Will a mortgage lender take in to account a very near pay rise?

Mrs_Bumble

I think reading through your replies you are seeing where we are coming from. For me you should take what is affordable now and not saddle yourself with too much debt because it will only lead to stress and trouble.

Beecher puts it very well and my feeling is that you should have a look round and see what you can get.

Your job is probably as safe as houses, but is your partners? If you were down to one salary could you afford what you have planned to take on, plus all of the month to month living costs etc? You envisage wanting children at some point, but if you saddle yourselves with horrendous debt now how will you be able to stop and pay for them?

ollyfarrow

Monthly Costs

MORTGAGE
660
HOUSE INS.
30
COUNCIL TAX
125
GAS
40
ELECTRIC
60
SOUTHERN W
18.5
SOUTH EAST W
18.5
CAR TAX
16
CAR INSURANCE
50
MOT & SERVICE
60
PETROL
110
TRAINS & BUSES
40
TV LICENCE
12
INTERNET TV PHONE
50
MOBILE PHONES
50
SUPERMARKET
410
TOBACCO
55
LIFE INS.
20
SPENDING
400

TOTAL (Net Income)
2225.00

ollyfarrow

The above would be our what I can see as our monthly costs. Does it seem reasonable?

Mrs Bumble, I can see your point. My job is very, very safe. My partners is okay, but she will always be able to find work.

ollyfarrow

Surely every couple takes on risk when getting a mortgage. There are lots of 'what ifs', what if I lose my job, what if she loses hers, what if house prices continue to fall for the next ten years, what if I lose both my legs in a car accident....and so on. If you try to plan for every single negative financial possibility we would all be living in mortgage free one bedroom flats right now.

I can totally see where you are coming from. I am going to speak to my dad today and ask him many questions, like; can you envisage me not being able to pay you back? What happens if I can't pay you back for some reason, what happens if my partner and I split? Etc

I may sound strange, but I have complete trust when it comes to my dad and money. He is a director of very large big ticket insurance company and has made a lot of money by being very clever with in the world of finance. I can not believe that he would be giving me bad advice. I should also say that he is not a big fan of taking too many risks when it comes to money, so he must have faith in this whole plan.

Mrs_Bumble

Unemployment is at its highest since records began I believe the commentators said this week, people are statistically out of work for longer periods of time at the moment. Even as a teacher your job may be as safe as it can be but even schools are struggling with their budgets etc.

Now you have listed the bare essentials above but what about going out together, birthdays, christmas, clothes, holidays, gym membership, savings, major unexpected repairs to house/car, repaying your dad, if you do go onto have children nursery fees/costs associated? If you were down to one salary a month for a period of time do you think that it is affordable? Have you checked out the costs of unemployment cover etc to help in that instance.

Do you think that saddling yourself with as much debt as you have detailed previously is going to make you both happy.

ollyfarrow

Mrs_Bumble wrote: »

Unemployment is at its highest since records began I believe the commentators said this week, people are statistically out of work for longer periods of time at the moment. Even as a teacher your job may be as safe as it can be but even schools are struggling with their budgets etc.

Now you have listed the bare essentials above but what about going out together, birthdays, christmas, clothes, holidays, gym membership, savings, major unexpected repairs to house/car, repaying your dad, if you do go onto have children nursery fees/costs associated? If you were down to one salary a month for a period of time do you think that it is affordable? Have you checked out the costs of unemployment cover etc to help in that instance.

Do you think that saddling yourself with as much debt as you have detailed previously is going to make you both happy.

Mrs Bumble, you are a very good person to bounce ideas off of and I appreciate it.

Being in our own place, being able to sleep at night without worrying about paying the mortgage and having a future with children in, is what will make us happy.

To get us out of living at home with my family, we have to move out. I refuse to rent anywhere as it is money down the drain imo. We both earn a very modest wage - combined from september at 38.5k. However my wages do go up very steadily for the next few years. I am doing very well in my job and can imagine earning another 15k pa in the next ten years or so.
We are lucky in that my dad is going to give us £20k in the form as a gift as long as it goes towards a house. He is prepared to lend us another £100k in the form of an intreset free loan over ten years.

I am going to phone him shortly and quizz him. I will mention the possibility of going for a cheaper house. 175k - 120k mortgage and 55k deposit (35k loan from dad, 20k gift from dad). Although I suspect I know what he will say; we wont be able to move for a very long time because of the loan to him, so we might as well get as far up the ladder as possible now and stay there.

Also it is worth mentioning that any property where I live worth less than 150k is not a good place to live. I'm not talking about size of rooms, I'm talking about very rough areas that are not safe to walk at night (or day!) and they are certainly not places where I would want my childtren to grow up or go to school in.


