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6y, 7m agoPosted 6 years, 7 months ago
Hi All,

I was wondering if I could get some money advice from you clever hotukdealers...

My cheap rent is coming to an end and so I am wondering whether it is time (now that I have entered my thirties) to consider buying a house or flat.

I am trying to work out what the average costs will be or whether it makes sense to keep renting for the time being.

Ok, so I live in London, houses are not cheap here, but the area I live in, which I don't really want to move out of - monthly rent for a 1or (if you are lucky) 2 bed flat goes at £1200 for anywhere that isn't the size of a cupboard. I figure if myself and my wife are going to spend that much a month we might as well put it towards a mortgage.

Problem is that 1 bed flats where we want to live start at 250k minimum. And I don't quite have a 10% desposit yet. Let's assume we can scrape together 5% so £12,500 (I spend way too much money on stuff I don't really need because of this site!)

For the sake of argument I have copied this table of other up front costs from another site:

Mortgage arrangement fee £400
Survey £350
Solicitor £900
Searches £300
Bankruptcy Search £5
Stamp duty £2,500 (assuming we get a sub 250k property)
Transfer fee £25

Total = £4480

So far it is costing me 4480 + 12.5k = approx £17k

Does anyone now how much a mortgage is likely to cost me based on borrowing 95% of 250k? For calculation purposes myself and my wife's joint salary is £62k - is there an online calculator to help me work out what the monthly cost will be?

Does it make money sense for us to buy?

6y, 7m agoPosted 6 years, 7 months ago
Options

(37)
banned#1
Always makes sense to buy, rent will always go up
banned#2
stamp duty is 0% for sub 250K at the moment I believe

http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

#3
You can roughly calculate your monthly morgage by going on most of the Building society sites like Halifax etc.
They have a morgage calculator and you can also calculate from your earnings how much the bank is likely to lend you.
http://www.halifax.co.uk/mortgages/home.asp

http://www.nationwide.co.uk/mortgages/default.htm
#4
There will always be fluctuations in the market I have seen ups and downs of our own property and previous ones but over a number of years i always think you must buy. Otherwise you are just giving your money away in rent. Do you really want to be 50 without a property. You need to look long term. If need be buy smaller to meet your needs. If there is no stamp duty thats great. As long as you can make payments i would always buy but you must think ahead in case in case your mortgage goes up. As prices of property at moment is down it would seem to be a good time to buy in my opinion but i am no economist. How about speaking to someone in mortgages at your bank who may be able to explain how things could alter if interest rates change etc.
Good luck.
#5
Problem is there is no 95% LTV mortgages at the moment, you will need 10% deposit minimum, and ideally 15% to get a better rate.
My fiancee and I are just finalising our purchase of a 25% share of a £175k property (She is 21, I'm 22) which is a one bedroom new build apartment in Woolwich, and most high street mortgage lenders wanted 15%, we employed a Independent Financial Advisor to do the leg room for us and he found us a 3 year fixed rate mortgage with a 10% deposit.

Here is a quick sum of our outgoings for it:
10% deposit
Reservation fee: £300 (comes off solicitor fees though)
Mortgage setup fee: £199
IFA: £500 (only gets paid if and when we are in the property)
Solicitors +registry searches etc: £850
Move in fee: £400 (comes off mortgage though)
Funds release: £65
No Stamp Duty under £250k
TOTAL: 10% + £2314 (£1614 after fees taken off mortgage+solicitors)

I'd much prefer to be putting money into a mortgage as even if the property happens to lose value we will be able to get something back off it when we sell opposed to rent which when its gone its gone.

Things to remember, especially in London is service charges, ensure to find out the values, how they are run, and stuff like that. In our property it is £92 per month, so although is quite a lot, we have lifts, it is cleaned twice weekly, repainted communal areas every year, 24hr concierge, on site desk, grounds maintained etc.
#6
tinkerbell28
We have been dabating about buying again, but don't know where to settle yet so one reason to hold off.

But also I do believe and this is opinion only we have not seen even a tiny bit of the consequences of this recession yet. I think within a few years of the election house prices will have fallen dramatically.

