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

Prothet_of_Doom

comeandgo wrote: »

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.

Depend how much equity I was putting in, but yes.

Grumpygit

We borrowed 350k 3 years ago and we pay £1,667 per month on a tracker.

It is scary to think about it, but with high house prices where we are, there's no getting around having a large mortgage.

Flats are about 300k (and that's for a basic place) and the average house price is over 450k for a 3 bed.

Take it in your stride and plan for the future, save where you can to ease your panic, but don't stress about it too much now or you'll make yourself ill.

FloppyDisk

I'm sure you will have a lot to think about with a new baby, but perhaps look at the Oly Style board for tips on how to prepare for a frugal baby and cut back on non-essential things and also the Mortgage-Free Wannabee board for company in reducing your mortgage?

The level of debt you are comfortably with is a personal thing, but the fact that you are at least aware and perhaps a little nervous is a good thing, much better than thinking 'yes I've got 50% of our salaries to spend on decorating!'

lixandra

I work and live in London, single mother with one child. My mortgage payments for a 2-br flat at around £1000 are roughly a third of my monthly net income and I have 23 years left on the mortgage. So yes it's a huge long-term debt and there is risk but...

Rent would be about £2-300 higher per month for a similar flat in this area, and it would all go to a landlord... isn't that the same risk, with no 'savings' attached to it?

If something happens I'd still have to pay rent - or mortgage... so I'd rather pay the mortgage and build some equity. Do make sure you have some savings or if not insurance that would cover the mortgage and utilities for 6-months or so, and you should be fine. Oh yes, and keep your other debt low, or better at £0, don't go overboard with house renos and furniture... I don't have any debt and I'm not taking more, although it would be nice to have a new bathroom

cynicalgit_2

The_Masked_Turnbull wrote: »

When I took on my interest only £200K 120% NR mortgage in 2005 with my salary of 20K to buy a house in Northern Ireland I was **** scared of what would happen.

Almost 10 years on and my wages have risen to almost £50k due to promotions and moving up the ladder. Some people think you only ever receive the national average wage increase all your life, but this is totally incorrect. If you don't decide to go on the dole or flip burgers all your life then your actual wages will increase on average 10% PA, far faster than inflation or house price inflation. Only stupid people fail to understand this.

So far I've managed to secure a very low interest rate and I decide when to pay the capital down. The monthly repayments are pitiful and I can pay up to £1000 per month of the capital (if I decide I don't want a weekend abroad that month!).

My advice, don’t worry about it. You’ll be fine. Just put in some graft and you'll be retired by 50.

Welcome to the club.

What world do you live in?
Wages increasing by 10% p.a !!!
Are you for real?

FANG

What happens if one of you lose your job or become ill. The mortgage is a horrendous amount of money.

I cannot understand why people indulge in this Ponzi scheme and over pay for slave boxes.

FANG

Dovah_diva

The_Masked_Turnbull wrote: »

When I took on my interest only £200K 120% NR mortgage in 2005 with my salary of 20K to buy a house in Northern Ireland I was **** scared of what would happen.

Almost 10 years on and my wages have risen to almost £50k due to promotions and moving up the ladder. Some people think you only ever receive the national average wage increase all your life, but this is totally incorrect. If you don't decide to go on the dole or flip burgers all your life then your actual wages will increase on average 10% PA, far faster than inflation or house price inflation. Only stupid people fail to understand this.

So far I've managed to secure a very low interest rate and I decide when to pay the capital down. The monthly repayments are pitiful and I can pay up to £1000 per month of the capital (if I decide I don't want a weekend abroad that month!).

My advice, don’t worry about it. You’ll be fine. Just put in some graft and you'll be retired by 50.

Welcome to the club.

Nice post. I'm not sure you reassured anyone, but hey! At least we all know how amazingly successful you are!

curedham

cynicalgit wrote: »

What world do you live in?
Wages increasing by 10% p.a !!!
Are you for real?

Don't feed the http://en.wikipedia.org/wiki/Troll_(Internet)

cynicalgit_2

The_Masked_Turnbull wrote: »

See above, if you choose to be a layabout then expect to get the average 1% increase. If you choose to climb the corporate ladder then expect 8-10% on average.


I suggest you do the maths.

Eff off you idiot.

MGCP

I've just taken on a £375k mortgage on a £500k property. On a 2 year fix
that represents 40% of my net salary. Add on my wife's part time salary (net and after childcare costs) and that drops to 30%. That seems fine to me, we were paying more in rent for a much smaller place, I feel more comfortable now.