Experienced mortgagee's - Will we be overstretched? IYO??

skaps

I bought my house in 2008 and my mortgage is pretty high. I pay £1700 a month on the mortgage and I had not thought it through as much as you have. We are both teachers and as our pay has gone up it has been easier to cope with the size of the mortgage. Its the first thing that goes out when we get paid and then everything works around this. We got married last summer and made sure we saved up to do this. I have got better at budgeting and have got spreadsheets galore so I know where everything goes. I was worrying for ages about having children and what may happen but now have set aside money each month and having researched maternity pay should be ok when and if it happens.HTH

hcb42

thriftychap wrote: »

Can you tell me why? Cheers

I can, I didn't as you didn't seem to want detail

A mortgage is usually a 25 year term, and that is a long period of your life, if you can get something slightly smaller and be comfortable, I would do that. you never know when ill health or something at work is going to eat into your income, not to mention kids etc and you only have £455 left over after paying your bills, which seems like peanuts to me (I know a lot of people will say that's a fortune, but it's my opinion, and I wouldn't be comfortable with that) there is always the unexpected

I don't fully understand the post further down about current generations paying for the previous generations. Perhaps the current generaation would like to consider interest rates at over 15%. I think that would take care of the £455 and that is well within the period of when I first took out a mortgage, in fact the first 4-5 years I owned a home rates were between 11-15%. Whether it will happen again, who knows but I wouldn't take the risk if I didn't have to

Engeroosi

I think you would be fine, if the house is right, the area is right, and you are planning living there for next 5-10 years. If it isn't right and you are just moving because you want to have a new house for the start of married life etc then maybe you need to reconsider whether you are ready to commit to a large mortgage on a property that isn't "right".

As for comments that the amounts are scary, these are from people who were lucky enough to of first bought when prices were a lot less( I am guessing this) and benefited from rising prices.

Another point is that rent for my home, in my area, is 1050 per month!!!! Whereas my mortgage is 900 per month. Yes I can't just up and move with a month notice, and I have maintanance costs. But I also have the security that I am going to own my home in years to come, and then have no rent to pay. There is a possibility that in 5-10 years that my home will be worth more than I have paid including interest payments. Although I would be happy if it was the same price as it was when I bought it.

It all comes down to whether you are buying a new property for the right reasons!!!

opinions4u

Actually, one important thing to consider is term of mortgage and when you "expect" to have children.

Don't automatically go for a 25 year term. Have a term that takes you to no longer 17/18 years after the birth of your first child. If the plan is to start reproducing in 2014 then I'd suggest a 21 year term will help you with education planning later on.

Of course, you still need to work out how you will meet your commitments as income and expenditure patterns change with the shape of your family!

dwsjarcmcd

Engeroosi wrote: »

As for comments that the amounts are scary, these are from people who were lucky enough to of first bought when prices were a lot less( I am guessing this) and benefited from rising prices.

Salaries would also have been less and today, it is very debateable when people will start to benefit from rising house prices. Also, back then (whenever then was) interest rates could go up or down. Today it is only realistc to assume they will go up for the foreseeable future.

laurel7172

Huh? Try the perfect storm of 15% interest rates, crashing endowment returns and a house worth 2/3 of the mortgage. Yes, it was all gin and tonics on the terrace while we plotted to rob the next generation.

Funnily enough, we thought the previous generation had had it easy...

Engeroosi

I never said you had it easy or that the percentage of your salary wasn't taken up by the mortgage, but the actual figures paid were less, therefore the higher figures being mentioned "shock" but in relation they are probably not too different. Again this may not be fact but general opinion

originalmiscellany

We too are both in education, and personally that mortgage would really scare us. We have had a fixed mortgage and also a variable. It's amazing how you don't know what the future will bring - I agree, you are guaranteed the salary increases in teaching (minus inflation pay rise) but getting a deputy or assistant headship is really hard at the moment! At my current school, we had almost 40 applicants for a head of science post and a higher amount for an assistant head. Not many jobs, not many people moving etc. But I'm sure you know about that, as it sounds like your head is screwed on.
Our strategy has been to overpay as much as we can, with the plan to be as close to mortgage free when we have a baby - we could have moved to a bigger house, but we have decided to stay here to ensure we're comfortable off, without the need for me to work my socks off.

My parents have always reminded me of the old days of 13+% interest rates, which if they ever come back will destroy most house owners.

Also, what would happen if you need something urgent like a car blows up? Would you be in a position to access funds to get a new one asap?

Hope this helps

getmore4less

thriftychap wrote: »

#17

getmore4less - Thanks for the reply, some good points. I too am starting to think its a little unrealistic.



In response to some of your posts - i have calculated future outgoings etc compared to current and it all seems affordable but pretty tight, be it moving in 6 months or 3 three years (15% deposit and all costs paid so no new debt except bigger mortgage). As you have pointed out its long term unforseen costs/expereinces etc i was hoping to hear about from people who have been their done it and got the badge.



Thanks for the reply

Longer term, the biggest inpact can be reduced income rather than expences most of which can be avoided or delayed.

So although public sector teacher/nurse not immune from job loss.
Kids, are the double wammy, reduced income with increased costs
Short and Long term illness, can be an issue once the sick pay runs out.

Expences to watch out for(after kids)

Cars can be the big one so watch out for the need for 2 cars.
replacement fund savings on top of running costs.

Bigger house more maintanence, can be offset if you have a garden by growing stuff.

Bigger house more furniture, look for free cheap hand me downs and replace over time.

Another we had to cover was instant travel, any relatives a long way away or overseas, they get older or can get ill or have accidents, flights are not so cheap for that short notice visit even with the emergency discounts.

Teacher, so holidays are in peak times, more expensive.


On the bigger house front if you can avoid a move then this can be self funding over time because it avoids a set of moving costs.

Another view point is to look at a place big enough to take a lodger, even a part time one or language student type deal for the summer, personaly I think this is easier to consider while young, build up the buffer so it does not become something you have to do later if something goes wrong with income.

At the back end you have(currently) pension lump sums to consider, these can form part of the end game planning and reduce mortgage costs now/later by having some interest only.

Allthough there was some things missing in your original forcast there was some slack, £60 gym, £200 invest, £200 each spending so that £455 is realy £655 with the investment, and could be close to £900 if needed, cut the gym and only £100 each spending. A coouple of years of overpaying by £900pm would make a big dent in the mortgage

Actualy thinking about it, affordability is not the issue its saving up to make it happen, deposit, costs, buffer funds will just take some time to get there.

thriftychap_2

Engeroosi wrote: »

It all comes down to whether you are buying a new property for the right reasons!!!

A good point - to get what we really want for the next 10 years we need to spend at least 250k.

The longer this post goes on and the more advice recieved: I believe it will be better to sit tight and save more with the intention of purchasing a house suitable for the long term future.