Job cuts coming, higher interest rates, more taxes, crap £, sluggish housing market. Lets be honest who in most average situations can afford £250k for a 1 bed house, there is a severe lack of affordable housing for most people, people have been priced out of the market unless they mortgage up to the eyeballs, which the bank won't do anymore as this is how the crisis started, that in itself will see prices fall on top of a new govt handling our financial crisis.

I think the market is still being talked up and given aid just to keep it all hunky dory before the election, then crash, it will happen here like everywhere else who have been hit by this recession. It's a buyers strike right now, most know the prices are still 2007 boom prices and are refusing to get huge mortgages just to have the house taken off them when they reach said old age for care.

We have a reasonable deposit/good rent/location and move a lot so we are lucky and have the chance to hold off.

Although I agree with the problems we are having, I know someone who works in the industry (not an estate agent either!) and he thinks this will continue, and that we will not see a dramatic drop in property prices for at least 10 years. He reckons the next time a huge difference in the property market will be made will be related to EU, and not the UK directly.

Although by no means, even as he says can anyones word be taken for gospel as no one really knows what will and could happen in 6months let alone a couple of years.

Personally how we looked at it was that renting would cost us the same as a mortgage, thus it made sense to put money into something that we could get money back from, even if property prices did happen to fall.
Suppose it is different if you live in an area where renting is cheaper then a mortgage, or if you just cant afford the funds needed upfront for the mortgage. But in London this isn't the case, we looked at property that was 5-15 years old, ok a little bigger sq ft, and even some 2 bedroom flats but the rent was the same as we will be paying or a little less/more then a mortgage.

Either way, all the best OP on whatever you decide.
#7
Stamp Duty can only be avoided for property < £250k if Both are first time buyers - this includes ever having your name on any property.

Only reason I have found this out is that I put my name down with an ex about 8 years ago so that enough could be raised for the mortgage. I never moved in to that house - it was going to be her's till we got married, then I was going to move in. We broke up about a year or so later.

I am in the process of buying a house with my new partner and because I am now "not a first time buyer" we have to pay stamp duty. (cant put it just one of our names as we don't earn enough)

Also the only way we were able to get on the housing market was one of these 85/15 shared equity deals
#8
Thanks for all the advice folks, a bit more digging with some of the links provided suggest that 10% is definitely the minimum but at least we will save 2.5k if we get a sub 250k house.

But still borrowing 225k - 90% of 250k flat is going to cost on average 1500 per month (plus maybe service charges). this is versus a 1200 rent.

I guess the deciding factor would be if we could get rent cheaper, then we might stick to that more flexible option.
#9
tinkerbell28
We could afford a mortgage but at the moment we would be mad too with hubby being RAF, we can afford but it's best for us to wait.

TBH anyone in the industry, from solicitors, builders, bankers, estate agents, it's in their interests to talk the market up or be in denial that the housing now is by far overpriced, especially if we want debt levels to fall in this country and abolish irresponsible lending.

I believe a hefty fall is on the cards, hence why we are waiting, but I think there is a drop coming within a few years easily. But who knows.

No if anything a fall in property prices would be in his interest, and not to talk it up. ;-)
Also he agrees its inflated anyway.

Yeah as you say you have other reasons for waiting, and also the fact if that is what you believe and can wait a couple of years then thats great. I'd probably do the same as you in your position/beliefs.
However, my fiancee and I need to move from where we are ideally, thus we have opted to move and to buy.

It comes down to everyones situation at the time, so I believe there is no major right or wrong, just different people in different situations.
banned#10
Any new builds in the area? You have the government initiative "HomeBuy Direct" then you have all the builder's variation on the same theme.

We bought out house last year as first time buyers and didn't have to pay a single penny deposit!
#11
master_chief
Any new builds in the area? You have the government initiative "HomeBuy Direct" then you have all the builder's variation on the same theme.

We bought out house last year as first time buyers and didn't have to pay a single penny deposit!

Did you do a joint (i.e couples) or single person's application? They are building near us but am assuuming they will probably all be sold out already.

