How is anyone affording life?

[Ellsee1995]

I’m 28, my partner is 30, we both work full time and both earn around £40,000. For me, this is around £2,200 a month, his is slightly higher take home monthly (self-employed).

we will hopefully be buying our first home really soon, we’ll have a deposit of about 27k and we’re in the south so property prices are horrible lol, but will be looking for a 2 bed around the 300k mark.

when we’ve spoken with our broker, he’s given the numbers of between £1600-£2000 for monthly mortgage payments. I know the interest rates are high, but this seems really REALLY high. I know some of my friends certainly aren’t paying this monthly, and are paying under £1,000, and really I’m just trying to get a better understanding of what I should be expecting to pay out.

at the moment, our combined bills are £1,400. £1,000 on private rent and £400 on all utilities and a few subscriptions. I’m really frightened to leave this comfort blanket that we can afford, and are able to save too, to looking at £2,500+ every month.

any other first time buyers scared too?!

What is a 'first time buyer house' in your opinion?

Houses aren't cheap anymore like they used to be several decades ago.

Absolutely don’t buy now while you’re in a position to save. Give it a year, prices won’t rise, it’s likely they’ll fall a bit, and you’ll have an extra £20k towards it if you save 2k per month. Interest rates may also be slightly lower.

Yep as I admitted - I honestly don't know where my brain was at that point, it had definitely left the building!! The second was relevant imo - they're worried about having bought at the top of the market, I'm saying that doesn't matter :)

Omg I'm going to stop posting. They haven't bought at top of market, they're just worried about prices dipping. Perhaps my brain will restore overnight, bloody hope!

Paying 50% of the joint take home money to a mortgage was always common for people with their first property even back in the 80s. You have been spoilt with low interest rates and cheap debt and now normality is returning.

Don't worry. I'm sure your brain will be fully restored after some sleep!

Not in wasn't. I think you need to go and check the facts!

In your situation OP I wouldn't buy just yet. I'd save a bit more and wait to see if prices come down.

Having said that, we just bought but as we're not FTB we've made incredible gains on our previous 2 houses, so even if we can't sell our new house for what we paid for it in 5/10 years time, we are still way out in front, only because we were FTB in 2010.

Not sure your story of how well you have done due to lucky circumstance is going to make OP feel better.

But I agree with the not buying just yet. I would save a bit longer and see what happens.

I’m in the same boat, except we do earn a bit less (take home about 1700 each). We’ve chosen to buy for the first time as well, increasing or monthly expenditure by about £700. I am terrified but I am more terrified of being at the mercy of the private rental market.

I feel like you’re projecting this belief into younger people, the ages that people used to buy houses when the market was different. First time buyers nowadays are in their 30s and 40s with children because it takes so long to save.

I don’t want to raise my daughter in a tiny flat riddled with mould and damp that is harmful to her health or in a dangerous area. Houses that are ‘cheap’ are typically unsafe to live in, especially in the North. You wouldn’t want to do that, so why expect me to?

So yes, I am spending more and paying a higher mortgage each month. I don’t have Instagram. I want my family to be safe.

OP if your rent is £1k and a mortgage would cost £1600-2k, I probably wouldn't rush to buy. Prices are widely expected to drop/stagnate as the effect of higher interest rates fully beds in (many people who bought a year or two ago will still be on fixes, which means their mortgage hasn't yet gone up).

Definitely save a bit more deposit so you're comfortably over 10% (don't forget fees) and be prepared for the valuation to be less than the purchase price (in this case you would either need to increase your deposit, try to negotiate a lower price, or walk away).

Perhaps keep an eye on what is available and consider buying if you see something that looks worth it, but you could well find that when we get to October/November and houses that have gone on sale over the summer still haven't sold, you might start to see a few motivated sellers dropping prices to sell which you could use to your advantage.

