Help - Buying my first house and worried about the future.

Marshflower

What have you factored in to leave you with £200 per month? That's just £50 a week and trust me it does NOT go far. If you have not factored in all essentials (and having a modicum of a social life - and by that I mean anything at all - having friends over for a dvd night and the extra costs of snacks etc, not going out and tripping out the light fantastic) then I'd carefully carefully reconsider. Martin's spreadsheets on here for budgeting are superb if you've not used them, and really do factor in everything.
In your situation, I would either be borrowing less or renting and saving for longer. If you CAN afford a £1300 mortgage then can you afford to save the difference between that and your rent for a bit longer?
You will find money you didn't realise you had when you have kids because primarily you don't spend anything like what you did on yourself, plus if you are entitled, the £80 per month child benefit is a huge plus and the e-voucher scheme for child care. There is help out there but it is tough going and the affordability of a child is only part of it. The fear of not having enough money is intensified 100 fold when you have a child to consider and provide for.

NervousHomeowner

Yeah, that really doesn't sound right! Just because you can get a 95% mortgage doesn't necessarily mean it is a good idea to get one! Is the £1300pcm if you borrow the absolute maximum?

Personally, I'd either wait a couple of years and try to save a bigger deposit or look into buying something cheaper. Taking on such a huge mortgage that you only have £200 spare at the end of the month sounds like a recipe for disaster! Remember that rates are really low at the moment and are only going to start rising, so in 5 years time you could find yourself completely unable to pay the mortgage.

Also, what happens if one of you loses your job or can't work for an extended period of time? Or you need to do repairs on the property? I can totally see why you feel so worried about it, your husband isn't thinking things through properly if he is just assuming that you'll both work and everything will take care of itself!

Marshflower

NervousHomeowner wrote: »

Yeah, that really doesn't sound right! Just because you can get a 95% mortgage doesn't necessarily mean it is a good idea to get one! Is the £1300pcm if you borrow the absolute maximum?

Totally agree.
In the words of Chris Rock "Technically you can drive a car with just your feet, doesn't make it a good idea. Just because you CAN, doesn't mean you SHOULD"....

Cycrow

and most of that £200 will be taken up by a car once you get that.

perhaps posting up your current SOA to see where you might be able to make savings and increase your available money

gazter

Watfordgirlam wrote: »

Can anyone help me, or give me any advice?

I got married last year and my husband and I are about to buy our first home. In order to get on the property ladder we are doing a first time buyers scheme with Nationwide (save to buy) with a 5% deposit. Due to this the mortgage repayments are near £1,300 a month (twice our rent) for a 2 bed house, fixed for 4 years. I'm also learning to drive as neither my husband or I drive currently.

The problem I have is not affording the house with us both, but affording the house when we have a child. I've done the budgets and both myself and my husband are on medium wages and can afford our house (though after the bills and monthly food shopping (£200 a month) we have £200 a month left between us. We like our jobs and I earn more than my husband.

I've been looking into what we need to do if we have a child and looking at various budgets and It scares the crap out of me, to the point I don't sleep and worry contently! Basically, we aren't entitled to child tax credits, If I work full time we can't afford childcare and the mortgage, If I work part time we still can't afford childcare and the mortgage and I'm wondering how anyone manages to earn enough to look after everything.

I know there are others worse off than us that cope, but is that because they have no choice to get into debt. I've been in debt and I've finally got out of it and don't want to get back into debt. My husband has never had a loan or a credit card, but has also never budgeted and thinks it'll just all be ok, that having 2 children will just work and the bills will pay themselves and we'll still be able to run a car and feed and cloth our children, take them on holiday and pay the mortgage.

Every time I look a the various avenues we can't afford it!

Does anyone have any tips, suggestions or personal experiences that will ease my mind as I'm getting more and more worried!

