Money/first house question. Is it too late/how do I do this?

[notabikeranym...]

Was going to write a fucking essay but I'm going to spare the details and try to keep this as short as I can. Edit: it's an essay anyway, woops.

Pissed away all my money on biking, saved nothing for future, recently gave up biking/facing ban soon, now late to the party with savings. So far I've got £15k to my name which is fuck all in the grand scheme of things.

1. Want to buy my first house at 32 (five years from now). - Is this possible?

2. Currently renting, can comfortably save around £15k/year living frugally. Aim to have close to 90k to my name in 2025.

3. Earning £33k gross per year in a stable 9-5 at the moment, probably won't change.

4. Have 'excellent' credit according to multiple credit checkers.

5. Doing this on my own. No joint mortgage or anything like that.

Affordability calculators say I can borrow up to £150k based on my salary. Kinda want to get a house in the region of £250k. Is this realistic?

I've tried to do my homework on this but it seems I need to save up £100k to stick towards the house if it's gonna be a £250k house.

Everything under £250k between 40-50 miles of my work is a one bedroom flat, so I'd probably have to move further out if I want to get more for my money but that might be a problem unless I can blag remote working or find a new job (which comes with all types of fucking risk).

What would you do if you were me? What would you do with the savings? I've stuck it in some e-saver with a shit interest rate because I don't know any better.

I never had any guidance with this shit and never took it upon myself to learn, so any advice is greatly appreciated. Apologies in advance if I seem utterly clueless lol.

[bhinso]

My experience is there's never a bad time to buy a house so definitely make it a plan.

Save everything you can. The deposit is the key thing. I think you could get something like 80% loan to value so 50k would be good for a deposit, but the mortgage rates would be relatively high.

Having said that I can't see the interest rates rising by much if anything over the next 5 years.

As for savings accounts, your guess is as good as mine. I got 32p interest from Nationwide this month

[MarJay]

I bought my first house at 25. My current GF bought her first house on her own at 23. The sooner you start paying the mortgage the sooner it’s paid off and lack of money on a place to live is one less huge worry.

Rent is money down the drain. I rented for two years and I couldn’t wait to get out of it ASAP. I see these people who rent permanently and just wonder what they are thinking. It’s generally more expensive than a mortgage and you get nothing in return. It’s one thing if you can’t afford a deposit but I’d you can save and you can get to the right number of £? Do it and you won’t regret it.

Just don’t get divorced and have to give half of it away...
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[piazza]

Interest rates are rock bottom right now with some lenders offerring a 10 year deal on fixed rate. Are you sure you don't wanna get in on the market now?. I dread to think what the future holds.

[Riejufixing]

[P.]

I'm literally moving away because it's cheaper. I'm keeping my current job and comfortably moving to a house that's around 100k for a 3/4 bed near the sea, rather than 250k+ for a 2 bed in a rank area, that saving means more to me than anything else

15k isn't a lot in all fairness. It's a good chunk, but if you intend to stay down south, I'd want triple that.

[Robby]

Assuming London. Prices are skewed currently because of the stamp duty holiday, but I sold an ex-council 2 bed flat in Lewisham for £250k a year ago. Another one on the estate in worse condition and probably shorter lease went for £230k.

You're kind of screwed either way. You would have to move a long way out of London to get prices down significantly, and then cost/time of commuting is noticeable.

You have a few years to think about it. Get your salary higher and you can borrow more.

[stinkwheel]

You need to decide between what you want and what you can afford. Seems like the two circles on your venn diagram do not overlap currently.

Most first time buyers don't get the house they want. You've heard the phrase "property ladder", you're looking at the bottom rung. Can't climb a ladder without stepping on it.

Get one you can stand living in, can afford and isn't fucked (or fucked over by leasehold agreements), pay as much into the mortgage as you can reasonably afford. When circumstances change, all that can be rolled over into the next property, plus appreciation on the property, less inflation on the capital.
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[wr6133]

If you plan to save for a few years then you have time to possibly locate an area out of London you like and if not wanting to commute then a decent job.

If you do plan to commute I believe Marjay does Basingstoke to central London and I know people as far away as Tidworth where I live who drive 8 miles to Andover station and are in Waterloo in a bit over an hour (I think this is too long commuting but for some it's ok). My nextdoor neighbour drives to Hounslow every morning

For an idea of what biting the bullet and commuting that far gets you, in London even further out than your current I'm guessing 250k is a flat, Leasehold? Here a bit under that got me a 3 bed end terrace house, driveway, garage, small garden and views toward Salisbury Plain, Freehold. Basically the further you can get from London the more rungs up the ladder you can start.

Don't over stretch. We had a large deposit and could have mortgaged something pretty huge, we didn't we chose something that easily meets our needs and was affordable on a 10 year fixed mortgage. Many of my friends take the opposite track and have bought bigger with small deposits on 90% mortgages for 25 years, I personally don't see this as wise. Monthly payments absorb most of their income so they are stuck for 25 years toiling for more house than they need, comparatively my monthlies are small enough to pay on a part time minimum wage job if I wanted to but in the main I know once I'm paid off I no longer need to be grinding at work to maximise my income. I plan to be working a 4 day week by 40.

TLDR, get the fuck out of London, don't over reach and pay off as fast as you can.

[arry]

[Polarbear]

Yes for getting out of London re prices but how does the commute work for you. It's a balancing act.

I commuted from Milton Keynes to London for a year. I caught the 0559 from MK and got the 1805 from Euston back. It made a fcuking long day and if I got a seat on the train going home it was a miracle. I was also paying 5 grand a year then for the privilege. OK, I own a 3 bedroom bungalow which in London would be totally unaffordable but I hated the commute so much I took my boat into London and lived on that after the first year.

As others have said, get on the ladder as soon as possible. I own my place outright so no mortgage payments, no rent. No risk of getting kicked out. It's a nice feeling plus if push came to shove, wifie and I could probably exist on as little as £500 a month with just utilities and food to pay for.

When I got my mortgage, I got the best deal I could and saved as much as I could extra and when the deal expired, before I renewed, I chucked all my savings into the mortgage as there was no limit when on standard rate. Then got a new deal.

Saying all that, I don't really know the present market that well but do make sure you can mange if interest rates rise and you aren't on a fixed rate. (not likely for a while).
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[rpsmith79]

Again, echoing Stinkwheels advice, get on the ladder sooner rather than later

There is no point carrying on renting for the next 5 years and throwing money down the drain if you can afford a cheaper property and at least start paying off a mortgage, you will still be saving the same amount to put towards your dream £250k house, but you will already have paid a decent lump off in the 5 years owning a cheaper property
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[GSTEEL32]

Be careful about for forward planning for a house worth "X", in your case 250k.

Houses, like any commodity, are subject to price moves for a variety of factors. What may be 250k house now, may very well not be in 5 years time.

Milton Keynes, Northampton, Corby, Peterborough have seen some areas increase by 30 - 40% in 5 years. Other area's, such as Newcastle have pretty much flat-lined since 2010.

I appreciate you're saving £1,000 a month now, which is very commendable, but you may find that this number is being dwarfed by the increase in house prices on a monthly basis. You may also find you are unable to save this over a 5 year period consistently (there are many reasons why this may by the case).

Case in point, we moved to Essex in 2013. Sold in 2015. The house (and to be clear, we did nothing more than revamp the bathroom) did 40%. There is absolutely no way I could have saved that money a month, as well as paying rent.

People have been warning of a price crash for years, the fact remains, so long as the population increases at a rate which is not being met by new build houses, the price of the commodity will rise.

Factor in that people are living longer, so can be offered more finance over a longer term (making repayments seem more "affordable"), and people will continue to be comfortable borrowing more outright "notional" value. Interest rates (defacto "inflation" under the Keynes economic model, however low) still erode the value of money over time.

My worry, long term, is that houses will become like car finance and be offered on a "PCP" type basis. This way, instead of effectively paying off the car depreciation over 4 years, you effectively buy into the expectation that you will have a house that is worth more after 4 years than the money you put in. You'll never ultimately own the home, but you'll be inclined to live in places that you think have the best opportunity for growth, which you will then "bank" at the end of the 4 year term. You then use any residual as a "deposit" for another PCP type agreement.

It will make "rent" feel like ownership, even though the bank ultimately hold the deeds. The bank would price the "rent" at a number which also buys them insurance against a default. Stamp duty on PCP deals would be scrapped as the government coffers will be swelled by all the additional activity in the financial services market.

Ironically, this will increase house exchanges dramatically, naturally driving up the prices, It would be a self fulfilling prophesy, but a financial time-bomb long term.

Apols - Tangent. TLDR - I agree with everyone, buy now, lock yourself in to current price levels.

[iooi]

[A100man]

[Diggs]

Move up north. You can still get a 3 bed terraced house for less than 100k in an area that isn't the wild west if you are canny.

If you need to work elsewhere at any point, give it to a letting agent so you don't have to worry about tenants etc.
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[TaffyTDM]

Prices can fall as much as rise, so dont buy the "property is foolproof" mantra.

That being said the sooner you start, the closer you are to paying it off. So theres a balance to be struck - if you can find a place that isnt your forever home, but is somewhere you wouldnt mind getting stuck in for a while theres a blip in the future then go for it, start overpaying the mortgage rather than trying to rent and save a larger deposit at the same time. If its a place that would be attractive to renters all the better, if your life suddenly changes quicker than rightmove can keep up, its another option to keep things ticking.
And if prices do crash, as long as you arent in negative equity you wont necessarily be worse off, in fact you may be better if the next place is now in reach and you are paying less in commision and SDLT as a percentage

There are benefits to renting, but increasingly they arent worth to me the hassle of dealing with turd landlords and the lack of personal control.

Be careful of leaseholds, especially in larger blocks of flats, check the ground rent and maintenance arrangements. Personally i always preferred a small cottage etc for the freehold element if nothing else.

If you do go for it sooner, i would lock in the rate as long as you can and overpay like fuck!

[struan80]

A house is like an investment that you can live in, sure you could possibly get more for your 15k by gambling on the stock market, but wouldn't be for me. Aim to pay your mortgage early.

Buy a place. Buy a one bedroom flat and save, let it out if need be.

Good luck, 32 is definitely not too old, but why not do it now? If you have good credit you will get a good rate.

This from someone who rents his property and has paid many a thousand over the past seven years for absolutely no return. I am 54 retired and can't be bothered anymore. But if I was your age the world is your oyster so they say.

[Nobby the Bastard]

I bought my first house at 34.
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[Robby]

Bear in mind that if you do live far enough outside London for the prices to drop, the cost of commuting is going to be significant.

Very roughly, a mortgage of ~£150k is going to be costing in the region of £650-700 per month. A train season ticket is going to be costing you £400-500 a month. That would pay for a whole lot more mortgage.

Croydon is still affordable. You can argue either way whether or not it counts as London, but it's a gentle 45 minute commute into central London by bike or public transport.

For me the question would be whether you want to stay in London. If there is a good reason to be here - could be career, people, or something else - then do it. Alternatively, you could still have the city experience in any decent city, housing half the price, and wages only 20% lower.

[bhinso]

I should have emphasized get on the ladder ASAP.

Far better to be investing and living in your investment than renting and giving your hard earnt to fund King29's used panties.

[Keithy]

Work and work patterns are changing drastically right now. A degree of the current house price rises in’t country are because of remote working and super-fast broadband. No idea what you do or how that may be impacted but bear it in mind.

You can’t do much more than you are at present in terms of lifestyle and saving, you really have the bit between the teeth there!

At the point you decide to take the plunge remember a couple or three things

As mentioned before lower LTV = lower rates
Take your other costs into account, SDLT will bite hard!
A slightly larger property may offer the potential for a room to let out
Unless exceptionally pressured, wait for the right property, changing houses is very expensive

What you do with what you are saving in the meantime is a tricky question, if you are risk averse then anything like annual savers or premium bonds might be the way to go. Equity based stuff is ‘for a minimum 5 year term’ but markets are going to rollercoaster in the next couple of years, if you are into that sort of thing you may cash in. I’m carp with markets so wouldn’t!

Good luck with the saving & house/flat hunting!

[Polarbear]

Be careful where you put your savings while you make your deposit..

I thought mine were pretty safe in blue chip shares. Guess what, Covid cost me many thousands with the share values dropping by nearly a half and obviously I didn't see that coming. I wish I had bought property rather than shares.

I concur with others. Buy a flat with the deposit you have now and save to move better. If you can save a thousand a month renting you should be able to save a good portion of that when buying and even if house prices fall they will come back long term.
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[winz]

[Riejufixing]