Help!! Would our Mortgage be Affordable???

GillBush

Hi all,

My husband and I are first time buyers and we are currently looking to buy a three bed house. We are planning on starting a family in the next year, so want to move out of our one bed flat asap.

We have found a house which we really love. It was built in 2008, originally sold for £287k and is on the market for £275k (reduced from £279k). It's been on the market for four weeks and is being sold as a result of a break-up. The house is within an hour of London.

We are hoping to offer £270k and with a deposit of 20%, our monthly mortgage repayment would be around £990 (fixed for five years). My husband currently earns £31k and I am currently on £27k. At the moment we currently taking home about £3,700 a month combined and our rent at the moment is £725 a month.

We know we could afford £990 at the moment, but being cautious people, we have roughly worked out that factoring in an interest rate rise of 2% above our five year fixed rate, childcare and part-time working, we would be left with a disposable income / potential savings of £500 a month. This would only be for a period of three years or so, while the children are not in nursery / education.

We have no idea if £600 left over money each month is reasonable, or if it shows we are pushing things too much? What does the average family have left over at the end of the month?

Even taking into account stamp duty, deposit and fees, we would have approx 20k in savings from the beginning.

We would love to hear back if our figures are okay or if we are stretching things too far? Or are we being too cautious and should we just buy and make do when things change.

Any help would be greatly appreciated!!!!

seriousDFW

GillBush wrote: »

We are hoping to offer £270k and with a deposit of 20%, our monthly mortgage repayment would be around £990 (fixed for five years). My husband currently earns £31k and I am currently on £27k.

This looks doable given the figures but I'm not sure I'd want to stretch myself that far.

I earn £32k and my OH earns £29k and we don't take home as much as you - we do both pay into pensions and student loans though. Only reason I mention it is to ask if you do have pension provision in place? As this is important.

The other thing to consider is are you planning to have any time off work e.g. maternity leave? If so you don't want to overstretch yourselves so you can't afford the time off work you want to have. Just something to consider, may be irrelevant to you!

GillBush

Thanks for the reply. We both pay into a pension, but no student loans.

I think we would be okay during maternity leave, we would only have about £600 left for savings/disposable income during the period when I would be working part time and paying for childcare.

Atomix

Hiya - In the same boat - sadly those figures are where 50% of the 25-40 year old couples are at now - I'm earning 30k wife is on 27k mortgage is 830 fixed 5 years.... wage inflation - bring it on sooner the better... :-)

Atomix

Also - to add another point of interest/ dont forget to take into account / what we noticed - your new home will have higher council tax, more expensive running costs, and generally it will cost more money 'to run' as well as the higher mortgage. - sorry to depress the mood -

dancingfairy

500 a month 'spare' after all bills sounds quite a lot to me. How much would interest rates have to rise before you struggled?
Are you planning on running car? tax, insurance, etc etc.
What would you do if one of you got made redundant etc.
can you overpay the mortgage.
how do you expect your costs to increase once you have a child?

Best of Luck
df

SG27

Owning a house has a lot more costs to it than renting. There is always something that needs doing/paying for. And if you want a nice garden prepare to spend a fortune on plants! Obviously not a necessity but there are lots of little things like this.

Saying that you both earn well and £600 per month after accounting for everything is plenty. It's what we save just make sure you haven't forgot anything when working out your budget. And build a contingency fund before you buy. We have 1 years mortgage payments saved. This to cover job loss or large unexpected costs like new boiler, house repairs etc.


I think you'll be fine though.

SG27

Just to add I think you could get away with knocking a fair bit more off the asking price. If its been reduced already in 4 weeks its either overpriced or they want to sell quick. It's a forced sale so they have to sell.

retepetsir

We're on a similar income and just about to buy a house for a similar price. We've worked out that it is manageable for our current lifestyle as we're not too extravagant and will also be starting a family soon!

Good luck

ChopperST

That doesn't sound too unreasonable to me at all. You have a reasonable amount of equity in your home and are on good incomes.

My wife and I recently moved and our mortgage went up from £270 a month to £1000 a month.

We have a joint income of £4000 a month after tax and felt 25% of our income was reasonable amount to spend on a mortgage, make sure you budget plan all your bills for the month and see what you have left to live on.

We have no other debts apart from the mortgage and plan to start making overpayments too. Sadly it is a fact of life that house prices (in the long term) are only going one way. We decided to buy our forever house now on that assumption and to negate fees on solicitors / stamp duty etc. eroding our future wealth.

We like you enjoy the simple things in life and at the end of the day when you've spent a day at work its rewarding to come home to a nice house.