Buying first house same year after graduating uni, doable?
I am currently doing a postgrad course part time. I am making around 40k a year with my job -and expect to make around 60k next year.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
Scroll to see replies
Original post by Anonymous
I am currently doing a postgrad course part time. I am making around 40k a year with my job -and expect to make around 60k next year.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
Just my 2 cents
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
Original post by elenimuffin
Just my 2 cents
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
Doesn't sound very passive, sounds like effort is involved.
Original post by elenimuffin
Just my 2 cents
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
Passive income is nice but I think they want somewhere they can live tho 😛 (I do buy and rent garages for this myself tho, not quite passive but close to)
OP my opinion for buying a house over a 3rd of a mil young with a big 20 year mortgage is you need to talk to a professional adviser in planning these things, not randos.
Where is the 350k figure coming from? do you have a specific area/type of property for this value, or are you thinking about your maximum?
Even with a wage going up to 60k (net? gross?) that mortgage is going to be a big % of your overall income for a loooong time, and you'll obv need to maintain or increase those earnings over time.
Currently, mortgages are 4 to 4.5 times your salary, so people don't overstretch themselves; that's not a £350k house for you. They will also look at where the deposit came from; there's a big difference between saving 20k and 30k and do your parents need repaying?
It's not 20 years of a consistent £2k a month. A typical mortgage lasts 25 years, but within that you can have deal options, eg you pay a variable rate for 5 years, then a fixed rate for 5 years. You have to renew your mortgage and move to another deal at the end of each 5 years (5 as an example, could be shorter, could be longer) and it doesn't necessarily have to be with the same provider. There are options to overpay and pay off early, but beware of fees; if you can overpay, it's better putting the money into something earning extra interest and paying extra when there's no fees due, which is normally after a few years.
Have you factored in the fees for buying a house? Some you could add to your mortgage rather than pay seperately. And all the costs? For the latter there's the upfront expense of furniture, soft furnishings, white goods, electrical appliances. Then bills: council tax, insurance, utilities, broadband, phone, TV licence. Then there's personal expenses, including travel, depending on where you buy, food, clothes, laundry and cleaning, gardening, socialising, credit cards, hobbies, subscription services, holidays.
Me: 10% deposit, 25 year mortgage, paid it off in 12 years. Used Fixed Rate Bonds as short-term investments for any spare cash and overpaid the mortgage when it was free to do so. Had it fairly well worked out on a spreadsheet as my provider advertised its deal options well in advance and I could adjust my figures with interest rate changes and overpayments. My calculations were within about £400 of the final lump sum that I paid to clear the mortgage, approx £8000.
It's not 20 years of a consistent £2k a month. A typical mortgage lasts 25 years, but within that you can have deal options, eg you pay a variable rate for 5 years, then a fixed rate for 5 years. You have to renew your mortgage and move to another deal at the end of each 5 years (5 as an example, could be shorter, could be longer) and it doesn't necessarily have to be with the same provider. There are options to overpay and pay off early, but beware of fees; if you can overpay, it's better putting the money into something earning extra interest and paying extra when there's no fees due, which is normally after a few years.
Have you factored in the fees for buying a house? Some you could add to your mortgage rather than pay seperately. And all the costs? For the latter there's the upfront expense of furniture, soft furnishings, white goods, electrical appliances. Then bills: council tax, insurance, utilities, broadband, phone, TV licence. Then there's personal expenses, including travel, depending on where you buy, food, clothes, laundry and cleaning, gardening, socialising, credit cards, hobbies, subscription services, holidays.
Me: 10% deposit, 25 year mortgage, paid it off in 12 years. Used Fixed Rate Bonds as short-term investments for any spare cash and overpaid the mortgage when it was free to do so. Had it fairly well worked out on a spreadsheet as my provider advertised its deal options well in advance and I could adjust my figures with interest rate changes and overpayments. My calculations were within about £400 of the final lump sum that I paid to clear the mortgage, approx £8000.
