Mortgage affordability?? Your opinions please!

sazzler61

Hi

My partner and I are first time buyers looking at what we could afford to buy!!

We earn around £3600 a month (after tax) between us.
We are looking at mortgages which are about £900 a month.
Is this realistically affordable in other peoples' experiences??

The main concern is not the affordability on our current incomings, but how affordable this will become in the future with the pitter-patter of tiny feet!

My part time salary (after having children) would make our combined earnings reduced to £2900 a month. My earnings would stay the same for the foreseeable future then, though me partner's would (hopefully) progressively increase...

Does this still seem affordable? I appreciate this has a lot to do with other spending but we would be prepared not to 'splash out' on expensive living (clothes food etc).

We don't want to push ourselves too far but are concious of making a good investment in a property which will have the most opportunity for appreciation. Any advice greatly appreciated!

Thanks

opinions4u

sazzler61 wrote: »

We earn around £3600 a month (after tax) between us.
We are looking at mortgages which are about £900 a month.
Is this realistically affordable in other peoples' experiences??

Assuming sensible lifestyle, yes. You'll probably find things quite comfortable.

The main concern is not the affordability on our current incomings, but how affordable this will become in the future with the pitter-patter of tiny feet!

Sensible thinking. I would also suggest factoring in higher interest rates. Work out what you would have to give up if rates hit 8%, 10% or even 15%.

My part time salary (after having children) would make our combined earnings reduced to £2900 a month. My earnings would stay the same for the foreseeable future then, though me partner's would (hopefully) progressively increase...

But so will prices. So don't base spending plans today on pay rises and promotions that might not happen. I've also seen many people rise up the corporate ladder and then seem them slowly slide back down again in the future.

Does this still seem affordable? I appreciate this has a lot to do with other spending but we would be prepared not to 'splash out' on expensive living (clothes food etc).

I think you'll still be able to live with a degree of comfort.

We don't want to push ourselves too far but are concious of making a good investment in a property which will have the most opportunity for appreciation. Any advice greatly appreciated!

Don't see your home as an investment. See it as a home. There are a number of economic indicators that suggest house price inflation outstripping RPI is a thing of the past.

I admire your caution. Focus on saving a decent sum every month as part of your budgeting too. Even when you drop your hours and produce an extra member of the family.

Best of luck!

GMS

Firstly only buy a property which you view as a home, not one which you expect to make money from. Whilst value may well increase do not put too much emphasis on this.

As for affordability only you know your circumstances. You seem to have considered it in depth so you are on the right lines.

£900 of £3600 take home is 25% but you say it will decrease to £2900 so 31% ish.

Get best estimates of household bills. Council tax, gas, electric, water, insurances etc. Food needs to be estimated as do transport costs, socialising etc.

Remember you will be liable for home repairs as an owner so factor something in for this.

Baby will cost money so factor this in.

Don't over stretch yourself as you will end up staring at 4 walls and resenting the place. With a baby planned you want to be in a comfortable affordable home.

Good luck

Thrugelmir

sazzler61 wrote: »

The main concern is not the affordability on our current incomings, but how affordable this will become in the future with the pitter-patter of tiny feet!

Then plan ahead. Pay down your mortgage quicker and save for the longer term. Everything you do now will make life easier and securer in the years ahead.

sazzler61

Thanks everyone for your good and supportive advice

When I said 'investment' I probably didn't explain well enough....mainly we see it as an investment as it's had a lot of work done and is pretty immaculate (therefore wouldn't need much doing- we hope!!) and also is in a good area where schools are great, so we meant more of an investment for our future in that sense rather than distant financial gain, necessarily.

The advice about paying off quicker was fab, we hadn't thought of this before. We're now looking at options of overpaying by 10% for the first two years when we could afford to do that (before another family member is planned!!) so that we'd have 20% equity by then (from only 15% to start) and would then be able to get a better rate when we had less cash coming in (part time salary).

Any thoughts on this would be great but again, thanks a lot as advice has really helped show us different things to consider/think about

xx

getmore4less

Just do multiple budgets based on various incomes.

start wit the SOA calculator and build in 5-10 years of spends like cars replacing broken things etc.

http://www.stoozing.com/msoc/soacalc.php

shortchanged_2

Firstly is this a repayment mortgage?

Also don't forget that interest rates are as low as they ever going to be at the moment so don't forget to factor in the prospect of an interest rate rise and hence a monthly payment increase in your mortgage payments at sometime in the future when it is time to remortgage or revert to SVR etc.

somnus

Funny that I happened to come across your thread, Sazzler. We were in the nearly exact same position when we moved last November. Our combined income is about £3500 and we wanted to take into account that having children could be a possibility in the near future too.

Because of this, and because there were some great rates for fixed mortgages when we looked, we took a 5 year fix to be sure of the rates over this period. There are obviously pros and cons around this, but we thought the higher rate for a fix would be worth it for us to have this security. Also, property prices are quite low where we live, so even with overpaying we pay £800 on the mortgage. We live comfortably but quite sensibly and manage to save around £1000 a month with such a mortgage. It's all about budgeting and getting all the figures down - not only the obvious ones like utility bills and council tax, but things like car servicing and costs for presents at birthdays etc. I think these are often not accounted for.

sazzler61

Thanks again!

Yes it's a repayment mortgage!

Sadly the house we were looking at has been snapped up (probably was the good investment we thought after all as only been on the market for just over a week!) But I always think things happen for a reason- at least we have more of an idea now of what we can afford etc! We'll be able to act faster next time!

Now time to keep saving and searching!!

Southernman

My mortgage is 40% take home pay and i manage really well although a lodger helps...with him it works out as 29% and i manage extremely comfortably and even overpay and go on holidays.

I don't have a car though.