Getting a reasonable sized mortgage when not earning much

brit1234

Kaida wrote: »

We're going to end up having to rent, I think, to get a decent house. It's frustrating that they go on multipliers rather than affordability.

I'm glad they have gone back to multipliers rather than affordability because the other way just pushed prices higher now prices will get cheaper.

ginvzt

Kaida wrote: »

My dream house would be 300K, but being realistic 200K would be more likely, and they won't even lend us enough for that. That would most certainly be affordable each month, even when rates go up. With the only multiplier I could find when I was looking being 3.5, we'd only be able to borrow 73k. Have you seen what that gets you now? Certainly nowhere I'd bring up kids, let alone live myself.

Sorry, but on the income of £21k, a mortgage for £200k is unrealistic! Ok, so you will save up £18k in 3 years. With the equity from current house and so on, lets say you will have £40k for deposit (and don't forget to have some more money for solicitors, stamp duty, moving, work required for the house, etc). So, you would need a mortgage of £160k. Lets say interest rates are about 6% (which is reasonable) and if you took mortgage over 25 years, your monthly payment would be £1030. Now, correct me if I am wrong, but if annual salary is £21k, take home pay is about £1370. Now, does anyone here think that £340 a month is a reasonable amount to live on for 2 adults and 2 children (you said you hope to have 2 kids)? Don't forget, that there are still bills to pay out of this, council tax, house insurance, TV license...

Even if you get interest rate of 5%, (payment - £935), £435 a month is not a huge amount to feed and dress 4 people, however small they are!

Just to add - If interest rates went up to 9% (which is not unheard of, or so I am told), you would have no money left after mortgage is paid each month.

Our joint income is £60k+, but I still can't convince OH that we can afford a £200k house (and we have enough deposit to be below 75% LTV).

Hopejack

Kaida - I was really trying to say what Andy & Ginvzt are saying but in a less direct way!

BTW without being funny, come back and tell me how much children cost when you have two... I have a 4.5 yr old and an 18 month old and had to buy them both shoes the other week - won't tell you how much they cost!!! I have to say they do get more expensive as they get older and want more expensive gadgets but even just feeding/clothing young children etc isn't cheap these days.

I really hope you get what you want but if interest rates do go up things could get sticky!

SUESMITH_2

Kaida wrote: »

Children shouldn't dent our earnings much, since I'm at home anyway so we won't be going down to one income.

oh deary me, i presume you dont have any children at the moment? i have 2, now almost grown up but even when tiny they still cost money. i could run a really nice second car on what my kids cost me, yes at first you can breastfeed but they soon want feeding. they will need clothing too, yes kids are as expensive as you make them but they still cost something.

i think you have totally unreal expectations of what you can afford, i presume the parents bought the house because you couldnt get a mortgage?

LilacPixie

Sorry Kaida but I don't think you are being realistic. I/we have 2 kids aged 1 and 3 so kinda the age you hope yours to be when moving in 3 years. Our joint income is roughly double yours with a joint take home of £3100. No matter how frugally you live a 160k mortgage on your current take home wage is impossible and IMO irresponsible.

Food for 4 say £200 a month, council tax £100+ so that leaves you with £150 ish for gas/electric, clothes (kids shoes £30 a pop every 8 ish weeks in this house) TV licence then insurances buildings and content plus life insurance essential.

I think you need to look at either modifying your plans or increasing your income substantially.

Personally I would not feel comfortable with a 160k mortgage on my income

Kaida

As an aside - £200 a month on food for 4 people, two of them tiny kids?! Don't be daft. I spend £50 atm, for two adults. I do know how much kids cost, I'm very involved with my parents and their finances (my Dad is appalling with money so my Mom has to cut back to make up the difference, and I help her) and they have three foster kids atm, 6, 7, and 8 years old.

Everyone seems to have gotten the wrong idea on here. I wouldn't be wanting a £160K mortgage on our current salaries, in three years time OH will be earning more and I'll be bringing in more than I do right now as well.

Everyone can throw figures of how much this and that costs per month, but the fact is I know exactly how much we spend per month, and a £1000 a month mortgage would be fine on the income I expect OH to have at that point.

For the poster who said about prices coming down with multipliers, I wish they would. Average salary is £25000, right? Average multiplier for a young family (assuming someone stays home with the kids since childcare is so expensive) is 3.5 x say £30000, that's 105k. Is that the average price of a house now? I wish is was. I'd love house prices to come down, but they seem to have stalled.

Thanks for the advice, I guess we'll have to hope prices plummet in the next few years, or rent.

begbeer

Kaida, Can we all have your secret for only spending £50 a month on food for 2, I thought I was frugal, own vegtables, own lamb etc but my bill for a month is £120

Clocky

Please can I have your secret too ... My german shepherd is costing me £40 per month in food alone, never mind myself & 2 daughters

kelloggs36

Me too!! We don't drink or smoke and have 2 children and our monthly food is over £350 per month! How do you know what you will be earning in 3 years' time? Wages aren't going up, in fact they are coming down at the moment in a lot of places. I do think you are living a bit in the dream world. Both my husband and I work and earn between 50k and 60k. Our mortgage is 105k and we save quite a bit, but I refuse to increase our mortgage by another 50k because I have been hit with interest rates of 13% in the past - so don't be fooled into thinking that because you can afford it now, you will always be able to! 13% of 160k would be a monthly payment of £1666 interest only!

_Andy_

Kaida wrote: »

Everyone seems to have gotten the wrong idea on here. I wouldn't be wanting a £160K mortgage on our current salaries

Why didn't you say that to begin with then?