I would go and see a mortgage advisor to help you weigh things up, I found Halifax very good. They should tell you what’s what. I do think it’s a good idea to get on the housing ladder as soon as you can, particularly if you have no other expensive pursuits or spending ambitions. This said, the £350k target with the deposit you’ll have seems like a challengingly high monthly repayment against the salary you’re aspiring to in the short term
(edited 3 months ago)
Original post by Anonymous
I am currently doing a postgrad course part time. I am making around 40k a year with my job -and expect to make around 60k next year.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
I can save reasonably 20-30k in time for my graduation in 22 months time. That, with some help (10k or so) from my parents, means that I could potentially have a downpayment for a 350k house. A 20 year mortgage should be about 2k a month, which, assuming that everything goes to plan, I should be able to afford in the future.
Does it make sense to make such a purchase? I do not have any significant outgoings outside my personal expenses.
It's likely you will need to downgrade your home expectations as only a single lender is allowing 6 x salary so it's more likely that you will be looking closer to 250k.
2k is an absurd monthly total, it would likely be beneficial to go for a lower monthly amount and then overpay. Interest rates are currently high and while the chances of Labour meeting housing targets are low, both of these are factors which present the risk of a period of negative equity, especially if inflationary pressure subdues real wage growth and wider economic growth remains sluggish. While house price growth is likely, we are not likely to be in an environment supporting significant growth anytime soon.
But yes, you should purchase.
Original post by Rakas21
It's likely you will need to downgrade your home expectations as only a single lender is allowing 6 x salary so it's more likely that you will be looking closer to 250k.
2k is an absurd monthly total, it would likely be beneficial to go for a lower monthly amount and then overpay. Interest rates are currently high and while the chances of Labour meeting housing targets are low, both of these are factors which present the risk of a period of negative equity, especially if inflationary pressure subdues real wage growth and wider economic growth remains sluggish. While house price growth is likely, we are not likely to be in an environment supporting significant growth anytime soon.
But yes, you should purchase.
2k is an absurd monthly total, it would likely be beneficial to go for a lower monthly amount and then overpay. Interest rates are currently high and while the chances of Labour meeting housing targets are low, both of these are factors which present the risk of a period of negative equity, especially if inflationary pressure subdues real wage growth and wider economic growth remains sluggish. While house price growth is likely, we are not likely to be in an environment supporting significant growth anytime soon.
But yes, you should purchase.
So I am confused. if there is going to be negative equity, why is it still a good idea to buy a home?
Original post by elenimuffin
Just my 2 cents
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
I honestly think that it is a tactical decision since inflation exists, meaning housing will get undeniably more expensive, however you should invest in assets which give you a passive income. This means that you should take in consideration real estate investments. You could easily buy a small property and renovate it, or if it comes already renovated even better, and rent each room out, making it a shared household. It is a profitable investment. And if anything, you own the property, so you will have 100% guaranteed a place to live.
You’re knowledge on real estate wouldn’t be an issue, since it can simply be fixed by buying a CPD course, duration of 40 hours average I total, which leaves you with a certificate in the course you chose (real estate/finance/etc)
Alternatively, you can buy shares in companies, which gives you a passive income.
Hope this helped! <3
are you saying that the op should rent his house out as an HMO? isn't that a headache? what is a CPD course?
Original post by Kutie Karen
are you saying that the op should rent his house out as an HMO? isn't that a headache? what is a CPD course?
Yeah It's a bit of a yuppie idealist answer 😅 It overlooks that renovating properties and managing contractors is NOT easy, and that being a landlord, esp of a live in HMO is pretty much a job, it's not really passive. (and you won't be able to leave your job at home)
I helped a friend do this exact thing, mortgage a big townhouse, try and renovate and spec for HMO (horrible, you pretty much need to turn your home into a hotel, everything to spec, warning signs everywhere) and then try and live in and rent out the individual rooms for as much as you can... christ, he's had no end of trouble over the years. I think he actually gave in a while back, kicked everyone out and turned it into some sort of crypto farm to try and pay it off.
Original post by Kutie Karen
So I am confused. if there is going to be negative equity, why is it still a good idea to buy a home?
House prices are currently increasing however it’s a short to medium term risk. Since we can’t predict accurately, OP would best off purchasing now.
Original post by Rakas21
House prices are currently increasing however it’s a short to medium term risk. Since we can’t predict accurately, OP would best off purchasing now.
so where does the negative equity come into this?
