Single First Time Buyer 34k salary 60k deposit...

Single First Time Buyer 34k salary 60k deposit...

Author
Discussion

HustleRussell

Original Poster:

24,602 posts

159 months

Saturday 30th May 2015
quotequote all
...How big a mortgage can I expect to get a reasonable deal on?

I have been on comparison websites and looked at the general advice and rules of thumb but in places they conflict i.e. I hear the reasonably good deals start at ~20% deposit (so 60k= 300k) but the affordability calculators etc suggest that my chances of getting a good deal fall off massively at over 100k borrowing amount (160k).

In my favour, I've worked for the same company for 6 years and my salary has consistently increased from 15,250.

I think I'm being ambitious with what I want but with possible salary increases in mind and the fact I'd probably end up getting a lodger in I'm hoping I can manage.

p1stonhead

25,489 posts

166 months

Saturday 30th May 2015
quotequote all
£60k for a deposit is good considering the salary of £34k which should be able to get you a mortgage of £170k (5x salary). Rule of thumb is 5x salary max however its done on affordability now so if you have loans etc this will reduce.

Looking at a £230k property ill give you a 65% LTV which will get you some very good deals.

You wont be able to get a £300k property though which you mention briefly unless im missing something..

HustleRussell

Original Poster:

24,602 posts

159 months

Saturday 30th May 2015
quotequote all
Would love to say that I'd scrimped and saved for years but in truth I blew all of my disposable income on Caterham racing until I sold the car last christmas, but since then I've spent 15 months working in Thailand with uplifts, overtime and low living expenses.

I don't have debt and my lifestyle is pretty cheap when I'm not racing, rarely eat out, occasionally drink thirty quid here or there, spent less than 300 quid on phone usage in two years, no gym habit, no expensive car habit, hate clothes shopping etc.

My credit report is probably pretty slim as I only had a credit card for a couple of years (always paid it) and took out a bank loan a couple of years ago which was paid off very early. Apart from that nothing really.

Looks like unless I go job hunting it's a flat then or maisonette at a push. I'm a bit disappointed by that but a house was going to be 300k plus and a cheaper property could at least leave me with some money afterwards to have some fun with.

frisbee

4,957 posts

109 months

Saturday 30th May 2015
quotequote all
80% LTV is still going to give you reasonable mortgage deals, the problem is going to be affordability as your mortgage will be +£1000/month.

Have to factor in the maintenance fee if you get a flat.

Alex@POD

6,133 posts

214 months

Saturday 30th May 2015
quotequote all
If you have been with your bank for a while, speak with them. I had a mortgage advisor look at the best deals for me, and due to some bad credit could only find really expensive mortgages. I have been with my bank for 6 years or so, and have a few products with them, and they gave us a really good deal. We went from repaying 850 to 530, for the same amount. It's over a slightly longer time, but once we remortgage we'll be able to offset that of course as my credit file will be better then.

Condi

17,089 posts

170 months

Saturday 30th May 2015
quotequote all
As has been said, 5x salary is probably what they will lend you, and so you'll be on much lower LTV than a lot of FTB. Might be worth looking at something needing some work if you have the cash you can invest straight away?

Supernova190188

887 posts

138 months

Saturday 30th May 2015
quotequote all
What is a decent mortgage rate nowadays with a 20% or bigger deposit?

HustleRussell

Original Poster:

24,602 posts

159 months

Saturday 30th May 2015
quotequote all
I don't know much about I but looks like overall cost for comparison around 4%?

HustleRussell

Original Poster:

24,602 posts

159 months

Saturday 30th May 2015
quotequote all
Condi said:
As has been said, 5x salary is probably what they will lend you, and so you'll be on much lower LTV than a lot of FTB. Might be worth looking at something needing some work if you have the cash you can invest straight away?
That's a good idea, keep back some of my savings for fixing the place up?

I nearly started a general 'what should I do with this money' kind of thread instead of a specific mortgage one so I'm definitely open to ideas like this for making the best of what I have.

groundcontrol

1,539 posts

190 months

Saturday 30th May 2015
quotequote all
frisbee said:
80% LTV is still going to give you reasonable mortgage deals, the problem is going to be affordability as your mortgage will be +£1000/month.

Have to factor in the maintenance fee if you get a flat.
And then some when rates rise.

Seems strange to lead such a frugal lifestyle and then spunk quite a bit of cash on the biggest possible mortgage but each to their own..! Once I'd sat down and done the maths the amount repaid on mortgages of 150k and their ilk just becomes ridiculous, which I'll be avoiding on basic principle. I am up norf though which makes this a bit easier.

Condi

17,089 posts

170 months

Saturday 30th May 2015
quotequote all
groundcontrol said:
Once I'd sat down and done the maths the amount repaid on mortgages of 150k and their ilk just becomes ridiculous, which I'll be avoiding on basic principle. I am up norf though which makes this a bit easier.
So whats the alternative? Admittedly you get more for your 150k up north than you do in the midlands/south, but Im pretty much in the middle of the country and 150k will get you a 1 bed house or 2 bed flat. Not exactly hugely inspirational or exciting. So you either save up, and get a smaller mortgage, or get a bigger mortgage and get on the ladder sooner.


