Mortgage payments - How much ? Help...

bcfclee27

Hi,

My wife and i are planning to sell her flat and buy a house.
Weve been told we can borrow over 300k.
However repayments would be too much on this amount.

Our joint income is £3,770 per month.
We have £30,000 in savings.
We have no debts.
We arent sure if we will make much if anything on the flat.

The problem is we want to have kids which will also cost a fortune.

Im just looking for a rough idea of how much money i should be looking at paying per month on a mortgage. I was thinking no more than £1100 per month.
Im guessing we can afford about a 250k house with these figures but could do with some help / opinions as i dont want us to be struggling every month especially with kids.

Any help opinion would be greatly appreciated as im finding this quite stressful as its very tempting to go get ur dream house, and then resent it later on when you cant afford to do anything...

many thanks
Lee

dodger1

Your joint income, is that gross or net?

bcfclee27

Joint income is what we take home per month.

harpoboy

The repayment amount seems reasonable. What rent are you paying now?

Have a look at the MSE budget planner to work out what you can realistically afford:
http://www.moneysavingexpert.com/banking/Budget-planning#tools

There are some really great 5 year fixes on the market now. Assuming you can get a deal at 2.75%, the repayments would be £1,163 over a 25 year term.

With rents and house prices rising, it is certainly a wise move to buy a property for your family to avoid the risk of being thrown out at the whim of a landlord.

bcfclee27

Thanks for the reply.
We arent renting the flat my wife part owns it on a part buy part rent government scheme as shes a teacher.
So theres no risk of being thrown out by a landlord.
Part of me is happy to have a child for a bit in the flat but really kids should have a garden i think which we dont have.

Im just looking for a rough guide on how much of our income we should spend on a mortgage.
ive heard before of between 25-30% of ur net monthly income should go on the mortgage maximum ?

this then will give me an idea of how much we can push ourselves to when looking for houses to buy.

harpoboy

It's really about whatever you are comfortable with. When I bought my last home, I was pumping in almost 50% of our joint take home pay into repayments and it was tough for a year or two.

Since then, we have both had decent promotions and pay rises and interest rates have fallen, so the amount of our joint take home is well under 20%.

I would say 30-35% would be a reasonable figure, but do consider applyin for a long term fixed rate to lock in the current great deals that are out there.

Now is a very good time to buy. Prices are very likely to shoot up in the next year, particularly once Help to Buy kicks in.

TMC35

bcfclee27 wrote: »

Hi,

My wife and i are planning to sell her flat and buy a house.
Weve been told we can borrow over 300k.
However repayments would be too much on this amount.

Our joint income is £3,770 per month.
We have £30,000 in savings.
We have no debts.
We arent sure if we will make much if anything on the flat.

The problem is we want to have kids which will also cost a fortune.

Im just looking for a rough idea of how much money i should be looking at paying per month on a mortgage. I was thinking no more than £1100 per month.
Im guessing we can afford about a 250k house with these figures but could do with some help / opinions as i dont want us to be struggling every month especially with kids.

Any help opinion would be greatly appreciated as im finding this quite stressful as its very tempting to go get ur dream house, and then resent it later on when you cant afford to do anything...

many thanks
Lee

Your situation is very similar to ours, only that we are FTB's and deposit a but smaller, but salaries roughly the same and the bank too will lend us £300k

We too want to start a family in a year or so, so what I did was work out a budget of all our outgoings based on repayments on a £250k house and then did different columns for when I'd be on maternity leave earning roughly £600 per month and then once I go back to work I looked at what my part time salary could be based on my salary now, also researched childcare costs and added this in too as it a lot and upped food budget etc. So then looked again to see if we could still afford it and have a life too! This will give you a better idea of how long term your costs might be and should make you feel more comfortable in the short term.

Personally I think with the deposit you have going up to £250k purchase price should be fine as you've no debts. Try not to go over if you can and save yourself the extra stamp duty!

Good Luck

hazyjo

bcfclee27 wrote: »

Hi,

My wife and i are planning to sell her flat and buy a house.
Weve been told we can borrow over 300k.
However repayments would be too much on this amount.

Our joint income is £3,770 per month.
We have £30,000 in savings.
We have no debts.
We arent sure if we will make much if anything on the flat.

The problem is we want to have kids which will also cost a fortune.

Im just looking for a rough idea of how much money i should be looking at paying per month on a mortgage. I was thinking no more than £1100 per month.
Im guessing we can afford about a 250k house with these figures but could do with some help / opinions as i dont want us to be struggling every month especially with kids.

Any help opinion would be greatly appreciated as im finding this quite stressful as its very tempting to go get ur dream house, and then resent it later on when you cant afford to do anything...

many thanks
Lee

You need to play around with some online calculators and mortgage options (YBS is good for that). Change the house value to see what monthly repayments would be.

Start keeping tabs on what you're actually spending. Try living on a set amount each week rather than drawing out/spending on cards in dribs and drabs.

To give you some sort of vague idea, my ex and I brought in over £4k a month (net). We had a £270k mortgage which, when at a fixed rate, was around £1,800pm.

I am now on my own with a £123k mortgage. Costs me around £600pm, but that's only on a 1.99% rate.

Both very comfortable. I still have around £1700pm for bills, shopping, going out, saving (not my forte!), other expenses.

(No kids, though...)

Jx

Kynthia

Your situation is quite similar to mine. My husband and I are looking to buy a house, have quite a bit saved up for a deposit, no debts and slightly more take home pay. Our flat hasn't gone up in value unfortunately. However lenders are willing to give us much more than we can afford to repay each month. Also we are currently trying for a baby which means quite a drop in take home pay in the future.

What we've done is try to consider what our take home pay will be in the future. Once we have a child and I go back to work I've assumed a reduction of about 30%. However it's difficult to know for sure and factor in child care costs. I've also thought about how likely it is that either of us will get decent pay rises or a promotion (which for us is unlikely as we've done that already and reached a level we're likely to stay at for quite a while but might be different for you). Then also factored in what would happen if interest rates should increase to 6/7% which is entirely feasible in a few years time.

We've decided to try to limit ourselves to repayments of a third of our predicted post baby take home pay. We believe this will let us lead a comfortable life and also be survivable should one of us temporarily be out of work. We believe our income won't increase for many years to come, so we're looking for a ten year fixed rate mortgage to keep our repayments stable for the long term. You can decide whether it's worth getting a long term fixed deal or risking a short term fixed or variable product if you have enough of a safety net or think your income will increase in time. We're also considering the length of borrowing, as we don't want the mortgage when either of us is over 60, also the LTV will affect the interest rate. All of this means us buying a place between £250/280k. My parents think we're being far too risk adverse, but at our age they were living in a time of significant pay rises and greatly increasing property values. I don't think they understand that times are very different and we'll have to live with a wrong decision for a very long time.