#FirstTimeHomeBuyer #Budgeting #SavingForAHouse
Hey everyone! 👋 I have a question that has been on my mind lately. I’ve recently started working full-time and am earning around 22k a year. I have about 900 left over each month after expenses and I’m thinking of saving up for a house. Do you think it’s possible to buy a house on a 22k salary? 🏡💸
Here’s what I’m thinking of doing with my monthly savings:
– Putting 400 a month into a Lifetime ISA
– Putting the rest into a regular savings account
I’m aiming for a house around 125k when I’ve saved enough. Any tips on how much I should aim to save for a deposit and what monthly bills might look like once I’m a homeowner? 🤔
I’d love to hear your thoughts and any advice you may have on this process! Let’s help each other out on the journey to buying our first homes. 💪🏠 #Homeownership #FinancialAdvice
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Hey. Purely from a money point of view, you’d need a deposit of around £12,500 to afford a property in the range of £125k. However, your income does not really cover the allowance for a £110k mortgage – this would be risky to vendors.
Your best bet is to max out your LISA – putting £333/mo in there will put you at around £3,996 per year – where the limit is £4,000, and continue this until you have the correct amount saved – this will likely take you the better part of over a year at £900/month.
Considering it will take you over a year to afford the deposit, the best thing you can do is work on your career. To comfortably afford the mortgage, you will likely need to be earning around £30k. So work on your career, and build up to a higher salary, which will help you save faster as well.
Just to add to others. Make sure to consider:
* Legal and conveyancing fees. Depends on property, but maybe £1-3k.
* Mortgage fees. Ussually £0-1500. Sometimes paying more gets you a better rate. This is sometimes worth it and sometimes not depending on your mortgage size and length of fix.
* Repair costs. Occasionally boilers break. Taps and toilets start to leak. A window is smashed etc
* Maintenance. Depends on property. Some landlords set aside 1% of the property price per year for this. Boiler maintenance, painting and decorating, gardening etc.
* Furnishings.
* Any leasehold/service charges.
* All bills. So possibly electric, water, gas, broadband, contents insurance, house insurance, etc. Again varies by property.
Live with parents until you have enough cash.
Don’t buy a car on finance like all your mates will probably do.
All depends on where you live. Hull? Maybe. South of England? Nope.
Firstly, lots of people are going to comment that you should instead focus on growing your income. That’s pretty good advice, but depending on region and career track you might still want to plan for buying on a low income (maybe you’ve got a baby on the way or a mum who needs to move in with you, what do I know?)
On your current income you can expect to get a mortgage of around £100,000 or a bit less. Mortgage lenders typically cap your loan at 4.5x your salary. This means that if you can up your income by £1,000 a year you increase the value of the property you can afford by £4,500 – this is why everyone advised to focus on growing income as much as savings.
So to purchase a £125,000 property on your current salary you’d need £25,000 in cash for the deposit and you should budget for around £5,000 in costs (hopefully less, but you don’t want to start the process without that much and being prepared to spend it) plus whatever you’ll need to make the house the way you want it.
So to save £30,000 at £900 per month will take you around two years and nine months (and eight days…) Call it three years. HOWEVER, you can use a LISA bonus. If you deposit £4,000 into a LISA before April the government will top it up to £5,000. You can do the same thing after April 2025 and April 2026, 2027, etc. This money will be locked in and you’ll be penalised if you withdraw it not to buy a property, but if you’re saving for a deposit then who cares, right?
If you can get together a deposit of £31,250 then you’ll have a 25% down payment, which MIGHT help you get a better deal on the mortgage. 25% can unlock lower interest rates.
So if it was me, I’d be considering starting my house hunt in summer 2027. You’ll have been able to save £32,400 and benefitted from four LISA bonuses leaving you with £36,400 – enough for a 25% deposit and costs.
Of course, property prices may have increased in three years – but so long as your income keeps up (it sounds like you’re on close to minimum wage, so it legally will have to go up) don’t worry about it. The numbers work today and so long as they ALL change they’ll still work in 2027.
You can usually borrow 4-4.5x salary so you could get a mortgage worth around 88k. That means if you’re looking at a 125k property then you’ll need about 40k saved up for the deposit.
Also house prices on average will be a bit more expensive by the time you’ve saved this up (seems like about 4 years?) but your salary will probably have risen too, so this is likely to shift around a bit.
Maxed LISA and anything else in an ISA are the generally accepted way to go if this is your goal.
I did a quick calculation based on one of the big banks affordability calculators and they would lend £89k on a 2 year rate and £97k on a 5 year rate based in a 40 year maximum term.
depends where the house is, in some parts of wales and the north, it is doable, but not in london
you can buy a car and live in it
Where do you live?
In Shoreditch, this is impossible.
In Northern Wales it’s a lot more possible.
[oldie but a goodie and of no assistance at all](https://youtu.be/flESd2vFXy4?si=XA7ClVcL3sjlOcH6)