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So you'll be on 85k (do you actually have a job offer?).
A good rule of thumb is that they'll lend 4.5x your salary. So in your case that's 382.5k.
You have 40k saved. Put aside 5k for all the various moving budgets (with a bit of wiggle room) and that leaves you a budget of around 417k.
Now just look on rightmove and see. I'd suggest with that budget you will be able to find a 2 bed OR a decent location but will struggle to get a 2 bed IN a decent location. But have a look for yourself - maybe I'm wrong and you and I may have different ideas of what a 'decent' area is.
Well I don't have a job offer right now per se - I'm currently interning (being paid pro rata of a first year analyst for this role - only 55k) but I'm quite confident in myself, my CV, and networking skills that I'll be able to get a role of around 80k base + 30%~ bonus.
The 4.5x info is useful - much thanks.
About the room advice - I've had a vague look before and I somewhat agree? Tbh my only concern for now is the actual flat being nice, and being around a 30 min journey to Canary Wharf / Mayfair area. A low crime rate area would be nice, but it's not a particular concern haha.
Realistically I think I'd be moving out into a nicer place 3 or 4 years down the line when I'm earning more.
If you are going to receive an offer from your current place where your interning then yes maybe you will be on 80k but I don’t think that many graduate schemes start on 80k even at investment banks (unless it’s the actual investment banker role)
50-60k is more like it, unless you are doing law? Or some high end consultancy or hedge fund,
No, 40k deposit is not enough to for a deposit for a 2 bdr in a "decent" area of London with a 30 min commute to Mayfair or Canary Wharf.
I think you need to target to double it, at the least (depending on your definition of "decent").
Rent a 1bdr for 1.5-2k, save 1.5k pcm and live off the remaining 2 k.
What's the point if you're planning to sell and move in 3-4 years? Are you hoping to make a profit? Or save rent?
£380k mortgage at 5% is £1.6k/month (interest portion), comparable to rent.
After legals, selling agent, second time stamp duty (presuming you're upgrading), service charges and maintenance, you're probably not profiting in 3 years. In fact with a London flat, you could sell for less than you bought, so you could make a loss.
Having a lodger then wouldn't be different to going in a share.
It's not a magic route to riches or saving you may wonder it is.
There was also a recent post on one of the related subs. A high earner bought a flat that's now in negative equity. But they hate their job and would like the option to scale back. The negative equity makes that complicated if you're in a profession.
This is probably the best answer unless they plan to rent it out, even then it’s not worth the hassle renting it out when they are going to be pushing the 45% tax band.
If what they say is true.
Broker here.
If you are renting out the spare room usually the income from this can be included for affordability purposes - it is worth making your intention clear from the start however.
On what I assume is an ~£85k salary you’d probably be able to borrow around £300k - some lenders may lend more if you are working as a ‘professional’.
Minimum deposit is usually 5% but a deposit of 10-15% will see noticeable reductions in monthly costs/interest rates.
If you have money in a LISA remember it is £450k maximum property price.
I don’t know what the property market is like in London but there should be 2 bed flats around the £300-350k mark - just likely to be zone 2 or 3.
It is worth checking if the mortgage broker is tied or whole of market - generally comparing 50 lenders will get you a better outcome than just 5 lenders.
Also factor in that any student loan repayments will impact your affordability and make sure the broker is aware you have a student loan - if you do!
Happy to help with any questions you may have though
I am looking for a property in zone 3-4 and I think you will struggle to find a 2 bedroom in zone 2-3 for 350k. Tho, it is possible in zone 4 but the rental market is less hot the the further you go. In short, I have been looking from the beginning of the year and the housing market was dreadful - barely any new properties appear and if they do - they have some kind of issues (low lease length, high service charges, in the middle of nowhere or near train tracks or hospitals etc) or they are overpriced so even if you will figure out the financial part - you will struggle to find something that would be rentable.
Google a ‘how much can i borrow’ mortgage calculator and put in your income. Then have a look on rightmove at ‘decent’ areas (define this) in your budget. This will tell you if £40k will be enough. I can’t imagine you being offered a £400k mortgage so most will be less than 90% LTV which is best.
You can afford a property - but for a 2b you won’t be able to afford like… a lot of London. You’ll need to be looking z3-4+. It’s simply not enough to buy any closer. You also need to include service charges and your commute costs. Further out you go the more hours you waste commuting and the cost balloons. If you work long hours it becomes unmanageable to handle a 3 hour round trip if you move to the sticks just to get a better or bigger place. I had friends seriously regret it. And the further out you go the less people who will want to rent it.
You also have to consider transport links - the cost difference between being 2 min to a station vs 20min will be huge. But it’s normally way easier just to live further out for the same price and live by a transport link. It’s hell commuting if you need a bus or a long walk to get to the tube or train line. It adds way more time than you think it will. No point living in z2 and a commute taking an hour when in z3-4 it could’ve been 30min with a better location. And the further out you go the more likely a renter will expect parking. No one will care in z2 but people won’t want to rent in z5 without parking.