OP; you'll be making the most of your money by getting something needing work. Say get a 80% mortgage on a 200k house... so your deposit will be 40k, which leaves 20k cash for new kitchen/bathroom/windows? Hopefully you'll increase the property value by more than you spend on improvements - giving you quick buck, albeit on paper.

groundcontrol

1,539 posts

190 months

Saturday 30th May 2015
quotequote all
Condi said:
groundcontrol said:
Once I'd sat down and done the maths the amount repaid on mortgages of 150k and their ilk just becomes ridiculous, which I'll be avoiding on basic principle. I am up norf though which makes this a bit easier.
So whats the alternative? Admittedly you get more for your 150k up north than you do in the midlands/south, but Im pretty much in the middle of the country and 150k will get you a 1 bed house or 2 bed flat. Not exactly hugely inspirational or exciting. So you either save up, and get a smaller mortgage, or get a bigger mortgage and get on the ladder sooner.
There isn't an alternative really, short of getting a stter house. Naturally it's down to personal preferences but as a single man as well I'd find myself rattling round in a 300k house and any perceived gain in property value over the time of ownership will be totally lost by the interest on the mortgage unless you can comfortably overpay. I suppose my priorities don't really lie in property though smile

paulrockliffe

15,639 posts

226 months

Saturday 30th May 2015
quotequote all
The limiting factor is going to be wages isn't it, the deposit is just going to buy you a slightly better rate, but won't let you borrow any more.

If prices are still flat where you're looking and you're used to living frugally, why not borrow as little as possible, which will allow you to save quicker and build up equity faster. Then when/if prices start to rise again, move and leverage yourself higher to lock in the capital appreciation.

You're also minimising your risk on interest rate rises that way.

HustleRussell

Original Poster:

24,602 posts

159 months

Saturday 30th May 2015
quotequote all
I was looking at getting a lodger in to help with the mortgage and getting a two or three bed semi but in Surrey these are north of 300k which you have shown me won't be doable. I wanted a house for parking maybe even a garage, and fewer noise issues- I'm a massive hypocrite, I like to make noise but less tolerant towards other people's!

I may see what the jobs market is doing because my salary is pretty modest and with six years experience and some on site overseas I imagine I could find a better salary. In the UK though, all the work is in the city or in Aberdeen, so I'm looking at zone 6 kind of area.

At least if I get a flat/maisonette and another opportunity overseas comes up I could pretty easily let it out for a year or two (I realise a standard mortgage wouldn't allow this)

Good stuff thanks for all the input, I do need and appreciate it.

Soir

2,268 posts

238 months

Saturday 30th May 2015
quotequote all
I'd prefer to keep bit savings back to put into a house that needs attention however just bear in mind the lower the deposit the lower the mortgage loan

HustleRussell

Original Poster:

24,602 posts

159 months

Monday 8th June 2015
quotequote all
Would £5k be a realistic ballpark figure for actually acquiring the property I.e. Arrangement fees, solicitors fees, stamp duty on ~£230k?

zed4

7,248 posts

221 months

Monday 8th June 2015
quotequote all
HustleRussell said:
Would £5k be a realistic ballpark figure for actually acquiring the property I.e. Arrangement fees, solicitors fees, stamp duty on ~£230k?
Should be. We bought our first house just over 3 years ago for the same amount. We were lucky and bought during the stamp duty "holiday" as our house was just under £250k. I think we paid about £2k for solicitors and searches etc. We borrowed a van from work and moved ourselves for nothing. All in all, it didn't cost us much to actually buy the house.

Shop around for different solicitors/conveyancers and get lots of quotes.

zed4

7,248 posts

221 months

Monday 8th June 2015
quotequote all
In fact, I just found the email from 2012! Costs were:


Conveyancing £500 plus vat
Searches £300 plus vat
Registration of the house in our name £180 plus vat

total ex vat £980.00
total inc vat £1,176.00

That's all we paid for everything from start to finish!

Matt_N

8,900 posts

201 months

Tuesday 9th June 2015
quotequote all
HustleRussell said:
Would £5k be a realistic ballpark figure for actually acquiring the property I.e. Arrangement fees, solicitors fees, stamp duty on ~£230k?
Stamp duty is currently 2% of the difference between £125k and your purchase price of £230k, so £2100.

Solicitor's fees are around £1500 all in to buy somewhere at present.

Mortgage valuation fee from £250 for the basic one.

Mortgage arrangement fee, depends on your mortgage and can be added to it but most are around £1-1.5k at present.

Guess who is moving house at present, so selling and buying?

Pretty gauling having to hand around £8k over in fees and what not!

HustleRussell

Original Poster:

24,602 posts

159 months

Tuesday 9th June 2015
quotequote all
Thanks everyone

Matt_N said:
Pretty gauling having to hand around £8k over in fees and what not!
Tell me about it, early days in my looking at buying a place and until now I had pretty much glossed over these costs.

Could've done good things with that kind of money!