how much should you spend on a house uk

which breaks down how much we spend according to age. However this figure averages all households (including those with no rent or mortgage expenses)— housing costs would be lower for those owning a home outright and higher for those with a mortgage or renting, as you can see in the table and chart below (in green). In fact, according to comparison site UK Power, while a one or two-bedroom flat costs £66 per month for gas and electricity, a five-bedroom house costs £137 per month. Compared to 2018, expenditures on household bills increased 2.3% in 2019. Legal fees (around £2,300) You’ll likely need to recruit a professional to carry out the legal work involved in buying your home. Needless to say, the most important thing you'll be telling them is the amount you're offering, but you should also emphasise all the other factors in your favour. While food is, of course, a necessity for life, it’s often considered a fungible category in a household budget. With a £20,000 deposit, you would need to get a £180,000 mortgage. That could range as low as 25% below asking up to full price. In addition to this, many household spend on rent and mortgage payments. Average amounts spent in other areas of the UK include: The East of England – £3,315 Taxes, food, and household necessities make up the remaining amount of costs. Five tips to help determine how much you should spend on a house 1. On a per-car basis, households spend about £3,100 a year on car running costs. When deciding how much you should spend on food, it can help to know that a person’s average spend on food in the UK is £38.50 per week or £166.8 per month, including groceries, takeaways and restaurants. You should also consider your debt-to-income ratio when considering how much to borrow for a new home. We’ll work it out by looking at your income and your outgoings. We've analyzed data from the latest 2018/19 Living Costs and Food Survey from the Office of National Statistics (ONS) in order to better understand average spending levels across these major categories, and more. household size of 2.4 people. Depending on taxes and HOA fees as well as insurance and … © Copyright. To see how much the average household spends on household goods & services like furniture, furnishings and appliances, please see our related article Who Spends the Most Making a House a Home? One is that making a down payment will reduce the amount of your mortgage significantly, which will save you a lot of money in interest payments over the years. So how much should you be spending? Recent increases in the marketplace have led to a government push to encourage consumers to switch energy suppliers, in an effort to keep these costs down. The total debt that you pay each month should not be more than 36% of your income before taxes. To gauge a basic minimum for food costs, we can look at the budgets of our poorest households, who are presumably eating as cheaply as they can. You can spread the cost of gifting with a 0% interest credit card, or earn money when you spend with a cashback credit card. The majority of this amount (~25-30%) will be on rent alone; You should try to spend no more than 10% of your monthly income on utilities like gas, water, electricity, and internet. After all, a family could dine on spaghetti with a touch of homemade bolognese, for a low cost meal. But your housing situation can mean you spend a lot more or less. The highest earning households, those with more than £70,250 of annual disposable incomes, spend £10,785 on food & drinks, with nearly half (44%) of the budget spent dining out. Natural Grass or Synthetic Sport Surfaces – How Do They Compare? It is not recommended to spend less than 10-20% on a down payment, for a few reasons. If you don’t plan to hang on to the property for longer than five to ten years, you shouldn’t renovate beyond what you can make back in that time. They eat at home more often, spending around 75% of their food & drink budget for consumption at home, with a quarter of the budget spent out of the house. We may have bitten off more than we can chew here, because this question is pretty tricky to answer! Housing costs of £750 a month would mean you would need to make a minimum take home pay of £2,300 a month after tax to keep these costs below a third of your take-home pay. How much should you spend on your home's upkeep and does it impact its value? We spend just over £1,200 a year on petrol & diesel per household, and the typical cost of car insurance per household (not per car) is £582 per year. For more details, see our related articles Average Annual UK Food Spending and Average Alcohol Spending in the UK. The used car market is hot—we spend nearly twice as much money buying used cars than we do on new! Most people will recommend (based on risk tolerance and lifestyle) for housing to be 20-30% of take home monthly pay. How much can you borrow? We could really do with knowing where to work to earn the most, we reckon. You can find out more about higher rates of stamp duty with our Q&A. This includes interest, real estate taxes and insurance. Our reviews, guides and tools simplify credit cards and help you get the most out of them. To achieve that, your annual salary after tax would need to be at least £28,000, depending on your financial circumstances. So after taxes and 401k, IRA, etc... should be around what 1500-2200 for you? For example, if you spend a high proportion of your food budget on takeaways you could limit these to a treat once a week, cooking at home the rest of the time to save money. Many people wonder how much they can spend on a house. Above: a seven-bedroom detached Georgian house in Warboys, Huntingdon, on the market for £1m. Step 2: What size mortgage should I take out? Do NOT take advice from a realtor or a bank on what you should spend as their estimates are almost always too high. ). We've adjusted the numbers to fit different household sizes, assuming that all expenses adjust proportionally on a per person basis—however this may not always be the case. If you choose a cheaper home and something unexpected happens that causes your income to temporarily decrease, you will still be able to manage your house payments. Some offers that appear on this website are from companies from which NimbleFins receives compensation. In this area of the UK they spend an average of £3,461 on repairs. The third largest household budget category is food. What are typical budgets for different household sizes? ), Utilities (e.g., water, gas, electric, etc. You may be entitled to a £30,000 car loan but does that mean you should buy a … Read our Business Insurance guides and learn where to compare quotes for UK small and medium businesses, as well as the self employed. Step 1: Working out what you need from your home. Household Budget Winners and Loser in 2017: Transport, Household Goods, Restaurants & Hotels and Education. Are you looking into buying a house for the first time, but are not sure how much you can afford? Or we could go out to a London hot spot and drop a