Help with the affordability of my mortgage. thank you

dont_run

Hello

Myself and my other half wish to buy our first property but would like some guidance with our decision. We have approached a whole of the market mortgage advisor and he said that the deal he has found (139K @ 4.9%) is the best that he could find and that he thought that it was ok based on our incomes.

We have 16K deposit and about 6K for fees (solicitors, stamp duty etc...).

I earn 20K and my other half earns 18K (combined incomes = 38K)

We have no outstanding debts and we both have an excellent credit rating.

We have seen a house (3 bed semi detatched, good area, good links etc...) for 165K.

Having spoken to the vendor we have negotiated 155K for a quick sale. We have had a mortgage offer of 139K which is what we need to borrow.

Looking at the figures we would be borrowing @3.75 times our joint incomes. We are both likely to get increased salaries over the next 5 years due to our job types (teachers) and as we are both young (26y/o).

Looking at the monthly repayments and having calculated our incomings and outgoings, we would have about £700 (with the exception of petrol this is disposable income) left between the 2 of us each month. If rates increased we could realistically afford upto 7%, anything above this would require that we switched to an IO mortgage or completely reviewed our situation (based on current salaries).

Any advice would be welcomed.

herbiesjp

Is that a fixed rate you have been offered?

The reason I ask is that there are lower fixed and tracker rates available, which would in itself help improve your affordability

Having the £700 pm disposable income is also a very good safety net that you have

dont_run

Hi

yes it is fixed for 2 years. The £700 is what would be left after every compulsory outgoing excluding social life expenses (going out etc..). Its much less than what we were are use to but i suppose that is the price to pay for have a home.

Do you think 3.75 times our joint incomes is excessive bearing in mind we are at the start our our careers?

thanks for your reply.

herbiesjp

I think the £700 safety buffer you have is significant. It also looks like you have done very careful analysis of your figures and looked all aspects when looking to budget.

Now if you factor in the possibility of pay rises, your affordability will increase and you will find yourselves in an even better position.

I still think your adviser should be doing better with the mortgage deal for you

jackieblue

Hi,

You've done very well getting such a reasonable deposit together - it means you're not going for a 95% or even 100% mortgage as some do.

I think 3.75 joint wouldn't be considered stretching yourselves these days - of course it seems high, but you seem to be able to do it with £700 disposable a month.

As there are only the two of you and you're looking at a 3 bedder, why not consider taking in a lodger for a couple of years (a newly qualified struggling teacher ?). You can do this tax free (up to £4,500 ish I think). Others on this forum could give you more advice on that, but while you're young and unencumbered by the patter of tiny feet, it's a good use of the space.

All the best.

MortgageMamma

I think your affordability is fine, and its great you have such a significant buffer. Like herbie, I don't think the deal you have been offered is anything special, I suggest you speak to your whole of market advisor and ask to see your sourcing results, and, for any cheaper mortgages on the list (they should all be sorted in price order) ask why those mortgages have not been recommended to you. I'm sure there will be a reason, but its important you know why. Failing that, ask another advisor to look at it for you and see if they can come up with something better. I doubt it wil be hard!

MM