Were you able to negotiate with the building company by much?
banned#12
tinkerbell28
We could afford a mortgage but at the moment we would be mad too with hubby being RAF, we can afford but it's best for us to wait.

TBH anyone in the industry, from solicitors, builders, bankers, estate agents, it's in their interests to talk the market up or be in denial that the housing now is by far overpriced, especially if we want debt levels to fall in this country and abolish irresponsible lending.

I believe a hefty fall is on the cards, hence why we are waiting, but I think there is a drop coming within a few years easily. But who knows.

I would have to disagree with you on that, have house prices taken a long sustained dive ever??

Sure there may be some dips like we've recently seen but generally they're only going to rise though doubtful at the rates we saw in the past decade or so.
#13
master_chief
Any new builds in the area? You have the government initiative "HomeBuy Direct" then you have all the builder's variation on the same theme.

We bought out house last year as first time buyers and didn't have to pay a single penny deposit!

They can't their salaries are £62k combined, the HomeBuy scheme means you have to be earning under £60k...so unless they can fiddle their numbers. :whistling:
eg Just one of you could purchase the property, and then at a later date put down the other name on the deeds...
#14
Did you do a joint (i.e couples) or single person's application? They are building near us but am assuuming they will probably all be sold out already.

Were you able to negotiate with the building company by much?

Negotiate? No, not unless they are struggling to sell them. :thumbsup:
Goes on survey, and valuation nothing more.
banned#15
Did you do a joint (i.e couples) or single person's application? They are building near us but am assuuming they will probably all be sold out already.

Were you able to negotiate with the building company by much?

We had no negotiating power really, we got some bits thrown in for free. We did get a fair bit knocked off due to an over valuation but that was nothing to do with our negotiations.

We did a joint one but no reason why single applicants would be different. If you work in a key sector such as teaching this may go in your favour too.

We also got a fairly decent mortgage rate as first time buyers at around 3% variable. This was because the lender saw us putting 30% in even though we never due to the scheme. Considering other couples we know who bought at the same time got 6%ish fixed that wasn't bad, always that gamble with variable mind.
banned#16
awoodhall2003
They can't their salaries are £62k combined, the HomeBuy scheme means you have to be earning under £60k...so unless they can fiddle their numbers. :whistling:
eg Just one of you could purchase the property, and then at a later date put down the other name on the deeds...

Funnily enough they fiddled ours as we earnt too much between us but they take into account any large loans you have like a car for example and deduct that from your earnings. We didn't have any but they made one up anyway. They were desperate to get people signed up to it, both the builder and the government people.
#17
master_chief
We had no negotiating power really, we got some bits thrown in for free. We did get a fair bit knocked off due to an over valuation but that was nothing to do with our negotiations.

We did a joint one but no reason why single applicants would be different. If you work in a key sector such as teaching this may go in your favour too.

We also got a fairly decent mortgage rate as first time buyers at around 3% variable. This was because the lender saw us putting 30% in even though we never due to the scheme. Considering other couples we know who bought at the same time got 6%ish fixed that wasn't bad, always that gamble with variable mind.

Yeah we had a valuation done and it came out the same. Also we got blinds thrown in...but nothing else!
banned#18
tinkerbell28
It's opinion and it it mainly homeowners or those that can afford to get on the property ladder that say that prises will rise, I am in the latter category and I can see the storm brewing.

The simple fact is house prices now are built on the back of the monumental debt we have accumulated as a country for the past 10 years, the debt that will have to be paid back with avengance after the election, when rises will come in, job losses, salary freezes, etc.

House prices need to fall by quite a bit, to get any of the "buyers strike" back in. House prices are over inflated and are the price they are because of a boom in debt, which is no-more the only way is down short to medium term.

But like I say just my opinion:thumbsup:

It's a possibility I guess. It depends on which outcome you find more likely.

