First time buyers - Monthly payment seems huge!!

[Walterwhiteswifey]

We currently rent a 3 bed for £1200 a month. We are in the south and trust me this is cheap! We have recently come into money, enough for a decent deposit but houses we want are around 500k.

Right move have mortgage calculators for properties we want, which estimate our monthly mortgage payments will be nearly 2k! Despite a sizeable deposit worth a quarter of the value of the house. Is this right? I'm so confused as I always thought renting was more expensive than owning but we would struggle to pay such a huge amount each month.

I find this all really daunting and annoying as we have such a large deposit but seems we can't afford the house we need.

Thank you, I think you're right 🙂

Yes that sounds right, low if anything

We owe £280k and with the interest rates increasing so much our payments will be £1.3-£1.4k and this is on a 36 year mortgage

Great advice thank you very much

mortgage payments also become more affordable (excluding interest rate changes) over time. So if you buy a house now and pay £1500 a month mortgage, you will pay that for the next 5 years, whereas rents are subject to increase. In 20 years time interest rates still being the same you would still be paying £1500, whereas rent would've outstripped this by far.

So when people talk about renting being more expensive they are often really comparing what happens a few years down the line. Even with the current interest rate changes they of a few percent it is still better than rental increases

At the moment where I am, Brighton and at our age , 50s, renting is much cheaper. We pay 1500 a month and to buy this property which we couldn't! It would be about 800k which is over 3k a month. So there is a lot to consider not just you situation now but what will happen in the future. For example can you afford it on one salary if someone was incapacitated or if you are thinking of having a family depending on up your age. What if you lost your job, list to think of.

You are all so wise and helpful thank you. You've given me a lot to think about for sure.

When we bought our 1st house about 10 years ago - we had a mortgage of around £375k after our deposit and paid £1.7k per month.

So what you are saying in terms of monthly payments now sounds about right.

Look further afield (so you get more for your money) or a smaller property

I’d also not base can you afford it on can you pay everything on one salary , worrying about if someone is incapacitated should not stop you buying, if everyone based it on one wage there would be a fuck ton more over crowded properties. Families are usually dual income for a reason

The crus of it is that the houses you want and the houses you can afford aren't the same thing. On a joint income of £90k, you wouldn't be able to borrow more than £360k. You need to look at what monthly payment you could afford, and how you can budget for it. That means either buying a cheaper house than the ones you're looking at, or cutting back elsewhere.

^ The crux of it

Also just think about if this is a 5 year house or a 15 year house.

If you want to be able to sell quickly to upsize you need to think about how marketable /attractive that house is

Speak to a mortgage advisor, or an online one such as L&C. We’re taking on £1,600 a month on a joint £95k income and even that seems a lot. But we’ve gone for a 35 year term, to bring the monthly payments down-worth considering. You pay more interest but we’d rather not over stretch.

As others have mentioned, it’s also not just the mortgage payments, it’s everything else that goes with a bigger house. So higher energy bills, higher council tax, higher insurance.

We upsized to a bigger house last year, and as well as our mortgage doubling our other bills too. Although I will say that the rightmove calculator came out much higher than what we got from the mortgage broker. Rightmove said £1400, our actual payment is £1000.

On paper we could have bought a £500k house, but factoring everything else in, we went for a £400k house - we did have to compromise on some features though.

Make sure you future proof your finances too and factor in any drops in income due to having a family etc, should you choose to do so. Much better not to be too overstretched and to have some room for change.

Interest rates at the moment are high. We have just secured a mortgage which will be repayments of £960 a month over 35 years. Our current mortgage is £407 so it's a hell of a jump but we really need a bigger house so we have to swallow the cost and hopefully rates will have come down by the time we remortgage.
In your position I would look for a slightly cheaper house, especially if you have a sizeable deposit. Then you can over pay and your next move you'll have an even bigger deposit

OP I think you've identified a symptom of the housing crisis here whereby, in times past, a first time buy would be your stepping stone. A 'not quite ideal' home that you might do up, move up from, ticks the boxes for now. And be cheaper than what you were renting.

However, with more and more people forced to rent in to their 30s, 40s; when we buy for the first time, we are going straight in to the '3 bed house with a garden near the good schools'.
Therefore it's not so much cheaper actually than what you're in... And it's not a stepping stone, it's the family home.

When we were quoted for our first mortgage last year, the broker was horrified when we merrily told him that the £2,000 a month repayments were still less than rent.

I wonder if your current place is a bargain?

Either way, congrats on being able to buy.

Um... it seems a bit obvious, but if you can't afford the repayments for that property you'll have to look for a cheaper one that you can afford.

my thoughts on this:

• interest rates have gone up recently, so it is no longer necessarily ‘cheaper to buy’. And that is assuming you are wanting to buy like-for-like, not size up.
• as others have said, beware hidden costs which you just don’t see as a renter! You need savings fund for maintenance and repair as you will be responsible for this.
• strongly recommend not maxing yourselves out in the mortgage - can be super stressful. You need to consider , will you still be able to afford it if interest rates go up another 1 or 2 points

What’s your motivation for buying?

We pay around £400 in mortgage, and £150 in interest a month. Houses around here for renting for £1300-1500 a month. Our rent before for a two bed flat was £1000. After we moved out it listed at £1300 a month. So it made sense for us to buy at the time. We also got a sub-2% interest rate. BUT I hate our house and miss renting. If we could have paid less in rent without leaving the area I would have preferred to rent.

I don't personally know anyone who had a mortgage that was less than what they were paying in rent. You may need to increase your deposit (a bit more saving before you buy) or consider moving into a less expensive area/less nice house.

To give context, we borrowed £490K and our mortgage is £1680 a month. But we have a very low interest rate. We make probably a bit more than you, though dh is self-employed, so he doesn't really have a 'salary' in that sense where it's the same month to month or year to year.

But yes, your best bet is your mortgage broker. We were able to borrow more and got better interest rates via our broker than through any of the online calculators. They were all significantly off.

Where abouts in the South are you? There are pockets of reasonably priced properties in the various counties but generally house prices are through the roof down here, £500k doesn't go far at all. Shifting counties could make the difference, Wiltshire is more reasonable than West Sussex or Surrey, not cheap exactly but you do get ever so slightly more for your money.

A 36 year mortgage?!
Woah

When we took our our mortgage 5 years ago it was less than the rent of the same house would have been (London) I think that's common as rents are so inflated. With the interest changes it will now be much more equal but probably still under as rents have gone up so much and there's such a dirth of rentable houses round here.

Mortgages are now generally more than rent, hence a lot of buy to let landlords selling, as they are making losses, without even taking into account repayments.

Long term you would likely be better off with owning due to long term capital appreciation, but this is unpredictable.

The calculators on rightmove always seems quite basic and as a result they come out more expensive than you'd expect. Try looking over the L&C website, they have calculators based on your actual circumstances and products currently available on the market. That said the figures you're quoting do seem roughly in line with the current market.