Mortgage and budget - does it seem reasonable?

BritishBulldog

My Better Half and i have found a house we want to buy as FTB's. Its on the market at £295k and is pretty much perfect for what we want regarding size, bedrooms, location yadda yadda. The price is the absolute top end of our budget (was £300k) and i just want to be sure i havent missed anything from our budget. We have good jobs so have a good take home pay of at least £5200 pm since the wife went back to work last year, though this can also be as high as £7000 depending on bonus payments etc. we are both 37 with 2 kids. We also want to overpay the mortgage by the max 20% pm @ £300 pm.

Mortgage of £260k (10% deposit paid) = £1500 pm fixed for 5 years HSBC + £300 overpayment = £1800
Insurances (Life/Illness/income protection/etc) = reckon on £120 pm to cover us both to pay off mortgage at least with some left over.
Cars = £500 pm payments for the loans.
SKy/TV/BB = £110
Council Tax Band D = £190
Utilities - £220
Union memberships - £30
House Ins £30
Mobiles £60
Car Ins £50

Gives basic outgoings of £3110 pm. Is there anything on there blatantly missing? We dont live particularly extravagantly..modest cars, modest holidays which we are doing without for the next couple of years anyhow and leaves approx £2000 pm 'living' which we dont ever come anywhere close to spending anyway. The kids are 13 and 5, and we would consider the insurances essential as basically we'd be screwed if anything ever happened to either of us!

PierremontQuaker03

I can understand why you are going for a fixed 5 year mortgage, but have you thought of an offset mortgage - if you have say 2k per month building up in your bank account then at least this 2k cumulative amount will be offset against your mortgage (lets face it you aint gonna make loads from ISA's, savings accounts these days) - correct me if I am wrong aswell, but on my Woolwich offset mortgage so I presume all offset mortgages, I can "overpay" as much as I want so if I have a month with a few out goings I just make a large lump sum repayment, on months I cant afford it I dont - I can also chose to increase/decrease my payment whenever I want (within reason).
It seems you have covered most of the bills, although you have kids so thats always difficult!:rotfl:

martinsurrey

PierremontQuaker03 wrote: »

I can understand why you are going for a fixed 5 year mortgage, but have you thought of an offset mortgage - if you have say 2k per month building up in your bank account then at least this 2k cumulative amount will be offset against your mortgage (lets face it you aint gonna make loads from ISA's, savings accounts these days) - correct me if I am wrong aswell, but on my Woolwich offset mortgage so I presume all offset mortgages, I can "overpay" as much as I want so if I have a month with a few out goings I just make a large lump sum repayment, on months I cant afford it I dont - I can also chose to increase/decrease my payment whenever I want (within reason).
It seems you have covered most of the bills, although you have kids so thats always difficult!:rotfl:

An offset is a bad idea in 99% of cases (or so I’ve found).

It only really makes sense in cases when you have a large amount of cash coming in AND going out, or might need access very quickly to equity.

Most 5 year fixes allow up to 10% capital overpayments each year (£20k+ a year in OP’s case) and offer better interest rates.

YBS offer a 2.89% normal 5 year fix or a 3.09 5 year fix offset.

Since you can easily get 2% net on savings the extra 0.2% on the mortgage rate means on a £200k mortgage you need to have £37k in the offset to make the 2 mortgages equal

Working
£200k mortgage at 2.89% = £5,780 a year out in interest
£37k in savings at 2% = £734 a year in interest
Net cost £5046

£163k offset at 3.09% = £5,046 a year out in interest

As most people don’t have, or need, access to £37k in cash they would be better off overpaying the standard mortgage and having a better rate.

jonas123

Insurances and Sky seem to be quite a lot! I'm sure there are better deals out there?

Cars often throw up surprises - have you included tax, servicing / mot in that? To be honest, I can't think of anything big that will eat significantly into your £2000 buffer (except food)