- April 23, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Financial Situation and Goals
£50k income, £25k savings. First time buyer.
I am looking to transition from paying rent to owning a 3-bedroom house, approximately priced at £250k. My plan is to pay a mortgage of around £1000 per month. I am considering renting out the other two rooms in the house to help cover mortgage expenses and potentially pay more than the standard monthly amount to reduce interest payments in the long term.
## Seeking Advice and Guidance
As a newcomer to property ownership and renting out rooms, I welcome any suggestions or pointers that can assist me in making informed decisions.
## Additional Income Opportunities
In addition to my main job, I am contemplating taking on a part-time job or starting a side hustle on weekends to increase my income streams and bolster financial stability.
## Savings and Investment Strategy
I aim to allocate 30% of my income into savings accounts with a 5% interest rate, leveraging the £12k I already have in savings. This strategy will help me build a strong financial foundation for future goals and emergencies.
## Long-Term Commitment
I plan on residing in the house for a minimum of 5-8 years to maximize the benefits of homeownership and potentially increase property value.
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****** just grabbed a
His Majesty’s Financial Sub – /r/ukpersonalfinance
I don’t know the requirements to buy a house in the UK, but this wouldn’t work in the US. Here you would be able to afford a home worth $125-150k if you saved a bit more for your down payment. I wouldn’t recommend it though as it would take all of your savings for a down payment and you wouldn’t anything left for other necessities or expenses.
Go to the UK personal finance sub for specifics. Conventional wisdom changes based on specific factors (such as not having health insurance payments, and UK specific tax issues).
In the US you wouldn’t be able to afford $250k.
$150k-$200k on a $50k salary is doable, but going to be tight (mostly because houses in that range are usually townhomes that also have a hefty HOA fee here in the US).
The main thing to keep in mind is that whatever the mortgage payment is will be the minimum you spend on housing. You’d still have taxes and insurance (assuming UK has property tax) and those constantly increase just like rent increases.
Your also have all the maintenance. So make sure you do not drain your savings entirely on a downpayment. You don’t want to have a fridge go bad and start paying CC interest on that purchase rather than the mortgage interest you depleted your savings on.
Go see an independent mortgage advisor. They’ll run though a whole lot of options of what you can afford. Or go to your bank but they will likely give you a not very good rate.
Mortgage advisors can check lots of different brokers so you’re checking more options and different types (we had a “discount” mortgage for years that ran at 0.25% above base rate which was wonderful when the rates dropped really low in the mid 2000s). But we only found that through an advisor – none of the big banks told us about it but it was actually a Barclays product but via ING. Advisors get paid a set rate by whoever they get their clients to sign up to but it’s the same from everyone so there’s no gaming the system on their side to offer something that wouldn’t fit you but make them more money.
I did this in the US. But it was in 2016. My interest rate was 3.75% at the time[i refinanced to 2.875 in 2021.] I made no more than 45k. And purchase price was 183.5k[now valued at 295k😦with a 3% down payment. I was house poor. I went into a lot of debt towards the beginning. I didn’t have money for anything other than the essentials barely. Food, bills, mortgage. As the years passed I started renting rooms[ I now rent 3 of the 4 available] and my income increased a little bit. I was able to save a yr emergency fund, save 15% towards retirement and currently have a down payment for a 2nd ‘forever’ home all from renting rooms and single income of about 58kish? I’m not sure if it was luck[interest rates were lower.] I say run the numbers. Stay realistic but I think it’s doable. Just make sure to have some emergency money after down payment and closing costs. Edited to say i was 22yrs old when I purchased. So I took more risks then. Hope this helps!