Difference between affording to buy & affording to RUN the house?

JustAnotherSaver

We're looking at buying our first place & we know that we can certainly afford to buy the house we're looking at no problem. As we'll be first time buyers i then started to realise that running a house would be a totally different question & i've come here to see if anyone can help with the confusion & concern we have right now.

My wifes gross income is £16,200 & set. Mine was £18,700 last year & variable (but so long as i have very few sick days, i get £18,000-£19,000.

Net income per month is approx £2,000. (is actually generally a few £100 more, but for play-safe we'll say £2k).

(All these bills are monthly & my wifes & mine combined)

FUEL: £130 (£70 me, £60 wife)
MOBILE PHONE: £20 (£10 each)
BROADBAND: £25.52 (we don't get any LLU on our exchange)
GYM: £67 (£30 me, £37 wife)
LOTTERY: £26 (£3 per draw, though we will drop the lines when the price goes to £2/line)
S&S ISA SUBS: £200 (£100 each)
ROAD TAX: £36.25 (£21.67 me, £14.58 wife)
CAR INSURANCE: £58.73 (£33.62 me, £25.11 wife - we pay yearly, i just split it by 12 for monthly)
UNION FEES: £12.70 (me)
GDC REG: £10 (wife)
SKY TV & PHONE: £41 (Sky Entertainment Extra & Weekends call package. Website said we can't get the talk package, which is balls as my mum has it right now)
GAS/ELECTRICITY: £100 (some friends in the city say they pay £50/month. Others £70/month - all in 2-3 bed houses, semis & terraced. I played with caution & lumped for £100. Think i did a quote which said £80 IIRC)
COUNCIL TAX: £113 (house we're looking at says it's band C. I thought it was based on value in 1991 i'm sure i read? House we're looking at wasn't built until 2001)
TV LICENCE: £12.13
WATER: £10 (based on my mum paying just over £60 half yearly)
BUILDINGS & CONTENTS INSURANCE: £10 (did a quote for the house we're looking at which said just under £100, so i played cautious & lumped for £10/month provision)
MORTGAGE: £500 fixed
FOOD: I'd guess about £50 per week

Is there anything i've missed?

I calculate that at the end of the month we will have approx £600 disposable income. I think i've been a bit on the heavier side on some of the above bills, so hopefully we'd have a bit more disposable each month (coupled with earning more than £2,000 in reality).

2 concerns...

1) While all relative, is £600 a reasonable amount of disposable income each month based on our income & spends? Are some of the bills alarmingly high/low? We don't live 'the high life', far from it. So at the moment i struggle to see many cutbacks (car & gym would be two).

However ATEOTD, disposable income is disposable income & still profit making, albeit slowly.

One big concern i had was....

2) We're looking at 3 bed houses for the reason of looking to start a family in the coming years. I say 'start' - we'd only ever have 1 child.

Question is, with £600 disposable with NO child, how on earth could we ever afford one? I don't mean mystical "oh you just will" either, i mean really how do we afford one?

The wife would be out of work for [insert amount of time here] & then either go back part time (likely) or full time if the chance arose. When out of work that's an income not coming in.
I'm aware there are some benefits (working tax credits - not sure what else), but i don't know how far these stretch (doubt they stretch very far). I doubt they'll come close to equalling her monthly wage.


So basically we're a bit down at the moment as we face the possibility of never being able to afford kids & having to re-think our house hunting.

Yet in the back of our minds is the constant thought that - plenty of people on less money than us afford to have children.

I can only assume my maths is wrong. Question is how can it be afforded in our situation? Would really like to hear from others in a similar financial situation.

Owain_Moneysaver

JustAnotherSaver wrote: »

GYM: £67 (£30 me, £37 wife)
LOTTERY: £26 (£3 per draw, though we will drop the lines when the price goes to £2/line)
SKY TV & PHONE: £41 (Sky Entertainment Extra & Weekends call package. Website said we can't get the talk package, which is balls as my mum has it right now)

You wouldn't need to go to the gym if you had a vegetable plot or an allotment. That would cut down on your food bills as well.

You don't need to do the lottery.

Freesat or Freeview costs £0 per month and you can get a phone line with evening and weekend calls for <£10 a month.

That's saved you about £120 a month.

You've forgotten maintenance on the house; things wear out and need replacing; and if you're renting your landlord probably pays for things like heating repairs and maybe even cooker and washing machine as well.

If you have a spare room you can take in a lodger tax-free under the Rent A Room Scheme. With a 3 bed house you have 2 spare rooms until the baby is old enough to need its own room.

dimbo61

You will manage to buy and run a house.
You will manage if you have one or four kids

i_want_one_of_those_mum

Hello,

I would say your gas/electric should be about £120 pm
Water if on a meter £20pm if on rates about £40 pm

With baby costs £20-30 pw, nappies, milk, wipes, cotton wool, etc. Look down the shopping aisle and will give you an idea on cost.

