Feeling scared at the amount of debt we're taking on

constantly_skint

Hi everyone, I'm a long time lurker on MSE. I'm posting because I haven't seen many people (if any!) that admit to the levels of mortgage debt we are about to take on. Is there anyone else out there... or are we just mad?

Here's our situation. We live in Surrey, and house prices are high in the area. We currently have a small 2-bed terrace, that we are selling for £350K. We are buying a 4-bed detached house for £500K. I think we are doing well to get the asking price on our house sale, and have negotiated a good discount on the house purchase.

Our new mortgage will be £325K over 25 years. Eeek!!!

There's some flexibility with the mortgage as we're offsetting, and repayments work out at about 50% of my DH's salary. I currently contribute to the household finances, so jointly the mortgage is about 30% of our joint salary. However, with a new child on the way, and maternity leave around the corner, my contribution is going to get less (especially with the cost of childcare on my return to work).

Are we mad? I just can't get my head around how much we are flogging our house for... how much the new house costs, and how much the new mortgage repayments are.

Please tell me we are not alone?

brettcta

once paid back, ours will be £217,000 over 25 years. i had a small panic attack when our mortgage offer came through - part relief, part 'ach mein gott, what am i doing?'

Mrs_Z

Dear OP, You are not alone! We are currently house hunting and IF we found our dream house, the figures are likely to be very similar. The only difference is that there are 2 of us working, no children but we only have 20 years before we are due to retire. SCARY!

comeandgo

At 50% of wages I'd be absolutely terrified. But 50% of take home pay of £2000 is scary while 50% of take home pay of £6000 is less so. I would imagine your mortgage company has decided that you can afford it.

GMS

Lender must think you fit within affordability though your username doesn't seee like one where an increased mortgage will help!

Crunch the numbers and see where you end up.

Thrugelmir

constantly_skint wrote: »

and repayments work out at about 50% of my DH's salary.

Based on what? Unlikely that interest rates are going to stay indefinately. 2% rise on £300k of debt is a significant rise.

dimbo61

Please tell me you are going for a 5 year fix ?
Like the offsetting IF you can save a little every month or have £25K after the move.
If you are selling a two bed terrace for £350K then the jump to a 4 bed detached for £500K is very good and you ONLY pay 3% stamp duty up to £500K
Good Luck in your new home

butterfly72

We are in a similar situation. We are FTBs and looking to buy in Surrey. We have a 200k deposit and was thinking of getting a 200k mortgage for a 400k property.

Looking around you dont get much for 400k. In fact we've hardly seen anything we like. We've decided to up our search to 500k. There seems to be some nice little properties for this price and we've seen a few we would buy.

A 300k mortgage is terrifying even though we could comfortably manage it with me still working part time and IR rises factored in. I could go full time if needed. This would be over 20 years as we are in our early 40s. We have no kids or debt. We're so fortunate tho, the bank of mum and dad has offered 100k so its back to the 200k mortgage rather than up our search to 600k.

It really is scarey figures, especially for me a northerner! When I think what we could get elsewhere!! But if we want a house we just have to accept the prices here in surrey.

penguin83

My Mum once told me that when her and Dad moved in to their current house in 1982 she sat on the stairs and cried and the £17,500 mortgage they had just taken on!

Enjoy your new home and baby xx

Goldiegirl

penguin83 wrote: »

My Mum once told me that when her and Dad moved in to their current house in 1982 she sat on the stairs and cried and the £17,500 mortgage they had just taken on!

Enjoy your new home and baby xx

Our £21500 mortgage in 1981 was considered big, and the £82,500 mortgage we took out in 1989 was thought to be enormous!

It's natural to feel a bit nervous about taking on a big new debt, but it is worth it in the end.

Southernman

When i first got my mortgage of £90k and earning not much over £18k it was a panic. Couldn't have done it on my own. Lodger stopped me falling into financial ruin!