Buy or not?

The_White_Horse

for two high earners, you seem incredibly daft.

the_flying_pig

i've not seen your full calculations of course but i don't really understand - is your actual take-home income after business expenses £100k or £40k? that makes a huge difference.

assuming you earn £40k

you talk about £1700 a month mortgage payments. is that interest only or repayment?? if interest only then i'd say that this house is a bigger risk then i'd want to take on in your financial position... i doubt you'll be paying more than 3.5% interest, but, calling it 3.5%, £1700 a month means debt of about £580k... that would, only in my opinion of course, plenty of people did worse during the bubble, pretty crazy on a male income of £60k and a female income of £40k - nearly 10 times his income, nearly 15 times yours, nearly 6 times joint. you'd be horrendously vulnerable to interest rate movements or dropping down to a single wage.

assuming you earn £100k [and that you can reasonably expect to continue earning at least mostly the same amount for the foreseeable future]

assuming IO again - the purchase would be a stretch by normal historic standards but not by those of today [where interest rates are so low & loans based on big multiples of joint incomes are so common]. it's more than i'd personally want to borrow, for sure, not far off double to be honest, but it wouldn't be crazy, not at all. really up to you, taking all considerations into account.

Percy1983

If you can afford it then just do it if the risks aren't too big.

bluedrop

The flyingpig: some clarification:

My business makes a profit of about £100k a year (10% give or take)....I keep my income at £40k due to tax reasons...

£1700 is not IO. This includes a repayment. Interst part is about £1000 (the rent I pay now )

Eellogofusciouhipoppokunu

Jegersmart wrote: »

Look at a situation where your husband loses his job and doesn't work for 9 months and you unexpectedly find out that you have another child on the way.

Another situation to look at is whether you think you will die in the next 3 to 5 years. If you do think so, then you should probably look at spending your deposit on Disneyland tickets.

Enjoy your life, why on earth are you worrying about a house. You have enough on your plate as it is! :eek:

bluedrop

The_White_Horse wrote: »

for two high earners, you seem incredibly daft.

Why? Because I am thinking before spending? This IS the reason we are high earners.

moneyinmypocket

If you can afford it and you like the house then buy buy buy

Don't listen to some of the very jealous people on here who say no - there v v v bitter much?

the_flying_pig

bluedrop wrote: »

The flyingpig: some clarification:

My business makes a profit of about £100k a year (10% give or take)....I keep my income at £40k due to tax reasons...

£1700 is not IO. This includes a repayment. Interst part is about £1000 (the rent I pay now )

right, £1700 repayment. so assuming [say] a 25-year term & 3.5% interest rate, you're talking about borrowing three hundred & something grand? if you've got a track record of being able to earn £100k p.a. in profits/whatever whilst raising one child, then, all in all, i don't think that it sounds like an absurd amount to borrow, not really. that amount of debt is a burden but relative to your income it's the sort of debt burden that families have always taken on*, & occasionally struggled with, over the decades, rather than a noughties-style absurd 'hit and hope' burden.


* - some of the dafter housing rampers on here often make similar arguments about 4+ times joint income loans, despite these being a very new invention, but in your case it'd actually be true... borrowing around 3 times the bigger income plus one times the smaller income is... really very normal historically.

System

It depends whether you are looking for an investment, or somewhere to live.

coastline

Good luck...whatever you do..
Using the calculator I'm guessing you'll have reduced your mortgage by around 20% after 5 years.This is subject to 3.5% rates which might go up in a few years time ..who knows..??

http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator