First Time buyers can we realistically afford a 260k house?

[Zka]

Hi all,

Me and my SO have just had an offer of 260k accepted on a property. We have 3 LOs and currently live in a very bad neighbourhood (very bad crime rate).

We are wanting to move and fell in love with a 3 bed property with a drive and huge garden, in a lovely area (up North). It was up for 265k and 260k is probably overvalued but we love and it will become our forever home.

But... We are both so nervous about it all. My partner works got a decent job earns around £49k/Yr and can get overtime. I have just accepted a job that is £25k/year (Starting in April). So a pre tax income of 74k/year. He has £35k saved up I unfortunately have nothing. So he is going to put a 10% deposit (26k) and cover all the fees.

We worked out our joint income after tax (with DLA for one child and child benefit) is around £5200/month.

The mortgage costs is £1200/month (on a 40yr fixed term) and all our rough outgoings will be around £3000k incl. Mortgage cost. So on paper it looks like we will have an excess of £2k but I've probably not calculated that properly.

So my 2 main questions are:

1. Could we afford the initial costs (deposit, legal fees etc.)

2. Could we afford the monthly costs (especially if the interest rates change)?

We would also need some money for furnishings initially (probably 3 beds, sofa). And I know my SO wouldn't be left with much money after all of that. So it is very risky!

Sorry for the Large post, I would just like someone with experience to say you'll be okay or don't do it you'll put yourself through hell!

Thanks for any advice,

Tara

Do your rough outgoing costs include food?

Yes.

Well seems the answer is yes.

could you rent for less than that? I doubt it.

DH and I bought a house for 265k a couple of years ago. Our mortgage is 1035pm, we did have a 15% deposit and we only have 2 kids, but our joint income is around 70k so slightly less than yours. We find it very manageable but not much left over for a private pension for me(I'm self employed). That will change when I earn more when the children are a bit older.

It sounds to me like you've worked it all out carefully and it seems achievable. Re furniture- you can always buy more modest(but sturdy) stuff for now and then replace with better things down the line.

What happening with childcare? that’s the one huge expense you have not mentioned.

When it comes to furnishings, go secondhand, FB and some sites offer stuff for free. I gave away a decent 3 seater sofa to a young couple setting up last year.

Yes that covers mortgage rates, food, car, car insurance/servicing/fuel, home insurance, water, gas, electricity, WiFi, council tax and phone bills. All rough estimates of course.

It looks OK to me...our income is very similar to yours (51k and 23k) and we are looking at houses around the 385k point (We have a 15% deposit though and are DC are both in primary school.so we only need to pay for a bit of wraparound care.

Definitely recommend FB marketplace for furniture - we pretty much furnished our entire house second hand in the last 6 years (nicely, not horrible stuff!) and it's still my go-to for decent quality stuff. Our sofas and mattresses are pretty much the only things bought brand new.

It sounds ok to me, will you jointly own the house?

Oh yes so the oldest is 13 so he is semi independent now. Then we have an 8 year old and a 2 and half year old. My dad has offered to help with pick ups and drops offs at nursery/school.

But if we didn't have him to rely on then we're looking at £800-1k on childcare costs. He lives around the corner from the house (5 min walk). And he lives 1 min away from the local primary school.

Come September 2 and half year old will be in the schools nursery (looking at getting him a place now) and he will get 30hrs free so will become very ideal with my dad living 1 min walk from the school.

Do a 2yr mortgage and switch to a lower rate later. Also hold on until the bank base rate comes down as mortgage rates will fall a little - the next interest cut is a near certainty i think tomorrow because of underlying falls in inflation. Get a broker that gets paid by the banks and get a good rate, historically I've always done virgin money to be the lowest. Even if you're stretched, get on the ladder. Prices only go one way, so if you can, do it. Your future you will thank you later because as prices continue to rise, you remortgage, your loan to value ratio falls, and you get a better rate next time.

Good luck.

Yes

When you say SO are you married or partners? Get married, particularly since you have presumably not worked for a few years and will have a correspondingly poor pension.

But yes, I'd say you can afford that house.

Sounds good to me

I’d go for it, buying your first home is always daunting.
The only thing to be aware of our childcare costs, your 30 hours may not be free and the pick ups may become too much for your DF.

Yea I think you can afford it with that income.

With a joint income of £74k per year they would probably lend you £330k. You are borrowing £235k, so £100k less than the most they would lend you. Obviously that's still a big amount of money, but it feels like that should give you a fair amount of room for manoeuvre?

Our joint income is 4500 post tax. Mortgage 1500 a month. one 6 year old. We manage to cover it fairly easily and also save 700 a month. We dont do international holidays tho and DO budget food carefully

Yes I think you are okay with those numbers.

It's not quite that simple though because lenders need to consider outgoings of which childcare might be significant. One couple on a £74k income might be allowed to borrow a lot more or less than the next couple depending on their expenses.

Putting that aside however OPs numbers look fine.

40 year fixed term or do you mean 4 year

Do it

Have you got a mortgage on principal even though you've not started your job yet?

Some mortgage providers will take DLA income into account.

Make sure you've seen a whole of market IFA to check you are being offered the best possible mortgage deal.

40 years is a very long term.

Definitely look at cutting that down in the next few years (eg when youngest starts school).

If it gets your kids into better catchments it'll definitely be worth it.

You just need to have a lifestyle to suit your disposable income.

Prioritising buying over renting is always the right option.

Ultimately the mortgage company will tell you. They won't lend if they think you won't, but it looks comfortable to me. Mortgage rates due to go down today too.

I would say yes. Mortgage is always better than renting plus you have the bonus of your dad round the corner. Good luck.