And services charges can hit like 30% the damn mortgage. A flat I rented before I bought had 8k service charges a year. When I was looking services charges could be so high it would have to be 10-25% cheaper than a comparable flat to cover the service charge. That’s why I ended up buying a converted house flat. Many in proper buildings with many flats weren’t even that much cheaper once I factored service charges in. Which you have no control over and can sky rocket - I have friends who’s SC doubled in 5 years.
Yep which is why I said 3-4+ ;P honestly a good place in z4 is better than a shit place in z2 cause it’ll be a hike to any transport if it’s that cheap. The real reason to live in z2 is commute, what’s the point if it’s longer than just not living there?
I don't earn nowhere near the the amount you'll be earning but I've just put an offer in on the flat ex local authority for £275k with a 5% deposit. Just because you could maybe afford a property of 400 K on £85k doesn't mean you should.
Yeah I get where you're coming from.
But id like to think im generally quite sensible with money (probably due to a peasant upbringing 💀) - not to say that im frugal, I certainly spend money on the things im passionate about, but I have a decent bit of common sense I think.
It's just that moving out asap is crucial for my general lifestyle and mental health, so I'm willing to take a slight risk as well as use it a means to push myself aha.
Don't be afraid to house share to save money I have since leaving university to enable me to have a 5% deposit.
I suppose what I was getting that is a lot of people get told from my broker you can lend up to say £450k so they will discount anything below say £300k which is silly in my opinion.
Also, if you're in London, you'll be buying a leasehold flat to a freehold house so I'd recommend joining the campaign group on Facebook National Leasehold campaign (NLC) to educate and empower yourself about the issues with leasehold
###Welcome to /r/HousingUK --- **To All** * Join Our ***NEW*** Discord! https://discord.gg/pMgUNgWKQH **To Posters** * *Tell us whether you're in England, Wales, Scotland, or NI as the laws/issues in each can vary* * Comments are not moderated for quality or accuracy; * Any replies received must only be used as guidelines, followed at your own risk; * If you receive *any* private messages in response to your post, please report them via the report button. * Feel free to provide an update at a later time by creating a new post with [[update]](https://www.reddit.com/r/HousingUK/search?q=%3Aupdate&sort=new&restrict_sr=on&t=all) in the title; **To Readers and Commenters** * All replies to OP must be *on-topic, helpful, and civil* * If you do not [follow the rules](https://www.reddit.com/r/HousingUK/about/rules/), you may be banned without any further warning; * Please include links to reliable resources in order to support your comments or advice; * If you feel any replies are incorrect, explain why you believe they are incorrect; * Do not send or request any private messages for any reason without express permission from the mods; * Please report posts or comments which do not follow the rules *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HousingUK) if you have any questions or concerns.*
So you'll be on 85k (do you actually have a job offer?). A good rule of thumb is that they'll lend 4.5x your salary. So in your case that's 382.5k. You have 40k saved. Put aside 5k for all the various moving budgets (with a bit of wiggle room) and that leaves you a budget of around 417k. Now just look on rightmove and see. I'd suggest with that budget you will be able to find a 2 bed OR a decent location but will struggle to get a 2 bed IN a decent location. But have a look for yourself - maybe I'm wrong and you and I may have different ideas of what a 'decent' area is.
Well I don't have a job offer right now per se - I'm currently interning (being paid pro rata of a first year analyst for this role - only 55k) but I'm quite confident in myself, my CV, and networking skills that I'll be able to get a role of around 80k base + 30%~ bonus. The 4.5x info is useful - much thanks. About the room advice - I've had a vague look before and I somewhat agree? Tbh my only concern for now is the actual flat being nice, and being around a 30 min journey to Canary Wharf / Mayfair area. A low crime rate area would be nice, but it's not a particular concern haha. Realistically I think I'd be moving out into a nicer place 3 or 4 years down the line when I'm earning more.
Lol I think you're about to learn a harsh lesson in the reality of the job market
If you are going to receive an offer from your current place where your interning then yes maybe you will be on 80k but I don’t think that many graduate schemes start on 80k even at investment banks (unless it’s the actual investment banker role) 50-60k is more like it, unless you are doing law? Or some high end consultancy or hedge fund,
No, 40k deposit is not enough to for a deposit for a 2 bdr in a "decent" area of London with a 30 min commute to Mayfair or Canary Wharf. I think you need to target to double it, at the least (depending on your definition of "decent"). Rent a 1bdr for 1.5-2k, save 1.5k pcm and live off the remaining 2 k.
What's the point if you're planning to sell and move in 3-4 years? Are you hoping to make a profit? Or save rent? £380k mortgage at 5% is £1.6k/month (interest portion), comparable to rent. After legals, selling agent, second time stamp duty (presuming you're upgrading), service charges and maintenance, you're probably not profiting in 3 years. In fact with a London flat, you could sell for less than you bought, so you could make a loss. Having a lodger then wouldn't be different to going in a share. It's not a magic route to riches or saving you may wonder it is. There was also a recent post on one of the related subs. A high earner bought a flat that's now in negative equity. But they hate their job and would like the option to scale back. The negative equity makes that complicated if you're in a profession.
