Can I afford this monthly mortgage repayment?

eabha

Hiya,

So I tend to be impulsive and have already come to the conclusion that I can afford this but I want to know what other peoples perspective is on the affordability of this set up:
I have a deposit of 120,000
The house I am looking at is 315,000
I have the money for the mortgage fees, solicitors and stamp duty ready in a different account.
This will mean a mortgage of 195,000 over 20 years this is about £1100-1200 pcm. My take home pay every month is £2650

Is a mortgage of £1100 when my salary is £2650 too high a ratio? I don't have an expensive lifestyle, no children, no debts and can live on the minimum - def less than £600 pcm - food, bills, petrol etc. I just want to know if I'm being stupid taking on such a large mortgage by myself for 20 years? Or maybe it isn't considered large? I don't know...I just don't want to make a stupid financial decision and then be worried about money until I'm 50!

Any advice appreciated
E

Thrugelmir

Draw up a full budget.

Also allow for interest rates to rise in the future.

Have you made allowance for saving? Pension, car replacement , house maintenance etc.

hcb42

There is no way I would take on that kind of commitment on that salary alone, (we are all different I realise, and if it is the house of your dreams and you have worked out the budget - with contingency, loss of job scenarios and the like..)

there are two of us so our take home is double that and mortgage was similar amount £1100, and I was never so glad to relieve ourselves of large mortgage payments last year.

swanny78

I would draw up a budget plan, there a few free ones online. Remember bigger house mean more heating (usually) and higher council tax so factor all that in too. Leave some misc every month for other expenses just in case. Think about if interest rates doubled, could you still afford it? On a positive note apparently the first 4-5 years of a mortgage are the hardest financially , (not withstanding interest rate rises etc) so assuming you get pay rises, build up equity in the house it theory it should get easier. I'm just applying for my first mortgage and I did a budget planner and layed everything out on it and then some just to be sure.


My mortgage is looking to be about £1250 a month , my take home is £3800. Plus I have my wifes salary on top which is abt £400 a month, it all helps.

lookingoverIT

I've thought about shortening the term of my mortgage in the past but decided to keep it longer and overpay, maybe that's an option if you're concerned over the affordability (depending on the lenders policy on overpayments) this may be something to consider?

witchy1066

I am no mortgage broker but would you get a mortgage for 195k on a wage of 2650 , (some clever person will know) but I don't think it would be much above 33k gross, that will be nearly 6x

and that is without any loans/cc you might have taken into account

sounds a lot to me but like I say I am not broker

eabha

So gross salary is just under 43K and then there is bonus which I don't count as it varies so much year to year! The 2650 is after tax, pension, society fees etc.
I can borrow £195k, the bank told me 204k was max. So it's a push but possible! Just think it might be stupid of me to just go with it like I usually do with things...
A longer term mortgage is an idea...and a budget!

bigadaj

Seems to me hassle to stretch yourself this far, finding a house for just under 250k would save 7.5k I. Stamp duty alone.

As thrug has said your mortgage payments could double or more I. A couple of years, also its fine saying taking for a longer term but the amount of extra interest you pay is huge.

brizza

I think you'd be fine. I don't understand why you'd do it over 20 years though? Most places seem happy to lend up to retirement age, so why bother hamstringing yourself?

Moonraker71

I also think it sounds ok. Of course, anything could happen and you might find yourself in dire straits at some point, but you could just as easily be fine. The thing is, if you're buying on your own it's always going to be more expensive, and if you're in certain parts of the country, £315k does not get you very much. It's easy for people to say just get somewhere cheaper, but where I live now £315k would buy you a tiny 2 bed terraced house that would need updating, and £250k would get you a grotty, small 2 bed flat with no outside space at best.

I'm in a similar position to you, with almost the same deposit (£130k), though the house I'm buying (in a different town) is £285k, so payments slightly less (though income slightly less too). Not everyone has the benefit of two incomes, and I just feel like I either bite the bullet now or just live in a one bed flat forevermore, which I don't want to do. (Done it for 15 years). Of course, I do worry that I'm taking on too much sometimes, but I'd rather risk it and finally feel like I have a proper 'home' than carry on where I am now indefinitely. If it all goes to pot, then I'll just have to throw in the towel and move somewhere cheaper I suppose. Also, if you can live frugally on your remaining income, then why not make overpayments while you can? This would eventually bring your monthly repayments down a bit.

Mrs_Z

What would happen if you lost your job? What is your back up plan/safety net/plan B?You could rent out one of the rooms under the Rent a Room scheme but this alone would not cover your mortage payments.