£1600/mth is well within my means but how much headroom would I need?

I still think that the market is overpriced so you are taking a risk that the government can hold the house of cards together. If house prices do fall substantially you will be tied into long term liability that will be a serious burden, and can might only be cleared by bankruptcy.

Though check what the impact would be if you lost your job. Housing benefits for mortgagees are different but will mean that you could have problems if your mortgage is above the benefit limits. I think that there was a 9 month wait before HB kicked in then so you would need sufficient funds or insurance to get you through that period.

In addition if you were going to be a locum and work all over the country would renting being better? What if you decide to emigrate?

If you decide you are going to buy I would opt for as long a fixed term deal as possible as rates only have one way to go. Also check options for overpaying. Then go for something cheaper if possible in case the market collapses and you have more equity wiped out quicker. A smaller mortgage will also be easier to over pay, so allowing you to overpay and still have some equity even if the market collapses.

It's a bit of a rough guess tbh because we can't know how high interest rates might go, plus how the interest is calculated may make a difference. As a rule of thumb, I'd say give yourself a 20% safety margin (i.e. get a mortgage that's only 80% of what you could afford to pay a month). My mortgage payments have definitely varied by more than 10% over the decade or so I've had one.

That's assuming you can get something that's fit for purpose within that budget of course. I don't know where you're planning to live, so...

Jon

I'm not a homeowner, so i don't know the ins and outs of mortgages, but if you can, it would be good to overpay by the amount you can afford, then if it goes up, you're used to paying more anyway.

You need to budget a good few thousand for legal fees etc, moving costs, and costs of running two homes for a short while, and then there are the furnishings which you can buy after your move but I doubt that you will have nothing extra to get. Have you budgeted for house and contents insurance? There are probably templates on the internet that can help. Though the headroom will depend on whether you get a long fixed term deal or tracker mortgage. Interest rates are artificially low so could you afford it doubling? And interest rates getting back to a normal 5% from 0.5%. Until you pay the mortgage off you are only renting in effect.

£2000/mth is still easily within my means.

Work isn't an issue - stable job though theoretically could go any time. Even if I locum, I could easily find work and have colleagues who are earning far more than me for similar amounts of work.

I think I need to start factoring in living costs (currently living at parental home so minimal expenditure). Any ways of approximating this?

Take your monthly salary deduct it all

Well get a figure for rates from estate agent. Check if water is metered or not, if not check what the unmetered rates are. It will be dependant on the value of the property. Check if you can switch to a meter, you will save unless you buy a place with a pool, as the estimated rates of water usage are way above normal metered usage.

Electricity can be kept down if you are out all day, but ask what your parents use and use that as a basis. You might have to budget for new appliances so get the best you can afford, and as efficient as possible. Opt for LED bulbs as these are even cheaper to run even if you allow for upfront costs. I am home all day and my electricity usage is around 9-11KWh per day, which costs me around £30 a month. Though if you have dual fuel you can get other deals. Also look at the costs of insulating the place. There are plenty of grants for home insulation so that could be minimal, but if you cannot find any grants pay for it as it will pay for itself in the long run. Get an energy audit and get as much insulation as possible. It will payback in lower bills and make the house easier to sell if necessary.

If you get a place with two or more bedrooms look at the idea of squatters/renting the rooms out though check the impact it will have on your insurance. Thefts by tenants are not covered.

That's a [LIFTED] load of money. But a solid deal in the current market.

Given your budget and your tastes in vehicles (and therefore the assumptions I've made about everything else) I'd want £1000 free on top of the mortage at a minimum. When I used to sell mortgages at the bank, we did "free income criteria" and if you didn't meet that, even if you passed the credit check, you were denied.

I do support a wife and child and spend a lot of money on food and booze, but I find I start to struggle when my rent reaches a third of my income. That's with a company car. (Although I do pay for repairs on my wife's car).

Having said that, plenty of people earn less than me and pay more in rent/mortgage and seem to cope okay, so maybe I just have expensive tastes.

I would've said 50/50 was an acceptable average. 70/30 is a minimum and 30/70 optimal. But you're right, plenty of people seem to manage with worse. Not sure how though.

Have just skimmed this thread and spotted this, not sure if anyone else has commented but mortgage companies require some kind of life insurance to cover the mortgage.

It is also cheaper to get when younger so you might as well get it if you have any plans to get married at some point. It will be useful then. Best to get it written in trust so that it does not count as part of your estate, and can pay off any debts without creating any other problems.

It's worth checking what benefits you have through work before taking out separate insurance.

You may have a death in service benefit through your work and some employers also provide what amounts to an income protection scheme (usually after a certain length of service).
If you're lucky enough to have a 'permanent' contract then check what benefits you have otherwise you'll need some form of extra cover to satisfy the mortgage company requirements.



The value of the property can go down to such an extent that the sale value won't cover the outstanding mortgage which is why they require you to have sufficient life insurance to cover the total cost of the mortgage. It's up to the mortgage holder to review the level of cover they require on a regular basis to ensure it continutes to meet their needs (i.e. you can reduce the level of cover as you pay off the mortgage).

Mortgage companies generally dont req life insurance these days and even if they do they never check up on it so you could take it out with Company X and then cancel it the next day
If you do want it then get a reducing term policy - this is designed for a repayment mortgage at it automoatically reduces the amount it pays out as the mortgage reduces