Risky or Reasonable Lending?

ed_miller

hello
would appreciate some advice on our predicament
we recently sold our house and moved into rented and banked £120K
We also have £40K savings

So we have found our dream house - it costs £350K
So i work out we want a mortgage at £220K with us putting down £130K
leaving us £20K savings for a rainy day

I have had a quick mortgage chat with HSBC and they seem ok to lend us it. I earn £50K a year. Iam 36. I think payments will be about £1100 a month. My wife currently work part-time for approx £30k per year. The problem (financially) is that she is pregnant, due in Nov and likely to take a break until next summer. She would not have a guaranteed job afterwards.

So my predicament, given the current financial climate and my person position would we be crazy to borrow £220k. Or given my salary, age, deposit does this sound like a reasonable mortgage. It would be for our dream house which makes me inclined to stretch but then I worry its a gamble and we should look for an interim house at around £270K which would be more comfortable but might mean we have to move again. My feeling is to go for it but woud love some other thoughts.

cheers
edmund

Blacksheep1979

Your 20k would see you through for a good year if you had to (tighten the belts a little) and if push really came to shove you could sell up and you've got plenty of equity - I'd say go for it.

Fire_Fox

Why wouldn't your partner have a job to go back to? Don't employers have an obligation to hold the position for several months and offer a similar position thereafter?

JoolzS

I would presume that your wife won't go back to work any time in the near future. She may have complications from the pregnancy; your baby may have problems; she might not want to leave her new baby, etc, etc (I've seen all of them during my working life). Only buy a house that you feel you can comfortably afford on your own salary.

I think you should stick with the normal borrowing rules - you earn £50K so you can easily borrow £150K. Chances are you can find some stupid bank to lend you more, but do you really want that stress. Your perfect home will still be there in five years, or maybe it already exists at a price lower than you expect.

If it was really your "dream house" you wouldn't be posting questions about it on an internet forum!

Julie

penguine

JoolzS wrote: »

Only buy a house that you feel you can comfortably afford on your own salary.

This is very good advice. You don't know how having a child is going to change your outlook on life. Your wife may not want to go back to work for awhile; you may have another child in a couple of years and find that her income is cancelled out by the cost of childcare. Don't overstretch yourself when your life is about to completely change!

What's more, although monthly payments now may be about £1100, they could well go up in a few years if interest rates go up again.