FTB question about disposable income

altitude2k

Morning all.

I think, more than anything I need a sanity check from current home owners about what sort of disposable income my wife and I should have per month after bills. Not strictly related to house-buying...but kinda. If it would be better-placed in another forum please let me know.

My wife and I are coming up on 30 and are in good jobs, and are planning on using HTB to buy our first home. Our plan is to use the scheme to stretch ourselves a bit to begin with, and get our "ideal" home rather than buying a house we're likely to grow out of in a few years and incur moving costs/stress.

We've spoken to the mortgage advisor who has told us what our maximum is, but I've tried to run through the numbers myself to see what sort of cash we'd be left with PCM.

So, after mortgage (plus around £200 per month over-pay to build equity and pay off the HTB loan), all bills I can possibly think of (including any increases and additions due to the house size, building insurance, council tax etc.), food, petrol, insurances, regular car expenses - even adding in potential monthly costs for a lease car should mine go "pop" - we're left with £~800 PCM for savings/entertainment/unexpected costs.

I guess my question is, is that a reasonable amount? Considering we want to live as well as simply own a house, and though we have no immediate plans will be looking at having kids sooner or later. I've looked at what our non-regular spending is over the course of a few months, but not having been a home owner before I'm not entirely sure I can account for the sorts of costs that crop up without expecting it.

Adding in the fact that I will have my student loan paid off in 2 years time and my wife's nursing band will also be going up in a few years, I do think I'm panicking for no reason. But as I said above, it would be nice to get some good, experience-based real-life figures on what is a comfortable amount extra to have.

Thanks in advance.

Kynthia

You won't be flush with money, although no new homeowner expects to be, but it seems like you'll have enough to socialise with and save if you budget well. You also expect that your future income is likely to increase and you have the £200 buffer should interest rates rise. If things ever got drastically bad you've got the space to take in a lodger. So you sound good to me if you think you're ready to settle down a bit and give up expensive holidays for a while.

altitude2k

Expensive holidays seem to have been a trend in the last few years! Have conceded that we'll be giving those up for a while. I don't expect home owning to be easy, but I don't want to be living hand-to-mouth - there are some people I know who are like that, and while they're happy to get on with it, I would absolutely hate it.

Thank you for the reply. Gives me a bit of confidence in my own maths.

isisini

Hi altitude,

We are a similar age to you, also recent FTBers, and have about £1,500 left to play with with after all our essential spends are made. Our disposal income includes savings, holidays, Christmas, all the DIY we're doing on our first home.

However, we do live in London, which sucks up money! Your budget sounds okay for now, but could get tight if you went down to one income or decide to do any major renovations to your home. So I guess it depends what your life plans are .

claire80

we have between 500 and 1200 disposable income a month ( i am self employed hence the variation ) and we live pretty comfy tbh. That includes budgetting for all the kids activities / trips a takeaway once a week and putting money aside for xmas and birthdays - all things we could cut out/trim if needed too.
we are not by any means- well off but we would not struggle if a high bill came through the door every so often etc

princeofpounds

Are you doing these figures on current interest rates and is the mortgage variable?

Because if the answer is yes you have some serious thinking about risk to do...

altitude2k

It'll be a fixed rate mortgage for 3 years, and using the rates from the adviser. We're looking to complete in the next few months so I would hope it doesn't change a huge amount before then.

It's also a new house, so no need for any renovations.

princeofpounds

It'll be a fixed rate mortgage for 3 years

Are you planning to pay a reasonable amount of the mortgage principal in those three years?

What would your disposable income be if you were forced to refinance at the current 5 year fix rate? Because that's roughly what the market it guessing as the average mortgage rate over that period, which you will be refinancing right in the middle of...

Paully232000

I would personally be happy with £800/month in disposable income as you would be able to save a small amount of that and still live quite comfortably and have money for unexpected events which happen in life.
Plus you have the option of not overpaying on certain months, for instance if one of you becomes unemployed or whatever.

We, when we move in a month or so, have worked out that we will have £1400 a month spare which we plan on saving some of it just for those very reasons.

altitude2k

princeofpounds wrote: »

Are you planning to pay a reasonable amount of the mortgage principal in those three years?

What would your disposable income be if you were forced to refinance at the current 5 year fix rate? Because that's roughly what the market it guessing as the average mortgage rate over that period, which you will be refinancing right in the middle of...

I see what you're saying. It's a touch under £100 PCM extra. But as I said, by the time the initial 3 years is up I will have paid my student loan which more than doubles that amount PCM right now.

princeofpounds

I see you also have a 200pcm overpayment which can serve as a buffer. OK thanks for taking the prodding in a dignified manner