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.

Not these days. Things have changed... average age and life stage of FTBers is much different now.

And doer uppers aren't even particularly cheap any more.

Yep - my friend bought a doer upper last year and had costed 60-70k and put it aside for all the work. They've got all the quotes in now and it's coming in at 120k. So they're stuck in this situation now.

Could you look at buying a two bed instead? I find the third bedroom (esp if it is small) often isn’t worth the added money in terms of space added

Talk to a mortgage advisor / broker.

You really don't need one. Why pay commission when you can source the best deal on Compare The Market?

I think some people on this thread are still in the mindset of how it used to work. You’d buy a flat in your early 20s, then maybe a small doer upper and then progress up the ladder. Unfortunately it doesn’t really work that way anymore. The average age of a first time buyer is now 33/34. They likely already have children and because they are buying much later don’t have time to work their way up the ladder in the same way.

Unfortunately OP, it is what it is. I live in a relatively cheaper part of the SE and my small 3 bed is probably worth £400k. We bought it as a “doer upper” but despite doing renovations to an average spec we spent about £60k and just about broke even. We intend to stay here long term though. That was 5 years ago, probably cost a lot more to do those renovations now.

I just binge watched the latest series of Love It Or List It and it's very telling that practically every house shown had a decent renovation budget to spend, but ended up cutting back on their plans as the budget wouldn't stretch to what they wanted to do any more.

Gone are the £60k renovations as they now cost £100k, and instead they spent £15k on some decent storage solutions and new furniture! Not an extension to be seen!

To do legwork and admin, and because they’re often free?

Houses are expensive! My first place was a 2 bed flat and I had a lodger. You had to make significant sacrifices to afford property even then

You think Compare the Market etc don't take commission?😂

This is not. A 3 bed semi, particularly one worth half a million, is not a standard starter home for most people. Start with what you can afford, build up your equity and work your way up the ladder.

I would suggest buying a cheaper doer upper as your first house if you can cope with the work.

That's if a property developer with deep pockets hasn't got there first, round here (South) they seem to be very few and far between and snapped up quickly.

If you use a mortgage calculator to play around with interest rates you will see what is going on. Enter 375K at 7% vs 2% and the difference is about 1k a month. 2% isn’t crazy, it is what the market was charging not that long ago. Of course if you look back in history, within my lifetime, you will see rates much higher than 7.

anyone getting a mortgage right now is going to be able to afford less house than they could a year ago. Full cash buyers won’t be impacted, but those are rare.

Depends if you buy somewhere cheap or not. Our mortgage is 1000 pm. Rents are sky high though, so to rent this house would be 2500 pm.we live in a regional town in an inexpensive are to buy. However rents are still sky high here.

*area

34, 200k...

Iguanainanigloo What lender is that with if you don't mind me asking?

We're 38 and could only take out 28 years with Halifax for our next step on the ladder. And as FTB we could only take 35 years with them as max .

So, Yorkshire Building Society works out cheapest @ £1371 pm.

2 Year fixed rate of 4.33%

That's a 36 year term. You could reduce that as time goes on, of course.

Or if you go fixed rate for 5 years it's cheaper @ £1302 pm. It's a gamble though, because rates are high right now.

That's a repayment mortgage btw. You could go cheaper still on interest only, but I'd never want to do that!

With a 10% deposit it would be around £1700 a month.

That’s because of your age. Though virgin can do longer mortgages for your age. Could also be due to being first time buyers. But I suspect it’s your working age….

Thank you so much, that seems much more affordable! And yes I agree, we don't want to do an interest only.

Definitely speak to a broker, there are good ones. With that kind of deposit you’ll be fine. I could only dream!

We have an appt booked with one soon. It's mad, I remember people only needing only like 30-50k for a deposit 10-12 years ago and I thought that was a lot then, but nowadays it's insane how much deposit is needed. I honestly don't know how people do it.