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Only if you want to live in central London. You can still easily get a house on that income in London suburbs. For example you can get a 3-bed in Orpington (20
by ig1 9y ago
Only if you want to live in central London. You can still easily get a house on that income in London suburbs. For example you can get a 3-bed in Orpington (20 minutes by train to London Bridge) for around £400k which should be comfortably affordable to someone on 70k.
- chrisseaton 9y ago> around £400k which should be comfortably affordable to someone on 70k The mortgage on that will be using up around half of your income. That's insane.
- ig1 9y agoAssuming a 60k deposit (so 340k mortage), you could get a 2 year fixed mortgage at 1.53% so your repayments will be £1,178.31. £70k post-tax is around £48k so £4k/month so the mortgage will take around 30% of your take-home pay which is a fairly standard ratio.
- mtkd 9y agolong term average mortgage interest rates are over 5% - if you're working in a STEM field what thought process leads you to blowing 1+ years net salary on a deposit for a 2yr fix at 1.53% with a 20+ year commitment?
- ig1 9y agoMortgage rates are fundamentally unpredictable, you can't assume that they'll revert to a 30 year average. However what mortgage lenders do is "stress test" at 5%-6.5% that means they evaluate if you'd be able to afford to pay the mortgage + cover your essential costs (food, energy, etc.) if rates rose to those levels. It's essentially a worse-case assumption to ensure you wouldn't be bankrupt if that happened, not whether you'd be comfortably off at that level. If interest rates were to rise in 5-10 years time don't forget you could also remortgage to a longer time period to significantly reduce monthly payments if you needed to. Rates aren't going to jump overnight; if they rise it'll likely be a long slow-rise by which point you should have already paid down a meaningful percentage of your mortgage.
- chrisseaton 9y agoI don't think someone on £70k, paying rent, would be able to build up that kind of deposit.
- user5994461 9y agoYou can in a few years if you flatshare alone, or if you live as a couple without children and double income.
- FireBeyond 9y agoWhere are you renting near London (so you can work that same job) that you can both pay that AND save 60K? Considering that looking at similar 3 bedrooms to those suggested for purchase gives rates of around £1350 / month. Even putting aside another 1/3 of your income (high) still leaves you looking at 5+ years to save a deposit.
- ig1 9y ago£70k = 48k post-tax 60k/(48k*1/3) = 3.75 years And that's assuming you start from zero savings.
- bencoder 9y agoSaving up a 10%, £40k, deposit while renting here is quite tough though, even on 70k. And most devs don't earn that much
- ig1 9y agoWell lets reverse out the numbers. The median cost of a room in a flatshare in Zone 1/2 is just under £700 month, that's £8.4k/year. Let's assume other costs of living to be £10k/year that gives us a total of £18.4k/year. Let's say you want to save £40k over 4 years, so 10k/year, that would require a take-home salary of £28.4k/year which implies a pre-tax salary of 37k. 37k should be comfortably achievable for a software developer 1-2 years out of uni.
- FireBeyond 9y agoHow many people realistically go from a "flatshare" to a "3 br home" in one step like that?
- ig1 9y agoIt's a fairly common move for people getting married with a plan to have children. But if you rent in the suburbs you can get a similar discount on rental as you get on purchases. (Although the 3-bed was just an example obviously you can get a 1-bed for a cheaper price as well)
- user5994461 9y agoFor £700 a month, you live in a complete dump with 2-4 flatmates. And you still have to add the expenses on top. Food, transport, council taxes, utilities.