Financial buffer for buying a house

[Sengah]

I'm interested to hear what the norm is for buying a house and how much of a buffer people keep back to cover unknowns. Friends seem to have a wide range of responses to this, from using a credit card to meet the last couple of £k on their house purchase 😱 To insisting it is crazy not to move with a year's worth of mortgage payments saved.

What did you do?

We’ve always bought high, so no buffer. No short term debt ti but, but short term debt to do House renovations etc. But in high value areas (relative to our geographical location) so we’ve always come out on top. It depends on a lot of things. Younger people tend to have their throw everything at House purchase, where as older people are more cautious, maybe?

Wow, sorry for typos! No short term debt to buy, but short term debt to do renovations.

As a ftb in a rising market it is pretty impossible to save as fast as the prices are going up especially whilst paying rent. So it's more tempting to just go for it. And yes, perhaps you get more sensible/careful with age. Especially having seen markets turn or interest rates go through the roof or experienced unforeseen repairs etc.

Our move will be tight (self employed so mortgage provider wants 5% extra deposit which will wipe out our other savings) but we are v lucky and can build those back up within 3 months.

Related but not the same - as a FTB how much do you need on top of deposit and stamp duty? People always talk about feed, but what are they likely to be?

EngagedWithALeaf our fees were about 2.5k

I think my legal fees have been less then 2k. Mortgage fees can usually be added to the mortgage but even if some are paid up front, you probably don’t need to budget more than £500.

That included the survey though.

We have £12k left but it was all earmarked for required work (new roof, new boiler etc). We have insurance, and about 3 months living costs saved now. I'd like more, but equally our home still needs a lot of work, so most of our savings get used on that.

I had about two years of mortgage payments but then found unexpected work on the house at 4x this amount. Most recently moved and don’t feel comfortable with less than five figures in case of unexpected expenses like I’ve had before. Not wealthy at all but have just worked really hard to save to feel more secure.

£4k kept as a buffer (4 x mortgage payments or 3 x bare bones living expenses if it came to it).

£1k for furniture - we already had a sofa, bought a bed and a mattress, have built everything else up. White goods came very cheap with the house.

FTB looking to buy next year, in principle we can afford a property of around £500k, but will probably look more around 300-350k and reduce the deposit to keep that as a buffer.

Fees from our first purchase were probably £2500 to solicitors and surveys on top of stamp duty and around £500 in removal costs. And whatever our mortgage advisor cost. This time it’ll be more as we are paying the estate agents as well.

This is a break down from our solicitor on our current sale/purchase if it helps show the kind of random costs involved. Obviously as a FTB you would have the selling fees.

We are moving to what will be our 'forever home'. It is about six months earlier than I had planned, so haven't had enough time to save really. We are also buying top end of our budget.

After everything is done, we are looking at having a surplus of maybe £500 after completion.

Luckily we can save around £1,000 per month so it will be uncomfortable for a few weeks until we get paid again. Luckily the house doesn't need any immediate work other than a lick of paint, so the buffer can build again over time.

People who have mortgage insurance, what do you have? Critical illness type thing or redundancy type thing? Is it super expensive?

Also did you go through a broker to get it?

We decided to take a bigger mortgage and keep back £30,000 that could have gone on the deposit. We will probably be overpaying the mortgage slightly and also saving £1000pm afterwards. We don’t intend to move from the house we are buying once this purchase is over, maybe when we are 80!

We're literally putting pretty much all our savings into our current purchase so we can put a 20% deposit down (most of the deposit is coming from the sale of our current shared ownership house, but I'm putting a few thousand in too). We could have just put a 15% deposit down and kept some money back but the 80% LTV mortgages had a much better interest rate than the 85% ones, and it means it'll save us thousands in interest payments in the long term.

We have no other debts though. And we already have life and critical illness cover. I'll try to build up a 'buffer fund' again once this is done. Any utter emergencies in the next year or so and we'll just have to use our credit card or overdraft.

we spent every last penny. Including raiding the DCs bank accounts (later paid back of course).

Seat of our pants for our first flat and when we traded up to a house. Next move involved me stopping work to be a SAHM so we had savings to cover this. Latest move we had quite a buffer but that went on renovations. We are now back up to 6 months mortgage payments buffer.

Buglife your stamp duty is £12,500 alone! 🙈

The people asking about stamp duty as a FTB you don't pay any stamp duty under I think £300,000.

Yes I wasn’t indicating that a FTB would pay all that stamp duty! Just an example of the breakdown in the fees you can pay, so all the various small charges for environmental searches and transfers etc. I’d assume people know it’s based on how much your sale is for/if you are selling and buying!

Although saying that my DH had a shriek when he saw the fee until he remembered the stamp duty was included in there...

Hope I didn’t give anyone a heart attack :)

mine has been (first-time buyer)
£600 mortgage broker
£1500 solicitors (including all searches etc)
£300 survey
£1000 mortgage fees

So approx 3.5k on top of the deposit.