If buying your first house..

[FinglisHobbit]

Would you push yourself to the limit to get the house that sets you up for many years, or do you stick to a much more comfortable budget and buy with a plan to upsize later?

I ask because this year we are likely to be looking into buying a house. However when we look at the market in our area, 140k buys a nice terrace with a garden, but 170k gets a largersemi detached with garage and garden.

With a deposit over 20k we can probably afford payments on both, and both would suit us nicely. Yet I know I'll want a garage and semi detached a few years down the line.


How did you do it? Do you go big as possible from the start?

 

[Hyburnate]

I would save up and get a bigger deposit and get the one I liked. Nothing worse than living in a house that you hate and not being able to afford to fix problems.

 

[Minstadave]

We went cheap, more flexibility, under 3% stamp duty threshold, not sure what the market will do. Felt a lot safer, we were looking at houses 100k more but bottled out.

 

[Destination]

Interest rates will go up, they can't really go down.
They won't change this year, they will change over the next few years, but probably not much above 2% by 2016/2018.
There is only one retard combo that might mess that up, and its the Milliband proposition.

If you know you will want a garage, get the one with the garage would be my advice, if the house suits, and is well located, then you move once, pay fees once, and a difference of £30K isn't that great consider moving from a 140 to a 170 incurs fess twice etc which eats into the potential price difference, also you end up buying furniture twice, redecorating twice etc.

If you're in a position to do it once, and your salary will increase over time, and your job is secure, go for it.

 

[Randomface74]

For me, the amount I could borrow with the deposit I had was the limiting factor.
Then I worked out what the repayments would be over 25 years.
I could cover it and have enough left to save up for stuff like car / repairs / pc
So I ended up getting the biggest I could, but it wasn't a problem really.

 

[Unluckyalf]

I think from a financial standpoint, its better to buy a place well within you means and upgrade as finances and market forces allow. This way you have a bit of a buffer should interest rates rise.
Having said that, im pretty lazy and i get settled easy. I cba moving every few years into better properties and have bought a place that i intend on staying in for 10 years+

I guess to a degree its what suits your lifestyle best, but don't aim so high that you arent future proofed as best as you can.

 

[lee1101]

Be careful though. If you are stretching yourself while the interest rates are this low you could find yourself in the doo doo when if the interest rates go up.

 

[Yaayuh!]

We waited and saved more knowing making sure we could afford a house we could live in for many a decade, with the ability to expand also.

However, neighbours are loud and walls are thin (single skin breeze on end...). Which has made me regret the purchase.
So just be aware, it may be ideal and perfect for you, until you live in it and hindsight shows it's ugly face.

 

[Jono8]

If you can easily afford the mortgage payments on a 170k house, even when interest rates go up(and they will) then get that.

You are lucky. Try looking for a decent place to live in a nice area of Surrey/west Sussex....170k gets you a grotty 1 bed flat...if you're lucky.

We are in the process of buying a new build with the help to buy scheme as we only have a small deposit. The fact you can access 75% ltv mortgages though means we have got a great fixed rate for 5 years.

We have however just stuck to a very affordable 1 bedroom place for now to get on the ladder with a plan to move to a decent sized place in 4/5 years when we have a bit of equity and have saved more.

 

[ndaar]

You obviously want to buy somewhere that makes you happy. That said you don't want to push yourself to far and end up financially ruined, as any happiness from the house will soon evaporate.

Interest rates will go up in the next few years. Any purchase now I would look to lock in a 5 year fixed rate.

I also think its important that you pick the area you'd want to live in. You could have the nicest house on a crap road and I bet you'd not be as happy as an average house on a great street.

Lastly a house purchase is stressful, there are times when you will of just had enough of the whole thing especially when your budget limited. Do your research, get surveys but always buy something that feels right for you.

And good luck and congratulations.

 

[TommyV]

I'm buying about 50k cheaper than my upper limit for this very reason OP.

However I'm buying alone, so a bit of a different situation by the sounds.

 

[FinglisHobbit]

Some good points raised here, particularly the costs of up sizing, buying new furniture and the like. Not something I had taken into consideration.

We need to see someone to discuss figures properly as it's all just in our head right now. We have pretty stable jjobs and bring in about 3200 per month. After tax etc.

Don't really have any outgoings other than a small credit card bill at 1500 interest free.

 

[Jono8]

I also think its important that you pick the area you'd want to live in. You could have the nicest house on a crap road and I bet you'd not be as happy as an average house on a great street.

.

This is especially important. As they say - "location, location, location".

I would much rather live in a smaller/not so great house but in lovely surroundings (countryside, no main road, no railway going by e.t.c) than have a high spec, big house but in a horrible noisy area.

 

[OpenToSuggestions]

Something to remember is that provided the interest rate stays the same, your mortgage will not change over time.

£600 today when adjusted for 2.5% per year over 3 years is the equivalent of £555 today, so the effective mortgage payment goes down over time, plus there are some significant reductions in interest rates as you own more and more of your home over the years.

I would never buy a house that I felt 'will do for a bit'. Moving home costs at least £10000 excluding the increased price of your new home - Stamp duty, solicitor fees, estate agent fees, removal company fees, surveys.

 

[Jono8]

Something to remember is that provided the interest rate stays the same,

Which they won't?

Mortgage rates are at their all time lows (well actually I think the all time low was the middle to end of last year but they are still pretty much as low as they will go).

It would be naïve to buy a house now and not factor in that interest rates will most likely go up in a few years time.

 

[OpenToSuggestions]

Which they won't?
It would be naïve to buy a house now and not factor in that interest rates will most likely go up in a few years time.

I agree.
I only said that to explain my example .

I bought my home for £112500 in May 2013, it was majorly undervalued and I'd have paid the £120000 it asked for without question if I could have afforded it - I was just very lucky. I would now sell it for £130000. I am hard up right now as I am overpaying each month, as when my 2 year fixed deal ends I want to either own 15%, or if the house is revalued I will own 25%. Both of which will lower my interest rates, as they will go up. They cannot go up by much though as those who borrowed the maximum permitted mortgage will be homeless, which would (based on my view) be millions of homes.

 

[FinglisHobbit]

Dont suppose anyone here could tell me what kinda monthly payments to expect on a 150k Mortgage?

 

[OpenToSuggestions]

Dont suppose anyone here could tell me what kinda monthly payments to expect on a 150k Mortgage?

Depends entirely on how long you borrow it for.

There are many online calculators that help provide a good understanding. If you pay £600 per month over 25 years then about £420 of that is interest at the start, with only £180 coming off the capital, so with a 35 year mortgage you really are wasting your time as after 20 years you won't even own half yet!

There is also an overpayment calculator to show you how much you can save:
https://mortgages.hsbc.co.uk/repayment-calculator
https://mortgages.hsbc.co.uk/overpayment-calculator

My interest rate is fixed for 2 years @ 4.15%, which at the time was the best on the market.
Assuming the above to still apply, £150000 loan over 25 years will be £805 per month.

EDIT: A sobering thought - If you borrow £150000 @ 4.15% you would pay it off a whole 12 months earlier just by overpaying £28 per month.

 

[Coldzero]

Dont suppose anyone here could tell me what kinda monthly payments to expect on a 150k Mortgage?

At what interest rate and over what repayment period?

 

[FinglisHobbit]

At what interest rate and over what repayment period?

Im clueless about mortgages. I was just assuming the most common kinda rates over a 25 year term