Original post by Kutie Karen
so where does the negative equity come into this?
I was pointing out to OP that if they intend to have such high minimum payments (2k per month) then they should be aware that we are not likely to be in an environment supporting significant house price growth for several years and that the risk of a period of negative equity is higher than the mean of the last 30 years. Should OP lose his job or have a protracted illness ect.. then OP May have to sell the property at a loss. That’s not saying that a period of negative equity is likely, simply that it’s maybe a 25% risk currently rather than say a 10% risk.
Basically, OP should purchase but I believe they should seek to overpay rather than engage in a high minimum cost.
You should definitely buy a house. However is buying a £350k really wise for a starter home? Most people tend to work their way up the property ladder. Don't borrow £10k from your parents - buy a cheaper house.
Also, having a huge mortgage is a terrible idea.
Far better to have a smaller house bought outright, or with a very small mortgage, than a big house with a big mortgage.
Far better to have a smaller house bought outright, or with a very small mortgage, than a big house with a big mortgage.
Original post by PinkMobilePhone
Also, having a huge mortgage is a terrible idea.
Far better to have a smaller house bought outright, or with a very small mortgage, than a big house with a big mortgage.
Far better to have a smaller house bought outright, or with a very small mortgage, than a big house with a big mortgage.
How so?
Original post by Quady
How so?
Financial stability
Original post by Rakas21
I was pointing out to OP that if they intend to have such high minimum payments (2k per month) then they should be aware that we are not likely to be in an environment supporting significant house price growth for several years and that the risk of a period of negative equity is higher than the mean of the last 30 years. Should OP lose his job or have a protracted illness ect.. then OP May have to sell the property at a loss. That’s not saying that a period of negative equity is likely, simply that it’s maybe a 25% risk currently rather than say a 10% risk.
Basically, OP should purchase but I believe they should seek to overpay rather than engage in a high minimum cost.
Basically, OP should purchase but I believe they should seek to overpay rather than engage in a high minimum cost.
oh I see. I thought the economy was going into recession and so the negative equity on house prices which sounds risky.
Original post by Kutie Karen
oh I see. I thought the economy was going into recession and so the negative equity on house prices which sounds risky.
We are not seeing a proper recession, it's more just a lack of growth similar to the floating around we had in 11/12. House prices did grow 4.8% this year which sounds great until we see that it's actually below wage growth which is rare for the UK and indicative of the fact that it wouldn't take much to stall or decline.
Original post by Rakas21
We are not seeing a proper recession, it's more just a lack of growth similar to the floating around we had in 11/12. House prices did grow 4.8% this year which sounds great until we see that it's actually below wage growth which is rare for the UK and indicative of the fact that it wouldn't take much to stall or decline.
Good point. I wouldn't want anyone to have to sell up with negative equity. That would be so sad. Even if house prices went up a bit it would be something rather than the negative equity scenario. That would be scary stuff. How much do you predict house prices will go up given the lack of growth?
Quick Reply
Related discussions
- Veterinary science - University of Bristol
- Can i live off maximum maintenance loan in Exeter or Bristol?
- Saved 30k during uni
- Just flunked out of Pharmacy School, career help!
- Living in Senghennydd Court? Ask me anything!
- Is £100 a week enough to live in London as a uni student????
- missed my med A-level offer. should i take a gap year OR do biomed and then grad ent?
- Medicine interview prep time
- funding medicine as a secondary degree
- what is a foundation year like
- What shall I look out for when searching for a house?
- I study Vet Med, ask me anything!
- Sir Howard Davies: Not that difficult to buy a home, says NatWest chair
- Having a full time job and being a full time student?
- QMUL or City for Computer Science? I have to decide this summer, but it's so hard
- University of Southampton A101 (BM4) 2024 Entry
- Should I get Maintenance Loan?
- Some reasons why you should NOT do medicine...
- Durham vs Lancaster (Compsci)??
- How does anyone afford uni?
Latest
Trending
Last reply 2 weeks ago
Halifax is closing my account, I am a victim of fraud. please what can i doLast reply 1 month ago
I think I have a Cifas Marker on my name , can I still open any banks ?Last reply 4 months ago
Has anyone had their student finance paid into their partners or parents bank?