I just can't see so many people taking a massive hit in the long term. If my house was worth half of what I paid for it in a couple of years and it stayed that way for the next decade then I, like most others simply wouldn't sell and move as the financial penalty would be severe. Thus you would get a buoyant first timers market for new builds but the rest of the market would become stagnant.
#19
master_chief
Funnily enough they fiddled ours as we earnt too much between us but they take into account any large loans you have like a car for example and deduct that from your earnings. We didn't have any but they made one up anyway. They were desperate to get people signed up to it, both the builder and the government people.

Well as I'm at uni the application was done wholly on my fiancees income which was fiddled as well if you like. As she works bank, and overtime, etc her paycheques are actually more then her salary so they took the average of her last 6 months pay rather then her salary. :-D
banned#20
I'm talking about the long term, not short term trends. Right now is a short term trend, it may become long term but everyone is fairly certain it won't.

The simple fact is nobody would ever sell a home to move elsewhere if they lost out on too much money. The people in the market will ultimately decide where the market goes and new buyers simply don't amount to that much compared to the amount of current home buyers.

It's not an ideal situation, it's not fair on most but it's the situation we find ourselves in.
banned#21
tinkerbell28
This is what you are not understanding, people now think it's "normal" to have high house prices, it's that simple house prices CANNOT be sustained as they are, they are built on huge mountains of debt we as acountry cannot afford anymore, people cannot afford to buy OR trade up, or refuse too.

First time buyers are the foundation of the pyramid, you loose them, you loose the foundations of the market, same with the middle tier of want to be but won't upgarders.

There are a heck of a lot of current homeowners out there, we were ones, who refused to upgrade in this climate, knowing doing so mega house prices on selling or not, you are uprgrading to a mega price=mega debt. The whole market, those that understand boom/bust have held off.

This recession has so far been easy, because as a country the govt has sunk us in debt to "protect" us from it, we have not seen the half of it yet, and tbh it actually scares me, even though we are in a very good position.

I understand where you're coming from, I just disagree. Ultimately it's like debating the football this coming weekend (any), I'm backing the favourite (most likely) outcome going by previous results and your backing the other team as you believe they stand a chance. A fruitless endeavour at the end of the day as neither of us can say for certain and we'll just have to wait and see :)
banned#22
master_chief;8362075
I understand where you're coming from, I just disagree. Ultimately it's like debating the football this coming weekend (any), I'm backing the favourite (most likely) outcome going by previous results and your backing the other team as you believe they stand a chance. A fruitless endeavour at the end of the day as neither of us can say for certain and we'll just have to wait and see :)

cant see prices falling again (actually they rose last year by 12.7% in my area!). Too many people looking for housing and housebuilders have shut up shop = further rises imho. Net migration rising isnt gonna help matters either.
#23
csiman
cant see prices falling again (actually they rose last year by 12.7% in my area!). Too many people looking for housing and housebuilders have shut up shop = further rises imho. Net migration rising isnt gonna help matters either.

This is very true on average since April last year house prices have rose by 9.1% for the whole of the UK and London has experienced a 'mini-boom' especially due to the change of stamp duty being reduced to £0 for FTBs for under £250k.
Registry figures show London is up 11 per cent (value).
#24
csiman
cant see prices falling again (actually they rose last year by 12.7% in my area!). Too many people looking for housing and housebuilders have shut up shop = further rises imho. Net migration rising isnt gonna help matters either.

This is very true on average since APR last year house prices have rose by 9.1% for the whole of the UK and London has experienced a 'mini-boom' especially due to the change of stamp duty being reduced to £0 for FTBs for under £250k. Registry figures show London is up 11 per cent.
banned#25
tinkerbell28
There is no shortage of housing, loads lying empty, especially town centre flats, there is a huge shortage of AFFORDABLE housing key difference. House builders have shut up shop for a reason, there is not the demand for new builds anymore, they are not selling like they were.

House prices are staying high as homeowners/estate agents are deluded tbh, and are still asking top wack, the AMOUNT of houses selling overall is falling.

Of course they will fall mortgages are drying up and people can't get mortgages for the house prices as they are now, on the whole., It's all smoke and mirrors built on debt.