Childcare cost - depends on whether u are going back to work. There is a benefits calculator on here, play with the figures, going back to work full time or part-time, will give you some idea on what child tax credits / working tax credits you may be able to claim.

Mortgage £500.00 is low comparing costs but depends on what size mortgage you want. Have a look at some mortgage calculators.

Hubby and I have always worked out figures that if we can't survive on one wage we don't have it.

But I have two lovely girls that were not planned for, but you just Coe with the cost.

JustAnotherSaver

Owain_Moneysaver wrote: »

You wouldn't need to go to the gym if you had a vegetable plot or an allotment. That would cut down on your food bills as well.

This depends. I didn't want to start on a negative note for fear of you thinking i'm just trying to challenge everything you've put my way. Hopefully you don't think i'm just being awkward as i'm not...

Depends what you look to gain out of the gym. I see some people who turn up still wearing their winter woolies & they sit on the bike with a magazine in front of them as they sloooooooooooowly pedal away & you wonder why they're paying £30pm.

You don't need to do the lottery.

Again, not trying to be negative, but there's a lot that people don't need to do. I'm all for cutting back - we don't smoke, we don't drink, we very rarely 'go out', we rarely have takeaways. But at some point you need to do something that you want rather than need. Some people don't need to buy Nescafe coffee - they could buy Tesco's own brand, but they do buy Nescafe & just cut elsewhere instead.

Freesat or Freeview costs £0 per month and you can get a phone line with evening and weekend calls for <£10 a month.

And the negativity finally stops :beer: Valid point you make - this is something we were considering. We'd like Sky, but were considering Freesat. Just sucks when you want to watch something that's on Sky though.

You've forgotten maintenance on the house; things wear out and need replacing; and if you're renting your landlord probably pays for things like heating repairs and maybe even cooker and washing machine as well.

We'll be buying, not renting. I figured the disposable income would go towards savings which in turn would cover maintenance?

If you have a spare room you can take in a lodger tax-free under the Rent A Room Scheme. With a 3 bed house you have 2 spare rooms until the baby is old enough to need its own room.

This is one where i really would need to dig my heels in i'm afraid. Appreciate the suggestion. It's something my sister suggested this evening actually. I just couldn't share my house with a stranger. Family member or friend yes, at a push, but stranger no. I've had the best part of 30 years not having my own space. I'm moving so that i get some.

i_want_one_of_those_mum wrote: »

Hello,

I would say your gas/electric should be about £120 pm

Thanks. Any idea why? I only ask because friends have quoted less than this. My mum pays about £130pm & that's with 5 people draining it.

Water if on a meter £20pm if on rates about £40 pm

This was total guesswork on my part - based purely on my mother paying between £60-£70 half yearly.

With baby costs £20-30 pw, nappies, milk, wipes, cotton wool, etc. Look down the shopping aisle and will give you an idea on cost.

Good shout. I'll have a look this weekend. I assume they still do reusable nappies? They were good enough for me when i was a baby!

Childcare cost - depends on whether u are going back to work. There is a benefits calculator on here, play with the figures, going back to work full time or part-time, will give you some idea on what child tax credits / working tax credits you may be able to claim.

This is something that'll need to get discussed, but i'm sure my mother would help out here a lot since she looks after another relatives baby once a week.

Mortgage £500.00 is low comparing costs but depends on what size mortgage you want. Have a look at some mortgage calculators.

This is for a reason. I've stayed at home as long as i have to build a sizeable deposit which in turn helps bring the monthly payments down. My aim was around £500pm & our deposit allows us to do that based on various online calculators & also the IFA we saw.

Hubby and I have always worked out figures that if we can't survive on one wage we don't have it.

A co-worker was telling me their TOTAL bills come to around £800pm. Their house was £120k & the one we're looking at is £160k, but we have about 5 times the deposit that they had. They're no live-at-homes by any means - he's often out & making various purchases. I struggle to see how £800 can be a total amount, but yes you make a good point.

Still, i wonder - are you able to have much if your bills need to be covered by one wage & you say £500pm mortgage isn't a lot? To cover everything on just my wage then that would only leave £500 for us each month to cover everything else. Even taking out the 'wants' (Sky, broadband, gym) i wonder if my one wage would cover it.

SG27

We moved into a two bed house in Feb we estimated very similar to you.

A couple of things. Our gas/electric is around £50 in summer and £90 pm winter.

Water is £22 pm on a meter.

And maintenance! Don't forget this. Make sure you have a contingency fund. Our house had just been refurbished totally so thought all be good for a while at least but after just a few weeks the shower broke! It cost £120 for a new one luckily I managed to fit it myself or it would have been more like £250!

Oh and the lottery is a total waste. If you still want to dream then do a line a week.

