feeling fed up, un decided about house move and finances

stolt

Hi this is going to be a long one but sad as it seems we don't have any family around us so i can chat it over with anyone else and me and the wife and been over and over this today and its getting worse rather than easier.


we are selling our house for 295k (which we have 66k on our exisisting mortgage, and we have a loan with my parents of 21600k)
we have found a house that we love, after looking for what seems a age, travelled to many different areas, some miles from my work in the hope of finding a nice house. we currently live in Essex and found this house in Maidstone Kent.

now the problem is I will need a mortgage of appx 185,000k not including the loan from my mum and dad.

i earn 35768k a year with some bonuses each year although not guaranteed, there aren't many banks around that want to lend me 185k. My wife currently looks after our three children and wants to return to work in about 4-5 years.

I want a fixed rate for 5-10 years and i was looking at the possibility of taking 100k on interest only and 85k on repayment which gives us a monthly payment of gbp 1112.00 + I pay my dad back gbp 150 a month for the original 25k i borrowed from him (this is borrowed on 1% under the halifax's base rate)


now i earn gbp 2100.00 a month (after tax) and after all the bills, food, insurances, school etc is taken into account it leaves us with gbp 51.00 month, plus my wife receives about gbp 200 a month in tax credits. so that gives us gbp 250.00 for non emergencies.

we have about 30k worth of savings of which about 17k will go on moving expenses, stamp duty etc and the remaining was going to doing a little bit to the house.

my money will hopefully go up each year, plus i get around 3k worth of bonuses as well, plus in 5 years my wife will be back at work and will hopefully bring in another 300-400 a month part time.

now i was all set for this, its a good move, bigger house with loads of potential and room for our three young children, but (and its not normally like me at all) but talking to some friends today and they have managed to put doubt in my mind, i know gbp250 is not a lot but it is for non essential things and all the bills are covered and some is food etc.

on the other hand i have spoken to some people that have said go for it, we have all done it at some stage or another and we have all come through it the other side.


do you think were mad, silly even for trying this.... what sort of money does everyone else have left over after all there bills are sorted out, i was so sure we both were now we have doubt and perhaps we are taking on to much but i thought we could do it, we making a new start and my oldest starts junior school in september so wanted to get her into a area so she can make friends etc before starting school.

sorry for the long post... i suppose i'm asking for encouragement but if you think its too much i would like to hear that as well, just not as much as go for it.:rotfl:

thanks for taking the time to read this.... theres nothing decent on tv anyway!;)

MortgageMamma

Ok you have three kids, a wife that doesnt work, a loan with your father and you are looking at borrowing 5.18 x your salary.

At first glance IMO this doesnt look good.

BUT

If you factor in your bonuses, and your wifes WFTC then there is a little breathing space

Whether or not this is doable largely depends on your other financial commitments, other than the loan you have with father do you owe anything on credit cards, store cards etc?

£250 a month leftover is not a lot, but I've known people with less - is there no way your wife could consider doing some part time work? Remember that leftover money has to stretch a long way - if your car breaks down, birthdays, christmas, holidays etc etc.

I think based purely on what you have told me already and on the assumption you have no other debts this is a bit of a stretch with three kids

Is there no way you could find a slightly cheaper property or play hardball and renegotiate the purchase price? Could your parent assist with some of the fee's so that you can at least keep some savings aside for emergencies?

stolt

MortgageMamma wrote: »

Ok you have three kids, a wife that doesnt work, a loan with your father and you are looking at borrowing 5.18 x your salary.

At first glance IMO this doesnt look good.

BUT

If you factor in your bonuses, and your wifes WFTC then there is a little breathing space

Whether or not this is doable largely depends on your other financial commitments, other than the loan you have with father do you owe anything on credit cards, store cards etc?

£250 a month leftover is not a lot, but I've known people with less - is there no way your wife could consider doing some part time work? Remember that leftover money has to stretch a long way - if your car breaks down, birthdays, christmas, holidays etc etc.

I think based purely on what you have told me already and on the assumption you have no other debts this is a bit of a stretch with three kids

Is there no way you could find a slightly cheaper property or play hardball and renegotiate the purchase price? Could your parent assist with some of the fee's so that you can at least keep some savings aside for emergencies?

