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My knowledge of mortgages and household costs are out of date.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’d go for it - yes interest rates are high, yes, energy and inflation is a problem and she can still afford it, and if she has a lodger as well that’ll be fairly comfortable. Every time I’ve bought it has felt like doom was around the comer - last time around the brexit referendum and there were some people saying houses might collapse by 1/3.

otoh, if she rents for a few more years then that’s pushing back the age she’ll be mortgage free. I don’t feel life does get more affordable when you get into your 30s etc unless she’s expecting a significant promotion soon.

I agree with you about a large rainy day fund (6 months expenses anyone?!) but I don’t think income protection is uncommon. I have a full policy that will pay out until I die for £30 a month which I don’t think is a lot in the scheme of things. I will say it depends though - DH has a high BMI (not particularly fat but a bit chunky with a lot of muscle) and the best he could get was 2 years of payouts for £50/month which we decided just wasn’t worth it when he gets 6 months full sick pay from work anyway

My 25 year old has just bought his first house his bring home is £2800 though he had a deposit of 35k and house was £182k he took a 30 year mortgage to lower his costs.

If she bought a house she'd get to decide who her housemate would be. I think she could make it work provided she lived frugally for a couple of years. Does she have any chance of a promotion in the next year or 18 months? Mortgage rates are high ATM so house prices have dropped slightly. Would you be able to help her out with paying solicitors fees? She might be better getting a fixed mortgage for a couple of years in the hope interest rates might go down by then. I wouldn't recommend getting a 5 year fix with rates quite high.

No, freehold but our estates haven’t been adopted by the council. A long mare of a story, we actually pay two different companies - one was marketed by the developer as a bargain £56 a year and the other £116. Well fast forward to today and we’ve had so many adjusted accounts that we pay over 300 for one and over 400 for the other but that’s a moan for a whole different thread!

I don’t know if OP’s DD is looking at a NB or an older property though but this is the kind of stuff we were naive to as FTBs so my advice is research research research.

Yeah I can’t get it at a reasonable price. Or critical illness cover or life insurance!

@hollyberrytree Just a note to say, most surveys will sound bad unless a brand new property. I can guarantee every one will say, the electrics need checking, as does the boiler, there may be damp, asbestos, needs a new roof, could flood, may not be up to date building regs, or planning - I could go on - surveyors always cover their backsides. This is not to say some of those things may need doing but reading most surveys on many houses, nobody would buy!

Good luck with however your daughter proceeds, but I feel the finances are fine - the joy of buying your first home, is instead of going out spending money, you actually want to spend time at home, inviting friends and family to visit.

You also have to take them in context. We’re buying a house that’s over 100 years old. Of course it needs things doing to it. It doesn’t mean if they don’t get done it will fall down immediately - it’s stood this long, it won’t fall down tomorrow!

Survey was the very thorough one and the surveyor was excellent and told her not to touch the property. I think the fact that the house was reduced by £40k the sane week tells all.

I think she should jump back on the horse and ride again! But she’s lost her nerve and is now blaming finances.

most houses don't have service charges though. And bills going up impact renters too!

The other thing I'd tell her to bear in mind OP is that even if she decides she wants to buy and offers on a house tomorrow, chances are it could be six months or more before she actually moves in - the house next door to me was empty and bought by first time buyers, so the most straightforward purchase/sell possible and it still took 8 months from start to finish.

on the positive that's more time to save a buffer, on the negative if she's already annoyed at sharing that's more time she'll have to do it even if she starts house hunting now. So if she puts it off for a year it could be 18months plus until she actually moves out.

She will definitely need the lodger for a few years. Especially if she wants to maintain some sort of lifestyle. The cost of maintaining a home (never mind decor etc) is a lot! It would probably be a very wise investment but she needs to really want it as it will be a big sacrifice on that salary.

Also you forgot water rates. Tv license. Gas+electric set to increase so £100 is wishful. Also what about her personal cost. Gym etc……

It really depends on her spending habits- 50% would be fine from my perspective , but I've never spent a lot on going out or myself, many younger people really wouldn't think of it as living if they can't spend.

hollyberrytree Do all you can to encourage her to purchase & the lodger will be paying half the bills anyway! Thats what I always did, get a good lodger (there are some feckin awful ones out there) and the rest is simples! 🌷

Buy and then get a lodger. Better to stretch when you are young and have the luxury of having a lodger to reduce costs than to wait too long and never be able to afford to buy

We’re in a 4 bed house, and combined B&C is less than £250 a year.

How many young people need a TV licence? Most just strwam now.

You can't watch anything live, or anything on iPlayer, without a licence. So if they watch sport they need one.

This is not true. I am selling my shared ownership property at the moment, there was no restriction at all who I could sell to. I do have to offer it for sale in two ways - as a shared ownership property and as a full sale property - but otherwise the selling process is the same.

Ok so -£15. The point is that there are still lots of extra costs.

She won’t have a massive disposable income, but that’s generally the case when buying your first home, especially when fairly young. Sooner she gets on with it the better. Good luck to her.

@SoVeryVeryBored That’s just what I think. Saving a bigger depot doesn’t make much difference to the monthly mortgage payments. £10k takes off about £50 a month.

Gas water electric - £100 each? If you mean combined I think she needs more