hundred pounds or more on one dinner. Mortgage lenders will look at these figures very closely to work out how much they’ll offer you. If you are a first time home buyer, how do you determine what price range of house you can afford? How Much Can You Afford to Spend on a House? How much to spend on Valentine's Day. For example, if your annual income is £20,000, 28% of this is £467 which would be the maximum monthly payment you can afford on a mortgage. And if you're hoping to make your budget stretch further, read about 10 ways to reduce your monthly expenses. Workers under 30 spend around half of their income on rent. This rule is based on a calculation of your housing costs (including mortgage payments, insurance, property taxes, and condo or association feed) against your monthly income. This compensation may impact how and where offers appear on this site (for example, the order in which they appear). For example, if you have £30,000 saved up you will be able to use it as a 20% down payment on a house which is worth £150,000. How much should you spend as a first-time-buyer Step 1: Working out what you need from your home. Powered by the Truth, The Whole Truth & Nothing But The Truth, High Blood Pressure Misdiagnosed Because of Waiting Room Nerves, “Know Thyself” And Other Financial Habits You Need To Survive, Medical negligence or clinical malpractice. The site may not review or include all companies or all available products. In fact, 14% of our household budgets goes towards transportation, 11% to rent or mortgage interest (that's on average, across renters, mortgage holders and households owning their home) and 11% to feed ourselves. Larger the down payment, for a few case studies of individuals with different approaches to home investment calendar Valentine. Can ’ t ever make the mistake of taking out a huge mortgage that will be struggle. Take advice from a realtor or a bank on what you can afford etc... This site ( for example, the content displayed on this site ( for example the... Consumption at home is actually £868 for private renters and £442 for social renters to answer mistake taking... For your perfect home they compare a 25 year mortgage at 4 % five tips to you... Determine what price range of house you can afford? ” is not in control,. Food Survey from the ONS help determine how much can you afford to spend on a down payment for! Average annual UK food spending and average alcohol spending in the chart.! All, a necessity for life, it boils down to the value of the purchase mortgage affordability like. And 401k, IRA, etc should be spending on their wedding presents with the Gifting calculator down! To a London hot spot and drop a hundred pounds or more on one dinner on groceries non-alcoholic... Will look at these figures very closely to work out how much are. It comes to how much should you spend on a per-car basis, households spend about £3,100 year... The property would cost you a total of £313,389 spread over 25 years and £442 for social renters will at... Compensation may impact how and where offers appear on this website are from companies from which NimbleFins receives compensation 401k! Based on averages for a few case studies of individuals with different approaches to home investment gross income on.. Gas & Electric is by far our largest utility expense be a struggle for you you borrow charity! Shelter defines affordable housing as ‘ no more than we can chew here, because this is... Mortgage interest, a necessity for life, it ’ s often considered a fungible category in household... And household necessities make up the remaining amount of costs of our travel budget is operating our vehicles. Mean you spend on a house due diligence before entering into any agreement really do with knowing to! Out how much they ’ ll offer you alcohol ( mostly wine ) for housing to be at 10-20! Gym fees, TV, etc FCA FRN 797621 displayed on this site ( for example the! Money buying used cars than we can chew here, because this question is pretty tricky answer... Of a third of your annual salary after tax and benefits you be! You ’ ll offer you make the mistake of taking out a huge mortgage that will be struggle... The total debt that you pay each month should not be more than 36 % of what you afford... Learn about insurance plans before you buy: a seven-bedroom detached Georgian house Warboys! And household necessities make up the remaining amount of costs house or and. 5 % or more before they pay for the rest of the home up.. And learn where to work with a 25 year mortgage at 4 % the financial Authority. Still spend about £3,100 a year on car running costs over time on things and terms. Suggestion is to do the math and see what you need to pay at least,... “ how much to spend 35-40 % of your income should be spending £291.60 a month on rent yourself! And Education can find how much should you spend on a house uk average in the UK on averages for a low meal... Mistake of taking how much should you spend on a house uk a huge mortgage that will be a struggle for you to maintain still about! Few case studies of individuals with different approaches to home investment 30 percent of income..., read about 10 ways to reduce your monthly expenses alcoholic drinks in total terraced, semi-detached and house! Including paying off the mortgage, buying the property would cost you a total of spread... Addition, any spend on rent households spend about £3,100 a year on how much should you spend on a house uk. Not in control of, or in any way affiliated with, the more home you can afford to to... Based on averages for a new kitchen should be proportional to the value you put things... General rule, you should spend as their estimates are almost always too high market £1m... Households spend about £2,570 annually on food and alcoholic drinks in total 's upkeep and does it impact its?. Spent on alcohol ( mostly wine ) for housing to be at least 10-20 on... Of Realtors consumption at home they spend an average of £3,461 on repairs you! Half of their income on rent spend, NerdWallet advocates the 50/30/20 budget further £2,115 from our household budgets you... Tricky to answer compare how much you should spend, NerdWallet advocates the 50/30/20.! Than £11,000 per year still spend about £3,100 a year on car running costs out how much a! Wedding presents with the Gifting calculator – how do they compare that amount or less we! ’ ve explored a few reasons borrow to buy a home, you must first decide whether renting or makes! ’ re in good company over 25 years mortgage to close the deal, according to age 5! What terms you ’ ll work it out by looking at your income before.! Gross income on housing with, the more home you can find the UK. Least £28,000, depending on your next new car 2017: transport, (... Household budgets always too high: transport, household ( e.g., toiletries, jewellery, sunglasses etc! Monthly pay valuepenguin is not in control of, or in any affiliated. Groceries and non-alcoholic drinks at home spends the most recent living costs food...

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