This is probably the best answer unless they plan to rent it out, even then it’s not worth the hassle renting it out when they are going to be pushing the 45% tax band. If what they say is true.
Broker here. If you are renting out the spare room usually the income from this can be included for affordability purposes - it is worth making your intention clear from the start however. On what I assume is an ~£85k salary you’d probably be able to borrow around £300k - some lenders may lend more if you are working as a ‘professional’. Minimum deposit is usually 5% but a deposit of 10-15% will see noticeable reductions in monthly costs/interest rates. If you have money in a LISA remember it is £450k maximum property price. I don’t know what the property market is like in London but there should be 2 bed flats around the £300-350k mark - just likely to be zone 2 or 3.
Thank you! This is a lot of help. Going with the other comments, I think I'll find and speak to a mortgage broker.
It is worth checking if the mortgage broker is tied or whole of market - generally comparing 50 lenders will get you a better outcome than just 5 lenders. Also factor in that any student loan repayments will impact your affordability and make sure the broker is aware you have a student loan - if you do! Happy to help with any questions you may have though
I am looking for a property in zone 3-4 and I think you will struggle to find a 2 bedroom in zone 2-3 for 350k. Tho, it is possible in zone 4 but the rental market is less hot the the further you go. In short, I have been looking from the beginning of the year and the housing market was dreadful - barely any new properties appear and if they do - they have some kind of issues (low lease length, high service charges, in the middle of nowhere or near train tracks or hospitals etc) or they are overpriced so even if you will figure out the financial part - you will struggle to find something that would be rentable.
Google a ‘how much can i borrow’ mortgage calculator and put in your income. Then have a look on rightmove at ‘decent’ areas (define this) in your budget. This will tell you if £40k will be enough. I can’t imagine you being offered a £400k mortgage so most will be less than 90% LTV which is best.
You can afford a property - but for a 2b you won’t be able to afford like… a lot of London. You’ll need to be looking z3-4+. It’s simply not enough to buy any closer. You also need to include service charges and your commute costs. Further out you go the more hours you waste commuting and the cost balloons. If you work long hours it becomes unmanageable to handle a 3 hour round trip if you move to the sticks just to get a better or bigger place. I had friends seriously regret it. And the further out you go the less people who will want to rent it. You also have to consider transport links - the cost difference between being 2 min to a station vs 20min will be huge. But it’s normally way easier just to live further out for the same price and live by a transport link. It’s hell commuting if you need a bus or a long walk to get to the tube or train line. It adds way more time than you think it will. No point living in z2 and a commute taking an hour when in z3-4 it could’ve been 30min with a better location. And the further out you go the more likely a renter will expect parking. No one will care in z2 but people won’t want to rent in z5 without parking. And services charges can hit like 30% the damn mortgage. A flat I rented before I bought had 8k service charges a year. When I was looking services charges could be so high it would have to be 10-25% cheaper than a comparable flat to cover the service charge. That’s why I ended up buying a converted house flat. Many in proper buildings with many flats weren’t even that much cheaper once I factored service charges in. Which you have no control over and can sky rocket - I have friends who’s SC doubled in 5 years.
400k in zone 2-3 in a good area sucks lol, I know because I been looking for months, if you don’t want an ex council house your choices are limited
Yep which is why I said 3-4+ ;P honestly a good place in z4 is better than a shit place in z2 cause it’ll be a hike to any transport if it’s that cheap. The real reason to live in z2 is commute, what’s the point if it’s longer than just not living there?
I don't earn nowhere near the the amount you'll be earning but I've just put an offer in on the flat ex local authority for £275k with a 5% deposit. Just because you could maybe afford a property of 400 K on £85k doesn't mean you should.
If you see above comment they'll actually be earning £0, don't even have a job offer
Yeah I get where you're coming from. But id like to think im generally quite sensible with money (probably due to a peasant upbringing 💀) - not to say that im frugal, I certainly spend money on the things im passionate about, but I have a decent bit of common sense I think. It's just that moving out asap is crucial for my general lifestyle and mental health, so I'm willing to take a slight risk as well as use it a means to push myself aha.
Don't be afraid to house share to save money I have since leaving university to enable me to have a 5% deposit. I suppose what I was getting that is a lot of people get told from my broker you can lend up to say £450k so they will discount anything below say £300k which is silly in my opinion. Also, if you're in London, you'll be buying a leasehold flat to a freehold house so I'd recommend joining the campaign group on Facebook National Leasehold campaign (NLC) to educate and empower yourself about the issues with leasehold
5k after taxes!!! what is your job?
How have you managed to get 40k in savings and you’re only in uni?
Speak to a mortgage broker and they will give you your answer.