SG27

This is for a reason. I've stayed at home as long as i have to build a sizeable deposit which in turn helps bring the monthly payments down. My aim was around £500pm & our deposit allows us to do that based on various online calculators & also the IFA we saw.

We did the same, saved a 50% deposit + fees and contingency fund in the end. We had to, we simply could t afford to move out otherwise!

Our total bills are £850 not including grocery shopping. Our mortgage is £497.

[Deleted User]

JustAnotherSaver wrote: »

(All these bills are monthly & my wifes & mine combined)

FUEL: £130 (£70 me, £60 wife)
MOBILE PHONE: £20 (£10 each)
BROADBAND: £25.52 (we don't get any LLU on our exchange)Can you combine with your TV package and phone and get this cheaper as a bundle
GYM: £67 (£30 me, £37 wife)
LOTTERY: £26 (£3 per draw, though we will drop the lines when the price goes to £2/line)
S&S ISA SUBS: £200 (£100 each)
ROAD TAX: £36.25 (£21.67 me, £14.58 wife)
Car maintenance and repairs?
CAR INSURANCE: £58.73 (£33.62 me, £25.11 wife - we pay yearly, i just split it by 12 for monthly)
UNION FEES: £12.70 (me)
GDC REG: £10 (wife)
SKY TV & PHONE: £41 (Sky Entertainment Extra & Weekends call package. Website said we can't get the talk package, which is balls as my mum has it right now)Look at other providers (eg Virgin, Talk Talk etc), also consider Freeview/Freesat
GAS/ELECTRICITY: £100 (some friends in the city say they pay £50/month. Others £70/month - all in 2-3 bed houses, semis & terraced. I played with caution & lumped for £100. Think i did a quote which said £80 IIRC)
COUNCIL TAX: £113 (house we're looking at says it's band C. I thought it was based on value in 1991 i'm sure i read? House we're looking at wasn't built until 2001)
TV LICENCE: £12.13 The first 6 (?) months will be higher, then will drop to this.
WATER: £10 (based on my mum paying just over £60 half yearly)I would be very surprised if it was this low
BUILDINGS & CONTENTS INSURANCE: £10 (did a quote for the house we're looking at which said just under £100, so i played cautious & lumped for £10/month provision)
life insurance?
MORTGAGE: £500 fixed but fixed for how long - play around with calculators to see what the cost would be if/when rates rose by 1/2/3%
FOOD: I'd guess about £50 per weekTry working it out based on where you shop and what you normally buy

Is there anything i've missed?

I calculate that at the end of the month we will have approx £600 disposable income.And is this the amount that you are saving every month? If not where is the difference between this and monthly savings going? - if unsure, keep a spending diary
2 concerns...

1) While all relative, is £600 a reasonable amount of disposable income each month based on our income & spends? Are some of the bills alarmingly high/low? We don't live 'the high life', far from it. So at the moment i struggle to see many cutbacks (car & gym would be two).At the moment it seems reasonable to be spending what you've listed above, but (as some other posters have mentioned) there are things that you *could* cut back on if the need arose (e.g. cost of child more than expected, loss of one or more income, illness, other emergency or high unexpected cost)(SKY, gym, lottery, one instead of two cars)

2) We're looking at 3 bed houses for the reason of looking to start a family in the coming years. I say 'start' - we'd only ever have 1 child.Is there a reason that you have discounted 2 bed houses if you are concerned about the longer term costs of a three bed? potentially higher costs and lower income in the future (child)

Comments above, HTH

Eve1975

My partner and I are about to get a mortgage which will be around £550 a month (what I pay rent at present anyway).

We are not high earners (me part time at £12300 and him approx £19,000).

I have worked out we will have about £500 disposable income which is fine for us. I do have a child but will get no tax credit help as we earn too much together. I pay out £142 a month on childcare still.

If you have a baby and your wife returns to work then childcare costs will be a lot higher (mine were approx £550-600 a month part time!) but I did get tax credit help then.

I would love another child but to be honest would have to quit my job and struggle on partners wage as child care would wipe out most of my wages once I pay out travelling to work costs.

Go to https://www.entitledto.co.uk as it has a pretty accurate calculator to work out different scenarios.

Dick_here

Buy Premium Bonds instead of doing the lottery - at least that way you're building up a contingency rather than just throwing the money away each week.

Rebecca01

Some good advice above.

Dont forget while your wife is on maternity, having worked she will still get in around the £500 mark from statutatory maternity pay even if she had left her job. Then £80 a month in child benefit. I am not sure on the tax credits , though you could play with the calculators as someone suggested.

Everyone says it , but children are not young long. Mine is 5 already. It has gone so quickly. Once children are at school the child care cost is much less. So if your wife was back at work you would find you had more money. However if you can rely on family for child care that would be a bonus.

It does sound a cliche , I know, its true though. You just manage.