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can i afford a mortgage

Anonymous #1

im 23 years old and need to move out of my parents place soon

i earn 21,000 a year (this is with no enhancements etc) which equates to 1300 a month after tax etc

i want a decent house not some scruffy thing, i.e. 100,000 asking price

i would be a first time buyer so if i find a new build i could do the 5% deposit thing

how much could i be expected to pay a month in the mortgage bills etc? i still want to have a life outside of a mortgage, if i realise i cant afford it i will just rent a room somewhere

by the way renting a room could be an option for me in my house but i need to know i can afford it when there isent someone living there

cheers

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Reply 1

Quady

Where in the country? You can't get a new build house for £100k, £110k minimum.

Well a 95k mortgage at 5% would be £550/month on a 25 year repayment basis (assuming you do the 5% thing and so the developer retains a 10% equity share in the property)

http://www.guardian.co.uk/money/mortgage-calculator

You'll need a grand for the arrangement fee and about the same again on legal fees.

If you're buying new build you'd need to buy a carpet which will be a couple of grand, turfing if you have a garden and obviously furniture.

Glad you're optimistic about house prices, I'm waiting it out a while.

Reply 2

girlwithsharpteeth

i think the OP was meaning the current schemes available, where you have a 5% deposit and the government/house builders provide a loan for 20% of the house price, so you effectively have 25% deposit towards the mortgage. however, I'm not sure how much repayments would be on these sorts of terms I'm afraid.

Reply 3

Quady

Original post by girlwithsharpteeth

There aren't currently any schemes operational where the Govt pays anything. HomeBuy stopped last Sept and FirstBuy won't be operational until September and the terms aren't yet known.

Reply 4

girlwithsharpteeth

Original post by Quady

There aren't currently any schemes operational where the Govt pays anything. HomeBuy stopped last Sept and FirstBuy won't be operational until September and the terms aren't yet known.

Are you sure? From the DWP website (and going through to certain HomeBuy agents) it looks like HomeBuy is still currently open?

http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_171504

http://www.homeshub.co.uk/help-to-buy/homebuy-direct.aspx

Reply 5

Kaykiie

Original post by girlwithsharpteeth

You can still access Homebuy in certain ways but for the majority of places, it's no longer running.

Reply 6

Jmzie-Coupe

Good luck, you need to have a large deposit these days to buy a house.

Reply 7

Quady

Original post by girlwithsharpteeth

DWP site?

Yeah, there are still a few available in Cheshire and the Wirral that haven't completed.

Not that HomeBuy helps with your deposit at all, just the initial purchase price.

Reply 8

girlwithsharpteeth

Original post by Quady

DWP site?

Yeah, there are still a few available in Cheshire and the Wirral that haven't completed.

Not that HomeBuy helps with your deposit at all, just the initial purchase price.

Sorry, DWP = Department for Work and Pensions. Ahhhh right, I just assumed that it was still running. Though as you say, it isn't the same as the FirstBuy scheme. If you're lucky enough to be in one of the few areas OP, look into Local Lend a Hand :wink:

otherwise, as others have said, you might be stuck like the rest of us (we've been saving for a deposit for the last 2 years and are about halfway to the amount we need :P). If you're wanting a newbuild though, often housebuilders have their own schemes, so it might be worth checking any recent developments in your area to see if any are offered.

Reply 9

Quady

Original post by girlwithsharpteeth

Can you link me to the DWP site?

Reply 10

Larrabee

Don't be taken in by homebuy/firstbuy or any other government scheme, you'll end up trapped in an overpriced poky new build that you can't sell on due to the restrictions placed on you by the scheme.

If you want to move out, go into a flatshare or be a lodger somewhere cheap, save like mad and then in a few years you'll have an actual deposit. In the meantime do a lot more research about mortgages and house buying.

Reply 11

girlwithsharpteeth

Original post by Quady

Can you link me to the DWP site?

It was the first link I posted, I said DWP but it's actually Directgov :wink:

sorry for confusion!

Reply 12

modgepodge

Hey, I would recommend against it tbh. Are you a graduate - if so ur loan repayments will kick in soon and take about £50-60 per month off you. When I graduated I was earning £21k+bonuses (prob about £1500-£2000 per year) and no way would I have considered a mortgage. I paid £325 rent plus bills, and rarely had much money left at the end of the month. Don't forget, if you have a mortgage, if anything goes wrong, unlike in a rented property, you have to pay to sort it. So you might budget £600 per month mortgage and think "ooh ok well that's fine, I could easily spend that renting" but then your boiler blows up or something - oh crap you need hundreds (thousands?) of pounds to sort it. Don't forget council tax too.

Reply 13

freeagent

You are unlikely to get a £95k mortgage as they normally multiply your salary by x3-4 giving you a maximum of £84k. If you did manage to get a mortgage you do not have to have a 25 year term; this seems to be the average but might not be the best. If you expect your salary to increase a lot over the next couple of years then you could take out a 2 year deal with a 30 year term and then when you are due to remortgage in 2 you would be able to reduce the term (which at that point would be 28 years left) to say 23 yearss. Obviously you would then pay more a month, but if you had a higher salary by then it wouldn't matter.

Rather than work out how much you want to buy for work out how much you can afford to pay on a mortgage; remember you will have all bills (utilities, food, insurances, council tax, running a car, phones, tv license, sky internet) plus money for going out, money for presents, savings?, etc. Then once you have calculated how much you can afford, use an online mortgage caluculator to work out what mortgage you can get over say 30 years. If I were you I would use around 4.5%-5% as your gearing will be low due to the small deposit.

Good luck! I am no expert but have just bought a house so have been through all this recently!

Reply 14

Jamil1987

Original post by Anonymous

It would be in ur interest for put the biggest deposit down, 5% deposit equates to £5k. You could save a little more and things will be alot more easier for you in the long run. Also £5k is a very small amount, please take into account the mortgage set-up could possibly be around £995(depends on product), Conveyancing, surveying etc could also add up to another £1000ish.

Reply 15

freeagent

Set-up cost and survey normally get wrapped into the mortgage so if you need a £95k mortgage to cover the property price, the lender will normally give you the £96-97k. It is normally benefitial to do this and pay it off by way of an 'overpayment' due to admin charges they levy on you. Conveyancing should only be around the £500 mark.

Reply 16

Lib

I've done part-buy part-rent on a flat (valued at £138k) in Oxford and the mortgage on my 25% share plus rent and bills comes to around £550 a month. One thing to be wary of though... Even if you get help with some of the deposit you'll still need to pay solicitors fees (think mine were ~£1k) and then there's things like carpet (three rooms + fitting came to around £800) and then stuff like fridge-freezer (£290 or so), cooker/hob (my flat came with one) and washing machine (also supplied) that you really can't do without. Then you get into curtains, a bed, a sofa, storage etc...

Reply 17

PinkMobilePhone

Volunteer Team

Original post by freeagent

You are unlikely to get a £95k mortgage as they normally multiply your salary by x3-4 giving you a maximum of £84k.

assuming this is true, it's not unfeasible for the OP to find a nice house for that amount of money.

OP - it really depends where you want to live. What size house are you thinking of? Consider something like this ?

http://www.your-move.co.uk/property-for-sale/sale-id-527651744

£74,950 for a nice new looking 3 bedroomed semi. Okay it's not new-build as in JUST been built, but it's a nice house anyway.