Mortgage repayments - comfortable or overstretching?

MRSB

Hi everyone,
I have been spurred on by a few threads on here recently about not wanting to over stretch when buying first properties, and how much to have in rainy day/emergency savings.
Our situation is as follows, I know everyone will have different opinions but any advice would really be appreciated.
I am a stay at home Mum, (will not be going back to work for around five years +) with one young child, my Husband works full time and before we plan to buy his pay will increase to just over £1700 per 4 weeks. (At the moment he earns £1450 per 4 weeks, and we pay £600pcm rent, but are managing to save less than £50 most months). We are looking to try for another child within about 12 months.
We have our deposit sorted, but are trying to work out how much to borrow based on our monthly repayments.
I have gone through and budgeted per month, (which should give us a 'bonus' payday every year with my Husband being paid four-weekly), and have worked out that our outgoings will be £1120, and that figure includes the following;
Gas and electricity
Internet/home phone/TV
Water
Council tax (higher band than we are paying at the moment)
Life insurance
House and contents insurance
Mobile phones
Groceries
Savings for birthdays/Christmas
Savings of £50 for emergency/house majntainence
Car insurance, tax and maintainence
Cat costs (we have four)
Petrol for commuting/train fares and leisure driving

Now obviously £50 emergency savings is not a great deal per month, and we are scrimping at the moment and not really going on outings/doing leisure activities that cost anything, and we are left with £580 spare for mortgage payments and the considerations in this paragraph.

So, how much of that £580 would people spend on a mortgage in our situation please?

We will be moving into our first home with around £4k emergency savings, and all furniture/appliances.

We don't want to wait to move and build our savings more as my Husband will not get his new job until end of spring 2014 so our monthly savings until then will be dire, and we are eager to settle somewhere before trying for another child.

Thanks for any input. Sorry for the long post!

MRSB

I forgot to add as well that we are in receipt of child benefit but I don't want to count this in my calculations as I use/save it for my child.
My Husband is also at the beginning of his career and expects his pay to increase by at least 10k within the next 4 years, however obviously already having a child and planning another we don't want to have to skimp horrendously in the short term.
Thanks again.

dgtazzman

Generally most sources say 1/3 of take home pay for mortgage or rent, which in your case on the new salary would be £565, but with a second child in the planning, personally I would probably nudge more towards 25% or £425. That is assuming the £1700 will be take home pay.

Building_Surveyor

Adding another child into the mix will change affordability in the lenders eyes. There's no guarantee that your husbands wages will increase either. You seem to relying a lot on bonuses and pay rises and new jobs that haven't happened yet, are these guaranteed? What are property prices like in your area? What size property are you after?
You mention 4k for emergencies, do you have a deposit?

MRSB

Building_Surveyor wrote: »

Adding another child into the mix will change affordability in the lenders eyes. There's no guarantee that your husbands wages will increase either. You seem to relying a lot on bonuses and pay rises and new jobs that haven't happened yet, are these guaranteed? What are property prices like in your area? What size property are you after?
You mention 4k for emergencies, do you have a deposit?

Hi, thanks for your reply. My Husband's new job in the spring is guaranteed, and the 'bonus' of which I speak is that getting paid four weekly means we will get 13 pay days a year of £1700 (net), but I have budgeted for spending £1700 PCM. So, we should have £1700 more savings at the end of the year if that makes sense. You are right that the further pay rises are not guaranteed, and cannot be relied upon. We have a 55k deposit, 45k gift and 10k our savings. (Husband has retrained in new career so we saved prior to this and used to earn more). We then have 10k for moving and emergency fund, and speaking with some brokers I hope we will be able to move for around 6k in fees/stamp duty and moving costs.
In the area we are looking to buy there is a lot of three bed housing which is what we are after. If we buy something in an 'average' area, not great square footage we could buy for 140k, if we try to find somewhere which will fit us all in it for longer, in a better area it will probably be about 160 - 165k which would take us to the top of our £580 allocated for repayments. Of course then though something else on the budget will have to give in order to be able to afford house maintainence/outings etc, so I feel that is probably pushing it. But then I don't know if we will be able to afford to move again any time soon either. I know this is just the first rung on the ladder though so we are not expecting to move into our forever home.
You also talk about two children affecting affordability - this is one of the reasons we want to buy and settle before trying for another child.
Thanks again, any more advice based on the above information would be great thanks.