So you have £4400 a month roughly together

Pay £1400 a month at the moment

Bills of 400 is very cheap

Council tax and heating are over that for me

Ct 190
G&e 285
Water 80
C&b 15
Tv 14
Life in 35
Bb 35

As basic bills. Yes yours may be a little less

Maybe save the extra you would pay for 6mths to see how that would feel

So put away £1.5/2k a month to cover extra for mortgage and bills

And see how that feels - and would add £9/12k to your deposit

Im south east so depending where you are thinking of buying , but prices are not dropping yet and £300 might buy you a good 2 bed flat but looking at £325 minimum for a 2 bed house in my area

Yes it’s a shame for the OP.

On a different thread @CrashyTime was even using that weird font that DeadHouseBounce uses.

No, I don't think it would. But it might explain why people are still buying at crazy prices.

I am massively risk adverse, so in OPs shoes I'd definitely be holding off, and saving hard.

Totally agree with you. I was responding to the other poster who doesn't seem to understand the current situation for most FTBs.

But OP is 28 and her partner is 30. No children are mentioned. They could easily get a flat with a smaller mortgage then trade up when the time comes, or buy a proper fally-down fixer-upper and do the fixing up pre children. I was a late 30s FTB and still did it the old-fashioned tiny dodgy flat, move up the ladder way, ending up with a house and an affordable mortgage by increasing equity through improvements. All in the past five years, not yonks ago.

Actually most people I know did flat then house, the only exception is my sister because she and her partner both had parental help so they had the big deposit and double income. (I bought my flat when single but DP never had parental deposit so wouldn’t have made much difference.)

OP, I think you’d be wise to hold on another year which will boost your deposit more, give time for house prices to fall further, then I’d be looking at a flat where you can add value, or a fixer-upper where you can do the same. Get handy at DIY and put your back into it before small children arrive to “help”.

I'm prob one of the rare people of my age who has only ever brought /moved once

1999 I was 27 and house was £82.5k for a 3 bed semi

Was the top of dh and I budget

For context I earn more a day now then I did in a week of working 5 days

24yrs later still here.

House across the road sold for £425k last month

I totally get why op wants a 2 bed house rather then a one bed flat and have to move in years

If there is no rush to move , carry on saving for a deposit - wait for houses to drop and for interest rates to drop or even out

In 1999 I was paying 7% so rates now do t seem huge /high but obv mortgage was a lot smaller but then So was my wage

Fally down fixer uppers are no longer affordable to do up, that's part of the problem. It's very different to five years ago when you could probably do it for 20k. These days you are probably looking more like 60-80k.

Additionally, very few fixer uppers are currently selling at realistic enough prices to factor in the amount of work that needs doing to them.

On top of that, you get to live in a mould infested, leaky shithole, and spend weeks upon weeks surrounded by dust with no working kitchen, bathroom etc?

Yeah, say OP could get one for 150k and spend 80k on it, that might be worth it. But that is not the reality of selling prices ATM.

We managed it by taking a 33-year mortgage; the maximum term we could take given DH age. We’d rather have lower payments we can definitely afford, and overpay if we can. And also have money for fun, what’s the point in living just to pay your mortgage quickly.

You can play around with loan and interest rates to see what repayments would be on here: Mortgage Repayment Calculator | MoneySuperMarket
On a £273k mortgage a 1.5% interest rate is around £1100 a month (over 25yrs) whereas a 5% interest rate is almost £1600 a month, so if friends have their rates fixed lower than you're going to get now, and/or have 30 or even 35 year mortgages, then it's not difficult to see how much lower their repayments might be. Also, mortgages with a lower loan to value ratio (i.e. a bigger deposit put down) tend to offer slightly lower interest rates.

I would look at yours reasons for wanting to buy in that particularly area for £300k - if as the TV show says it is location location ! Then maybe save for a bit longer and keep an eye on the market if prices start to drop. But there lots of areas of the country where you buy at first time home for much cheaper than that. Ftb market in some areas for your salary is around 130,000 to 180,00.

Borrowing £273k is expensive, unfortunately. Over 25 years at 6.4% (average at the moment for 95%) you would pay back £550k at £1800 a month. But it's unlikely to be that high for the full term. Projections are that we will settle around 3 to 4% - still £1300 a month and would cost you £411k. It depends if you want to bite the bullet, fix for 2 years and hope for the best in 2025.