Hello, we don't have any other debts, as i say we have some savings and the house were are buying is a 5 year old so it doesn't need much doing to it, just a little stamping of our mark on the place.

at the moment my wife is out at work because of child care fees, we have one who's just over four the second thats just over two and the third at 3 months old. so until the youngest is at junior school we thought it would make more sense with her staying at home.

the original purchase price was 425k and we got it down to 414k, they only accepted our offer because we have first time buyers so the chain is very small. The house has lots of space and plenty of potential (when i win the lottery!!, to build a build extension on the back as a neighbour has done and get a superb house)

while ive been putting the children to bed my wife has been playing around with the mortgage calculators and come to the conclusion that for the 185k we could do 85k on interest only and 100k on repayment which give us a monthly cost of gbp 978.00 + 150 gbp for my dads loan = total 1128.00 appx a month. which would give us gbp 372.00 a month disposable income after bills etc but this does include tax credits. obviously its still 85k on interest only but we could amend that after the 10 year fix.

i make a little money on ebay aswell which could add to the pot, but its not guaranteed but could be as much gbp 70 a month so it is looking better. Plus we allowed in our budget gbp 350.00 for our monthly food bill, now at the moment its pretty much buy what we want but we could get this down to gbp 300 with some careful shopping i'm sure.

MortgageMamma

If you feel you can do it then go for it, but remember a ten year fixed is a long time and if you have anymore babies you might struggle for money/space and incur early repayment charges if you need to sell up.

Know how that childcare trap works I had same problem, Little girl now five but her brother has just turned three and is still in full time childcare, for two years it cost us nearly 300 a week and we felt like we were working to pay the nursery! at least you have had them all close together so they will all be in school soon and hopefully be really close as they grow up

good luck whatever you decide, but i do think you should take the advice of a professional

Baileys_Babe

Hi I say go for it. To me it looks do able, if your both committed it will work. Many people have a lot less at the end of each month, make a realistic budget and stick to it. Would it be possible for your wife to earn some money now, possibly child minding which would enable her to still be their for your children but increase the families income.

herbiesjp

Difficult to say just on the basis of what has been posted.

However, what you have posted has impressed me, as it looks like you are spedning a lot of time analysing all the figures and the whole scenario (and all your posts verify that).

That indicates to me that you are very methodical (which is a good thing) and that you are going into any purchase with your eyes wide open

Based on the higher disposable income, I think you are looking at the right figures, plus looking at reducing other bills, and maybe having other small streams of income cam only help the situation

HTH

mummytofour

Sounds good to me. We have a large mortgage and a bigger house than we did a yr ago and for us it really is worth it.
Enjoy.

mayb_2

I am sort of assuming that the house you are buying is bigger than the one you are leaving - have you asked the people at the new house to show you their bills for heating and electricity and checked out the water rates and price for the rate band on the house etc. I am sure you have but just in case - these things can vary enormously from one house/area to another as I found out to my cost when we moved up the housing ladder size and area wise. Also food costs - and including things like clothes etc these grow with a growing family - school uniforms. MOT expenses? Not trying to be depressing but £250 really isn't a lot of money. On the plus side as you say a newish house shouldn't hold too many repair suprises.

densol_2

I have a mortgage that is £1762 per month and with food and bills the total per month is £2450. I have around £1000 to £800 left per month for non essentials and I struggle struggle struggle. I bought out my ex partner so had to get a wacking mortgage to cover the existing mortgage and equity buy out.

There is no way that I could live on £300 per month. There are so many incidentials - car tax, car breakdown, birthdays, petrol, christmas, car insurance, hair cuts- just loads and loads of things to pay out for. My money is always gone at the end of the month.

I wish you well and wish I could budget better . When house prices were racing upwards - getting a big mortgage today - was yesterdays news. Now it seems like it will always be a big millstone with the opportunity gone of collecting up lots of equity.

WhiteLily_2

We have joint income of £2500 and a repayment mortgage of £750 per month. We have one school aged child. After all the other bills i.e food, council tax, utilities, car and life insurance we have £600 per month left - which we get 50% each to do as we please. This has to cover petrol, car maintenance, personal clothing, haircuts, entertainment, hobbies etc; Believe me £300 per month doesn't go far!! The child benefit and tax credit goes into a seperate joint savings account for childcare in school hols; birthday presents etc and childs clothing/expenses etc. Any bonuses/overtime go into joint savings for emergency, family breaks etc; We struggle!! We Consider ourselves very lucky to live in a lovely house (with a lot of equity), to have our health, family and friends and no debt etc - but we do, occasionally feel sorry for ourselves that we can't afford the luxuries in life that others appear to have e.g luxury holidays, hectic social life, new kitchens, bathrooms and cars!! Your decision will depend on your attitude to risk and also, your attitude regards debt to paying for the 'extras'! Hope this helps and good luck with whatever your decison may be.