£1300 a month, that's a lot of mortgage! My wife and I have about £40,000 pa between us, and we have just taken out a mortgage with a 63% LTV, and are paying £700 a month, and that makes us very nervous, i dont think i could ever consider £1300 on what we currently earn. We worked out if interest rates would have to hit 10% for those levels, and we would just sell and use the equity to buy something outright.

hazyjo

My last mortgage was way over £1300pm, but we still had a spare £1k+ each month! My current one is for over £120k and only £600pm.

OP, please think VERY carefully before signing up for any sort of scheme.

Or at least try it out - live on £100 each a month! If you get a car, you will (a) have to find the money to buy it as you won't have anything left to pay off a loan, (b) pay for petrol, (c) insurance (even a tiny £300pa for insurance works out at £25pm - and it's likely to be WAY more than that!), tax (some cars are extortionate now, over £300pa - mine, luckily, is only £30), MOT is around £60 once a year, servicing or maintenance is also likely to run into the £100s...

What about birthday presents? You'd barely have any money for those. Christmas! OMG, you'd just have to forget that.

I feel very jittery even thinking about running a home, possibly a car, and living generally with only £25 per week, EVERY WEEK, spare to my name (with nothing saved).

Jx

BitterAndTwisted

What my sister and brother-in-law did when they were considering increasing their mortgage to buy a much bigger house was to set aside the difference between their current mortgage and the prospective one in a savings account for six months. In the end they did it for a year so had a decent additional sum to add to the deposit

£200 a month left over after paying the mortgage, bills and housekeeping is a pittance, so I don't blame you for not being able to sleep at night. I wouldn't be able to either!

DRP

1300pcm is a massive mortgage and I think you are right to be concerned. The scenario is impossible imo. Seriously OP - what if your new house needs the roof fixing, or a new boiler, or car MOT? You need some slack in the finances to pay for these things.

If 1300 is twice your rent, why not save 650 a month for a year... that'll be another 8 grand towards your deposit right there, plus you can see if you can live with that kind of financial restriction.

nakiwala123

We have the same product and our repayments are about £1230 with about £650 left over after all bills. Before we even went to the bank I realistically budgeted for everything, even the odd lunch at work when I don't make my packed lunch, xmas, clothes, pub allowance, etc

Because of the tiny deposit we put down, I included in our budget £100 overpayments over the 4 yrs of current deal and we are also going to throw all our bonuses to the mortgage. We also ensured that we had atleast 3 months worth of bills money put away just in case the boiler/roof/etc decided to go. £200 is very little that if the boiler went that might just cover the call out and not the repairs!

Have you considered increasing the term to 30yrs and lowering your repayments? You need to looke at the equity you are left with at the end of the 4 yr deal to be able to get attractive deals or you might be stuck with NW (current SVR 3.99% but who knows what it will be in 4yrs ). I have worked out that with our regular and bonus overpayments we should have approx. 20% equity in our property ( if prices stay the same - southeast); though 25% equity would be more ideal for attractive rates. Without overpayments at the end of 4 yrs we will only have about 10% equity which currently does not attract the best mortgage deals. Overpayments are key on deals like this and at the moment you don't have much left over to save for emergencies and overpayments.

Good luck with your decision but I would carefully rethink the amount borrowed. Have you looked at maybe a cheaper location? I would have advised a smaller property but you have starting a family in your plans so a smaller house is not ideal. We bought a 3 bed semi and hope to stay 10yrs+. I believe that if you take out a very high LTV mortgage then the length of time should be longer for you to build up your equity, unless ofcourse you aggressively overpay, but then the save to buy mortgages only allows you £500 extra max per month.

Pm me if you need more info. We moved into our home 4 weeks ago and received the £1k cash back on the day we made the 1st payment.

Cornucopia

Couple of suggestions:-

1. Do what you can to raise further deposit. Even if you can get to 90% LTV, the rates back off considerably and could save you £300 pm. (At 95% they are pretty steep >5% APR).

2. Consult a Mortgage Broker (a free one will give you an idea of other products available that might be cheaper).

3. Even if you end up going with the Nationwide, consider a shorter tie-in period. This will both reduce the rate payable now, and enable a free swap to a cheaper rate earlier, if you can decrease your LTV later on.