Is a 200k mortgage reasonable in our circumstances?

Daniel_B

Hello all,
myself and my partner will shortly have to get rid of our teeny weeny mortgage that only had about 12K left to go on it, and are planning to get a 200k mortgage.

Our combined gross take home is 57K per annum, do you think that is reasonable?

Deep down I think it probably is, but what makes it more difficult for me, is that we are going from a point of huge comfort (£500 payments but overpaying by £370) to around £1200 payments, with not as much room to manoeuvre as previously - when I know full well we were very spoilt beforehand.

To offset this increase in payment, my travel costs will be falling by £220 per month.

Also my gf has just started a 2 year HR qualification that should enable her to earn significantly more within 3-4 years, and maybe make savings on travel costs also.
We are currently paying into a sharesave scheme, and in another 3 years it will have finished, so then we will have an extra £250 available from that to overpay per month.

Are we crazy, should we look to borrow less....?

Dan

ctabuk

I think in many ways you have answered your own question. Borrowing too much and getting overstretched is not funny. You may want to ask a Local Broker what they think of Advantage Home Loans Flexishare which is a Shared Ownership product -the other owner in this case being the lender. Revolutionary stuff and brand new to the market.Not neccessarily just for keyworkers.

Daniel_B

Thanks for your reply cta - much appreciated.

True enough, we don't want to overstretch, but I don't know if we are....

In January, before the move was on the cards, I was planning to up payments on the mortgage to £1000, and just reduce what we saved.
This combined with the £220 reduction in travel costs offsets the difference completely - interest rates aside of course.

After we sell our house, we 'should' clear £140K, we have decided to hang onto/sit on £15K (£125K deposit) and have that as a cushion, and save nothing for 3 years, and pay every spare penny into the mortgage, at that time we should then have some spare money from the circumstances I explained above, and we could then pay it even more aggressively, and save some as well.

I should also be getting a family loan back of 12K in the next few years.

The enforced move is due a to a relocation for my company, and they are meeting most of the costs, including removal and most importantly stamp duty, though I will be taxed on this slightly.

We both feel that we would like this move to last us 10-15 years, if not longer, and most of the time I feel the risk is worthwhile, but I would appreciate an outsiders points of view - as many as want to give it!

Dan

silvercar

We did the same, haven't regretted it at all. We weren't moving areas so you have more motivation than us. We decided to stay where we were and have a tiny mortgage but weren't happy. So we bit the bullet, took on a massive commitment and moved. Been here since July and are so pleased we did it. We are also hoping to make massive inroads into the mortgage over the next 5 years, if we didn't think we could do this we probably wouldn't have moved.

Our plan is to stay here for 10 years +. If our finances don't work out then we will sell sooner and downgrade.

Daniel_B

Hi SC, many thanks for your reply.

Feel free not to answer me if you don't want to, or pm me if you would prefer, but are you in a similar income/mortgage repayment situation to that of my partner and I?

Thanks

Dan

ctabuk

Well, there you go, find a broker and one you like and good luck to you both, hope it works out well for you. At least you know the right questions to ask and will not go blindly at it.

silvercar

I don't think it is as much salary multiple (about the same as yours) that is important but spare cash left each month (quite a bit).

The question I would be asking is whether there are smaller houses in the new area that you would be happy to move to if needed. In 6 years our youngest should be off to uni/ work, so we could then move to a smaller house and/or give up some of our garden if need be.

Poppy9

Talking of children, what happens if one comes along;) . Even if you both continue to work full time childminding/nursery fees are extortionate.

Ultimately you must do what you feel is right for you. A lot will depend on your ages and attitude to risk etc.

We moved 11 years ago and doubled our mortgage. Seemed a big committment at the time and we had a few very lean years when DD came along. I didn't wish to continue working fulltime so we took a big hit with the loss of 1/2 my salary. Holidays and two cars had to go but I don't regret it. Now I still work p/time and we are heading back towards the comfort zone. We have both realised though that that this could change tomorrow if one of us became ill etc and had to stop working. That is life. We could manage, we could easily downsize our home and buy another one and release a tidy lump sum.

plane_boy2000

Depends on your lifestyle, but we are in a similar position to you - joint income of about 55K, but we have had 3 kids close together so our joint income will rise as my partner works more when the eldest starts school next year. Our mortgage is 180K. We manage, but things are tight, but as I said for us there is light at the end of the tunnel!!! We also took out an interest only mortgage so it keeps our payments low at the moment, and we repay capital when we can.