First time buyer and baby on the way - have we got our sums right?

surreybased

Hi,

Just seen this post but that my thoughts were it might be tough getting a mortage whilst your wife is pregnant. When we went through a mortgage recently, with Santander, they use the family size and made general assumptions on the spending patterns rather than our actual spend. They also assume rates of 6% to test affordability.
Also have you factored in costs associated with childcare - if you're in London these costs are likely to be very considerable.

Good Luck - I'm sure you'll get the mortgage and house you need.

pokey128

MrChips wrote: »

Just off the phone to First Direct. Unfortunately they refuse to consider my wife's income due to her pregnancy. They will lend a maximum of 4.5 times my basic salary (not gross) which will probably mean my figures no longer stack up

Time to get the spreadsheet out and call the mortgage broker again!

Hi
We remortgaged with FD last year while I was on Maternity Leave and what they needed from me was a letter from my employer stating my salary and when I was planning on returning to work (as it happens I fell pregnant again and never went back but that's beside the point). They could then use my salary to calculate how much we could borrow.

Good luck

MrChips

[edit - started new thread on house buying board as this isn't really a mortgage query anymore. If you want to post a reply please do it there instead! Thanks

https://forums.moneysavingexpert.com/discussion/2772646 ]

Thanks again to everyone who has posted so far - time for a quick update!

We decided against the first house in the end. In truth my wife's heart was never in it, and we got fed up of their refusal to negotiate on price so we didn't increase our offer from £490k. The place is still on the market at £530k and I even had a call from the agent yesterday asking if we were still interested at £490k ("but not that he would definitely accept this, mind"! )

We were about to give up looking for a house to buy and start looking for another place to rent in the short term so we at least had a bit more space for the first few months after the baby was born. However we finally saw another place we really liked in a similar area (probably a bit better actually) again on at £530k, but 3 bedrooms this time (but with planning permission for a loft conversion and a conservatory).

We have carried out a couple of viewings and we would both be very happy living there - it feels right for both of us! A first offer of £490k was refused and we went back with a £500k offer, but said that we wouldn't go any higher because we were already stretching ourselves, and the stamp duty threshold made this impractical.

Got a call today to say they need £510-£515k to get the house they want to buy, and would we consider increasing our offer! Sounds like an estate agent tactic to me to try and squeeze a few more pounds out of us.

My wife and I have decided we will wait for them to ring us back and then say we can't go any higher, and that we need to agree a price before mid October or we'll be forced to look for rental properties as we need to move before Christmas (baby due in January).

We are hoping no one else will want to go over the stamp duty threshold. From Property Bee, it seems a lot of houses in the area are having to drop asking prices so it does feel like a buyers market.

Any thoughts? This is all doing my head in!

p.s. having never bought a house before, how much time should we allow between agreeing a price and moving in?

neverdespairgirl

Their desired price of £510k to £515k seems very unlikely to be, given the jump in stamp duty.

If you paid £500k, you'd pay £15k. On £510k, you'd pay just over £20k. So the total price (to the buyer) is £515k or £530k. Big difference. You won't be the only buyer to think that's not on.

MrChips

Me again!

Can I tap the brains of the mortgage experts out there? It looks like we will end up agreeing a price of around £505k - £510k for the house we liked (with a house price of £500k and the difference made up through additional payments for chattels).

I've updated my spreadsheet of savings and we are now on or around the £275k mark. I am thinking hard about how much to put down as a deposit and how much to keep as savings. My current thinking is to go for the HSBC lifetime tracker at 2.19% pa 60% LTV, which would mean paying £225k for the transaction balance, stamp duty and moving costs. We would then have a £300k mortgage and initial monthly payments of £1300 (affordable on one salary and plenty of room to suffer rate rises).

That would leave savings of around £50k. Is that a reasonable amount for a first time buyer just after completion? I'm not sure what sort of savings we should be aspiring to have. Some (or more than some!) of this will be eaten away quite soon as we will also need to completely furnish the house, as well as get a new (second hand) car, and the costs associated with a first baby. We currently earn more than we spend so probably would be able to top up the savings reasonably quickly.

An alternative would be to borrow more, e.g. First Direct offer 2.39% for 65% LTV, which would leave us with an additional £25k, but a higher mortgage. Is it worth having this extra cash, at the expense of 0.2% on the mortgage rate? Balanced against this is the possibility that they (or any bank) may not be willing to lend this much as my wife is pregnant and they won't take her salary into account (as set out in a previous post).

Further alternative would be something completely different that you might suggest! E.g. fixed rate. What are the best buy 2/3/5 year rates at the moment?

[Deleted User]

£50k sounds a good figure, as you will still be able to save. Is that just accessible savings, or do you have other amounts tied up in pensions and the like?

Given you're planning to be in the house for 10+ years, I would give long term fixed a look over - 5- 10 years fixed. I believe there's a sub 4% 5 year fixed floating around which may be of interest. Not saying you will come out financially better (although I don't think there would be much difference), but given that you've bought your first house (and a big one at that), with a baby on the way, and will now be obliged to spend your weekends buying soft furnishings at your wife's behest, it might be as well to put a semi permanent tick in the mortage box and forget about it for a while.

Thrugelmir

MrChips wrote: »

(with a house price of £500k and the difference made up through additional payments for chattels).

That's a hefty list you'll have to put together to substantiate this I feel. Being so close to the dividing line will arouse interest.

MrChips

Thanks - I agree much more than £5k will be hard to back up. Do you think even £5k will be tough to justify?

luckyfool

MrChips - The revenue have cracked down on this kind of thing and now require it all itemised and justified with receipts/valuations etc. It really depends on what is included. You can't just say the light shades are worth 5 grand.

Thrugelmir

luckyfool wrote: »

MrChips - The revenue have cracked down on this kind of thing and now require it all itemised and justified with receipts/valuations etc. It really depends on what is included. You can't just say the light shades are worth 5 grand.

This is as old as the hills. Nothing new in cracking down.