How much would you borrow?

Zelie

As an aside, are they really offering you five times the salary of one person for your mortgage? I thought most of them had gone back to much reduced multiples?

Plans_all_plans

Hi Zelie

Yes they are offering us a 78k mortgage, but we would be mad to borrow so much money. The fact we have no debts helps, but I think the real clincher is the fact that we have a big deposit. There is less risk for them, but more risk for us, that's why we dont want to overstretch ourselves!

I have a friend who got 5 x her salary for a shared ownership place in Dec last year. She had a minimum deposit too and debt, so some of them are still lending riskily.

ET1976

Agree with all FF has said. I think borrowing 5x salary with (potentially) 2 kids to look after would be a bit crazy. Even 4x would be pushing it a bit but extending the term and overpaying when you can would be a good idea IMO, especially if you are able to get a decent house you can stay in for the forseable future.

I also don't have a car - I go pretty much everywhere by bicycle and train/bike if it's too far. With the right luggage you can transport loads on a bike.

poppysarah

How long has it took you to save £40k? It's a massive amount of money -so well done the both of you.

But to borrow 4X income when one of you isn't working is going to make it stressful for you? Wait til his payrise is agreed then it's much better imo. (Although won't you miss out on more tax credits?)

Plans_all_plans

Hi poppysarah, we actually have 50k saved, but only want to put down 40k for deposit.

I was working full time for 18 months after our daughters birth and saved absolutely every penny I earned in that time, except travelling costs and rent to parents. So over those 18 months (plus the 9 months of my pregnancy) I saved 26k. I didn't go out or do anything in that time though, unless it was free!

My fiance's parents saved 16k for him since birth, which obviously helps bump up the final total. While he was a student and working too, he managed to save another 8k on his own.

That's how we managed to get so much money together for a deposit. We had nothing when we found out I was pregnant (he was still a student and I was doing my finals!) so it was imperative we saved like mad and obviously his parents saving for him has boosted our savings.

Borrowing 4 x salary will def put pressure on us, but I will be returning to work in future, so I was interested to hear what other people felt we could manage given that I would be working full time eventually (hopefully earning a decentish salary!)

We would lose tax credits if he got a payrise, but the extra earnings should cancel out what we'd lose anyway.

ET1976

Plans_all_plans wrote: »

So over those 18 months (plus the 9 months of my pregnancy) I saved 26k.

you saved £1400/month, and had a child - respect!

carefullycautious

Wow another 'respect' here too

Have you thought about delaying having another child and paying down the mortgage.

Thats what I would do. Not sure how old you?

Plans_all_plans

Well it would have been slightly under that each month, once you take into account the interest that's been added. Also interest rates were really high when I was saving, which helped. My only outgoings each month were £200 rent to parents and £100 travel to work though!

We dont really want to delay having a 2nd child because there is a big enough gap already (it will be over 4 years if we got pregnant soon) and I don't want to be in work and out of work again. I'd rather do it all in one fell swoop and then concentrate on career properly.

I'm 24.

vegasvisitor

It does sound like too much based on that one salary. However totally clear that you are very good with money managing to save like that, and also you have the ability to go back to work at any point in this too.

I am a bit surprised they'll lend that based on one salary, but if they do then I think you'll be fine. You won't risk your deposit by not paying your mortgage, and you can go back to work if you need the money to keep up payments.

We are borrowing £150k, however only short term until we sell our own which we currently own outright. The thought of the £150k terrifies me, even though it's going to be £50k as soon as we get a sale and pay in at least £100k (hoping to sell for £120k and use some money to do up the new place too). Totally different scenario, but I'm a bit cautious and still think you'll be fine as long as you're able to go back to work if need be.

jonewer

I wouldnt borrow five times your household income.

You sound like you're really prudent with your money. I'd continue to rent if I were you and keep saving the deposit. Outside of London, house prices arent going anywhere.