Mortgage advice please.......!!!

JohnWex

Hi all,

My girlfriend and I are almost ready to buy a new build three bed property. We have agreed a price with the developer and are now going through the process of getting a mortgage. However, we're now starting to get cold feet!

We both have relatively good full time jobs and togther earn about £3000 after tax per month. We are currently renting and paying £720 per month and have a combined loan of just over £340 per month, which will reduce to £140 in December.

The best mortgage we can find is a 35 year term with a two year fixed term working out at £925 per month.

We are begining to think that this might stretch us a little, but have worked out a budget and we would still expect to save about £400 per month. Based on our income, can I please have your opinion on whether you think a £925 monthly repayment is too much or just about right.

We are really worried about this now because we are due to put a holding deposit down tomorrow and we dont know what to do. Your advice would be very much appreciated.

Thanks !!!!!

CloudCuckooLand

35 years is a hell of a long time. Pennies of that £900 will be going off the capital for the first few years.

Re-work the figures to 25 years. Then you will see it is really unaffordable.

Wait a year and do it without so much loan in the background, will make it nearer to doable.

Wh05apk

35 years is as near an interest only mortgage as is possible, you will pay off very little, but if you can still save £400pm then you should be fine, its £200 + bills more than your rent, but you will have something to show for it.

I would try to reduce the term, alternatively settle on a longer term to keep costs down , and then in 2 years once your lonas are gone, remortgage down to say 25 years knocking years off every time you remortgage.

Make sure you go to a broker, rather than your bank.

GMS

Only you will know if your payment to income ratio is right.

How much are you borrowing? How much deposit do you have? Are you first time buyers?

JohnWex

Thanks for the replies.

We are planning on reducing the term after two years to closer to 25. The 35 years starting off was just to give us a little more breathing space.

The house is costing £250000 (we're in Surrey, same house costs £130,000 in the North West) and we are planning on getting a loan of £200,000. We are both FTB's.

Thanks!

Wh05apk

Good luck, oh and the abbey deal you are looking at is not bad!

DVardysShadow

Crossposted https://forums.moneysavingexpert.com/discussion/comment/41526708#Comment_41526708

Gorgeous_George

If you are not committed enough to get married, don't get a mortgage together. A marriage is easier to disassemble.

GG

Wh05apk

Gorgeous_George wrote: »

If you are not committed enough to get married, don't get a mortgage together. A marriage is easier to disassemble.

GG

I've heard it all now!

This is a mortgage and endowment forum, not marriage guidance!:wall:

getmore4less

£200k 35y £925pm is around 4.33%

LTV 80% but new build premium on price.

£3kpm income is around £50k so 4* multiple.

Whats the follow on rate after 2 years?
There is a risk you won't have a choice to move lender so needs to be looked at.

In two years you will still owe about £195k. your £925 is just over £200pm capital so renting the money is about the same as your current rent.
Allthough owning comes with cost you don't get renting.


Whats the SOA look like with £1k on house, £1k spends, £340 debt I would have though you could get to around £600 spare a month on £3k income

How much are you saving each month now, that is a good guide.

A few other things to think about.
Exit plan should things go wrong.
Plan for loss of income.
Plan for death
Plan for kids.

JohnWex

Hi everyone, many thanks for your replies.

Right, we have decided to scrap the plans to buy the house. It was working out too expensive and we were worried about getting a 35yr mortgage.

Today we have been looking at a 2 bedroom apartment in the same development. Its only 40 minutes by train to London, is 786 sq feet with a large wrap around balcony and separate kitchen. It would cost around £206,000 and with a 25% deposit (5% of which is being gifted by the developer), a 25 year mortgage looks like it would be approx £780 per month.

I would appreciate your views on this option and whether you think its more realistic than the first. Also, we are a bit unsure as to what our starting bid should be given that the devloper has already agreed to gift 5% of the deposit (around 10,000). Would we realistically be able to get more off the asking price?

Thanks again!!!