer term and overpaying of she has spare cash? Would she have savings left over after buying, or the ability to build up? Does she know anyone who would like to be a tenant?,

Are there are new builds around which sometimes have schemes for first time buyers?

Also, there’s an article on the latest MSE weekly newsletter about mortgages which may be helpful, including tips for first time buyers.

Have you deducted single person discount for Council Tax? There are costs too for Ring doorbells, garden waste, tv licence, Netflix…
I have come through this recently. Just because you would be up for this and such a sacrifice, she’s not you.
Her present situation must be tolerable if she’s not desperate to become a property owner.
I’d just caution against pushing her if she is resistant.

Of course it’s up to her. She asks my advice. I think it’s affordable but I know my own frame of reference is out of date. Hence asking here on MN where hopefully lots of people who know more than me can comment.
Shes on her third house share and hasn’t been happy with any despite being ok sharing at uni . It’s bad luck that she hasn’t gelled with housemates, nothing overwhelming awful

You can earn up to 7k tax free under the rent a room scheme.

It’s affordable but maybe it’s too much of a change of lifestyle for her. It’s a risk buying somewhere on your own and it’s a big responsibility - so she needs to feel strongly it’s the best thing for her.

how fast can she save - is she likely to have a much bigger deposit in a year or two?

It seems doable to me but she must want it first.

She does want to live alone, have a small outside space.
She lost her nerve after first attempt as the survey was so awful ( seller hid lots of issues, DD got a very good and expensive survey, house was up for £210k, now on the market after DD dropped out at £170k!!)
She feels she wasted a load of money in fees. ( dodged a bullet! ) so maybe that is why she suddenly thinks she’s using up to hug a % of her salary.

Once bitten twice shy?

It’s not my money but I think it’s do-able.

I earn just a little more than your daughter and have a mortgage of £195k. £1050 a month and I live alone. You have to be a little savvy but absolutely doable.

Its completely doable. Families live on much less!

Huge congrats to your daughter firstly for being in a position to potentially buy a house!

I'm a first time buyer currently in the process of buying (third time lucky after two bad surveys!) Based on the figures you've provided, I think it could be affordable. However, it completely depends on her current living costs and whether she'd be comfortable living a bit more frugally.

It seems like you've partly done a draft monthly budget but I would definitely recommend doing a draft monthly budget with all costs including items like entertainment and home maintenance costs (estimated to be around 1% - 3% of home value a year I believe, but would depend on age and condition of property). This will help her see whether buying now is affordable for her. It is also worth making sure she has some emergency savings left after the deposit and buying costs for any unexpected costs.

There are also some really useful apps, such as Snoop, where you can track your past spending. This could help her to know what she currently spends on different categories, if any of this could be reduced and thus if purchasing a house now is affordable. There are also some great schemes for first-time buyers, for example, Nationwide have a helping hand scheme where FTBs can get a slightly higher mortgage if certain criteria is met (this would obviously increase her costs but just as an FYI).

Sorry for the slightly long reply, but hopefully this is helpful!

Completely do-able.

I don't blame her avoiding flats. It was where I started, and most people I knew started back in the 80s and 90s, but now the service charges in so many places are ridiculous. If you can afford them, you might as well borrow more and buy a more expensive property. When my dc were looking, they actually looked at 2 places I looked at 30 odd years previously, and it no longer made sense.

Is she local to you ? If so would she feel more comfortable moving home and saving what she would have paid in rent for another year and increasing her deposit a little ? Where I live, prices seem to be dropping an are predicted to drop further as interest rates are predicted to rise.

The other thing I did when I was looking to buy, was work some evenings - I used to do a bit of bar work and quite a bit of babysitting to boost my income (with the advantage of also not spending much on going out for a years or 18 months).

As she would have a 2nd bedroom she could let out if she wanted, I would definitely help her see she can afford it, even if it means no fancy holidays or new cars for a couple of years.

@SummitSeakerView it with a builder. Surveyors make places sound much worse than they are, because they are ticking boxes against risk. A good builder will give you a practical steer on what needs to be done.

I think your figures are way off personally. You’ll need to factor in tv licence, WiFi budget seems very cheap at £25, is she going to get critical illness /life insurance cover?
How much does she spend monthly on food, car insurance, petrol, MOT, car/home maintenance fund for when things go wrong, clothes, shoes, hair, make up, cleaning products, new mobile phone, her car won’t last the term of the mortgage, everything will increase year on year, any credit outstanding, is she with the AA/RAC, things like calling a plumber can add in a surprise £300 bill. The monthly expenses could easily now be £2300-2800 a month. Is she intending to leave the house for day/nights out, holidays?
Is she going to use all her savings for the deposit? (I wouldn’t).

Any chance earnings will increase? I’d call it ok but not comfortably affordable- depending what life throws at her. A lodger could help but the reality is she may hate this option once it happens.

I think that it's doable. Well done to your DD for being in such a good position.

I would encourage her. She skimps and saves for a few years but will be able to get it back if she sells. Renting is wasted money.
She gets to choose her housemates.

I’d say this was do-able
she could have a lodger or get an evening job to top her money up too
plenty of people manage on a lot less!

I think it is doable.

I'd go for it in her shoes because I view renting if you don't have to as money down the drain. If she buys she'll be paying off her own mortgage and fully owning that bit more of her own house every month. As things stand, her monthly rent is highly likely to be paying off someone else's mortgage.

Renting is not the most secure either. The landlord could always want the property back to sell it etc. If she buys she will have much more security.