You can't say a homeowner is "deluded" because the market tells them the value of something.
#26
Totally support tikerbells views on here.
We will see more poo hit the proverbial when interest rates rise from their artificial low point.
banned#27
thefilbertfox
Totally support tikerbells views on here.
We will see more poo hit the proverbial when interest rates rise from their artificial low point.

My god it's like you almost want people to lose their homes because they had the audacity to buy one thinking the market will do what is has always done.

Now don't get me wrong, I support her views from an idealogical perspective, I really do. Some of us gamble with our hearts and some with our heads.
#28
People will lose their homes if they can't afford it. If they didn't do the maths when buying a home then who should they blame?

BTW OP. Create a realistic plan of incomes and outgoings both for your current and future situations i.e., paying rent and paying a mortgage. Factor in an increase in interest rates (base rates were at 5% not so long ago)
Don't over stretch yourselves as circumstances can change.
#29
Also OP, take a look at the MSE forums as there's loads of advice for FTBs over there.
If you use Firefox, install the Property Bee addon. This handy tool lets you see all of the changes (including price changes) applied to listings on the Rightmove website.
#30
Guys, everyone has been great. Certainly given me lots to think about.
#31
Out of interest I have been looking at a 10% deposit level to get a mortgage interest rate %.

But at what LTV % does the interest rate change drastically? or does it depend on £ amount you intend to borrow?
#32
bump...
#33
tinkerbell28
master_chief
You can't say a homeowner is "deluded" because the market tells them the value of something.

Some are though they see themselves with a huge paper ££££££ asset, they can't see the bigger picture like we did.

It's all built on debt, it's all being sustained by huge amounts of debt the govt is getting the country in to "cushion" us, we have not seen the half of it yet, it's not going to be a nice few years at all.

House prices it's all smoke and mirrors built on huge debt which has dropped the whole country into debt, people cannot afford a house without getting a huge mortgage, that has dropped us into crap too, it will rectify itself, when the economy gets hit properly, I mean when we start having to really pay this debt off, stop borrowing, bad £ rates, unemployment, realistic, not massaged figures and artificially low interest rates the aftershock of this recession is coming, the political parties won't tell you that..........It's going to pay to save for a change not be maxed out on debt, the whole attitude of the country will have to shift back.

thefilbertfox
People will lose their homes if they can't afford it. If they didn't do the maths when buying a home then who should they blame?

BTW OP. Create a realistic plan of incomes and outgoings both for your current and future situations i.e., paying rent and paying a mortgage. Factor in an increase in interest rates (base rates were at 5% not so long ago)
Don't over stretch yourselves as circumstances can change.

:thumbsup:

Just reminded myself about this post from a year and half ago and thought it was worthy over huge bumpage. Tinkerbell has certainly hit the nail on the head, a year and a half on and it's even more relevant now than ever. It's a shame that most people who read this won't understand it, or indeed the consequences.

I wonder if the OP ever bought the house.
#34
completely forgot about this post. In the end I changed jobs for more money, which meant I was unable to get a mortgage for 6 months.

We kept looking around London and further out - zone 4 -6, but got fed up seeing overpriced shoe box flats. We made some cheeky (calculated) offers on some nice 2/3 bed houses with gardens out in the sticks but all were rejected.

In the end, we thought efff this and decided to go travelling for 6 months, just spent 2 months in Indonesia and am off to see more of Asia.

Good weather, nice food, cheap beer and absolutely no inflated house prices!

Reminds me, I have not checked out http://www.housepricecrash.co.uk for a while.

Hopefully prices will normalise shortly or I may have to extend my trip..........
#35
Good for you. I wish I had the balls to just jack in my job and go travelling.

housepricecrash is quite lively at the moment! What's being reported in the media regarding the Eurozone is being lapped up by them. Although it is a great source of news and comment on what's actually going on in the world, albeit with their own vested interest.
#36
for some reason HPC never lets me post comments - can't remember doing anything wrong.
#37
OP which areas were you looking at?

If I were you I would keep on saving, most banks want a 20% deposit as minimum now. Have you looked at areas outside London like Hertfordshire, Surrey etc? Not ideal but you would certainly get a better standard of living than paying a small fortune to live in a cramped shoebox with no garden.