another baby on the way...... need to overpay

sarahmog

Hi all,

I have just found out i am pregnant again. I have a 3.5 year old and a 4.5 month old. We are currently in a 3 bed semi which was never our forever home but now we really do know that we need to move somewhere bigger.

We both have reasonably paid jobs (when i am not on maternity leave!) however we live in an area where the house prices are one of the highest in the country. So really need to get our act together in trying to get the mortgage down to then enable us to buy our forever home in about 10 years time.

Currently the balance on the mortgage is roughly £122000 with 21 years left to go. We can potentially pay off roughly £250 per month which would knock 7 years off mortgage term, however, we also desperately need new double glazing, a new kitchen and bathroom.

We are currently on a fixed rate with 3 years left to run. Our plan is too overpay the £250 per month for 3 years and then borrow roughly £25,000 on top of the mortgage again to pay for the home improvements. We would then start to overpay the mortgage again. I know this sounds topsy-turvy however we are both not good at saving so by putting the £250 a month straight at the mortgage means the temptation is not there to spend!

Does anyone have any words of wisdom or advice? I think this is going to be a long hard slog and I also need to get hubby on board with this as he loves to spend spend spend (even more than me!):cool:

edinburgher

Firstly - congratulations on your good news

My advice to you would be to take an honest look at your expenditure and get good at saving!

Realistically I think that you should expect there to be increases to the Bank of England base rate in the next 3 years. This will increase the cost of lending, which will doubtless have an impact on your affordability.

In addition to this, you will possibly have heard of the new affordability checks that lenders are conducting on people looking to take out a mortgage. These look at many areas of your finances (i.e. leisure spending, childcare, alcohol and tobacco use and gambling etc.) People who would have been offered a mortgage before may not get one now.

A couple with 3 young children will have substantially reduced income for a fairly long period (at least until they're all in primary school, when you probably won't have many childcare costs). Also, if you're both spenders, this will be picked up by the new checks (although I think we Brits always have a tendency to overdo descriptions of our own extravagance )

None of this is meant to worry you, but if I were in your shoes I'd be keeping my money, not paying it into the mortgage assuming that I could draw it down in 3 yars time. Nothing beats cash in the bank if you're looking to improve your home/move home etc.

sarahmog

Hello edinburgher

Thank you for your advice and congratulations. Luckliy we don't and won't have any childcare costs as between my work and hubbys work and family we have it all covered.

But i totally hear what you are saying, so potentially it may be better for me to lock this money away. It might be better to have a regular savings account which i can only touch in 3 years? That way it will mature when the fixed rate on my mortgage comes to an end?

Hmmmmmm you have given me lots to think about!

edinburgher

Re. childcare costs - you might not have fixed expenses, but you will find that the general costs of raising a family will impact on your affordability (i.e. more children = less money)!

Unfortunately regular savings accounts aren't nearly as generous as market leading current accounts etc.

You can learn to love savings, honest! Money used to run through my hands like sand, now I save like a champ and have tracked my income for nearly a year.