When my dad and I have talked about this in the past we have not discussed my partner and I having children in finacial terms, although he does know it's something we both want. I will ask him about this.

Thanks for listening Mrs Bumble :A, I will tell you what he said when I get back.

Mrs_Bumble

Thank you:)

If you get as far up the ladder as you can now and have to remain there till you retire, what happens if you find that you don't like the neighbours, the area goes down hill, the local school is actually not quite what you want for your children? Or suddenly out of the blue you have the opportunity to go for a job that you hadn't thought about previously but good prospects but means moving? These things happen to all of us.

I have previously worked in collections and a lot of the customers were there because they had overstretched initially and then something unexpected had happened and they were then in trouble financially.

Chat over all your scenarios, factor in as many costs as you can possibly think of!

good luck!

ollyfarrow

Mrs_Bumble wrote: »

Thank you:)

If you get as far up the ladder as you can now and have to remain there till you retire, what happens if you find that you don't like the neighbours, the area goes down hill, the local school is actually not quite what you want for your children? Or suddenly out of the blue you have the opportunity to go for a job that you hadn't thought about previously but good prospects but means moving? These things happen to all of us.

I have previously worked in collections and a lot of the customers were there because they had overstretched initially and then something unexpected had happened and they were then in trouble financially.

Chat over all your scenarios, factor in as many costs as you can possibly think of!

good luck!

You will also be pleased to know that Ihave just made an arrangement to see an IFA on Tuesday to discuss my options. I will let you know.

Thanks again

TeddyBear_2

ollyfarrow wrote: »

Thanks for the concern and I can see why you would suggest to not taking on so much.

Most people start off buying a little 2 bed terrace or maybe a flat. Then, depending on their circumstances they aim to move every ten years (give or take) and move up the property ladder as their wages increase.

We are just jumping the queue. You could say that instead of starting off on rung number one of the property ladder we are starting off on rung number 3 or 4.
Effectively we are buying a house that we are going to stay in for the next 20 years. That is why it was very hard to find a property that suited our needs and was 'future proof'.

The 1ook loan from my dad will be repaid off, not each month, but in the form of an affordable remortgage when we can afford to do so. For instance; if after ten years most people move out of their terrace and buy something bigger, we will just remortgage a higher amount against the property and give the equity to my dad.

If most people move up the property ladder 2 or 3 times during a 15 year period, we won’t move at all, but we will take on a higher mortgage at different stages to pay my dad back.

The 20k gift is only a gift to help with getting a house. It is not as if I could turn around to him and say 'actually forget the house, but can I still use the 20k to a new car?'.

I can see why my arrangement might seem odd to an outsider, and I suspect that I haven’t explained it properly. As far as I can see, my dad is being very generous in trying to help me out. My dad works in finance and would not be giving me bad advice. He does not expect monthly payments on the 100k loan. We would be paying a monthly mortgage of £660 with a joint net income of £2230. To me that looks pretty good?

We are at a time when you can buy a four bed detached house in a good area for 250k. We wouldn’t have been able to do that 18 months ago.

The opportunity has presented it self and we have taken a chance. Remember, more is lost through indecision than wrong decision!

I do appreciate all the feedback I get on this forum and I suspect that shortly I will be asking for more!

I understand the theory in your thinking, but bearing in mind the little equity you would have in the property and the commitment of the repayments, sorry, but that is not the way to go.

You may not agree with the advice on here, but I think others are trying to make you consider the implications of getting yourself in too deep before you actually do it. If you over-commit yourself now and you find yourself losing your home, either because interest rates rise to the extent that you can't keep up the repayments or a loss of income, etc, you will feel miserable as sin. My advice, as others have already conveyed, is you should be in no rush, and certainly don't look to buy a property where the size of the debt gives you no manoeuvrability when your outgoings increase, as they inevitably will.

Instead of looking for a large property now (with a large price tag) why not look for a smaller property for scope to extend *in the future*? If you look carefully, there are all sorts of options, such as an extension over a garage, or if you find a property which has enough head height in the loft, you could consider a loft conversion *later on down the line*. Improving, rather than moving is a really popular option these days; at least you don't lose nearly so much money in fees to the cost of improving as would be involved in moving and you won't be affected by a re-banding in council tax, so a no-brainer if there's scope to extend and you find an area long-term which suits you and has potential for a growing family.

Don't over-stretch yourself now; it's better to end up with 100 per cent of something smaller than 0 per cent of something larger. Think about it.

ollyfarrow

For so many people all to be giving me the same advice, telling me that I'm making a mistake, has really made me re-think my options.

I guess that after seeing IFA I will have a better view of the bigger picture.

Thanks for the input guys.