£300k mortgage, whaddya reckon?

Smoggy_2

Opinions folks if you please... My partner and i have an annual income of £85.5k (58.5k for me and 27k for partner), giving us approx £4500 after tax. We have 2 kids, and i would like to be mortgage free before i'm 50 (31 at the mo). After years of renting due to a rather nomadic job (which i no longer do) we are now settled in a town and looking to buy a house at £300k on a 15 year mortgage of £2600 per month (and using fixed rate deals). We are pretty careful with our finances so have very little debt (car loan of about £8k left), but will not have a deposit (stamp duty and fees wil be about £10k altogether, wiping out our savings). Do you reckon its doable...we would have almost £2000 per month for bills and to live on, though our eldest son is 8 years old and we plan on a 3rd in the next year or two, or are we being daft??

herbiesjp

In terms of getting the mortgage, it is very doable

In terms of monthly affordability, it is difficlut to say without knowing your lifestyle, but having £2000 pm to live off (with 4 of you) would seem fine

The new arrival woudl make things tighter, but as to how much would again depend on how you budget and the lifestyle choices you make

An alternative would be to go for a longer term with the mortgage, but make capital overpayments. This way you are not contractually bound to the 15 year term, so if thinsg did get a little tight, you could slow down on the overpayments, as you woudl be in control of those as opposed to having signed up for a 15 year term

Similarly, you could opt for an interest only option, and again make the capital overpayments in order to reduce the mortgage amount in much the same way

Both options need the discipline to maintain the overpayments, but maybe give you a little more control and flexibility should the purse strings need to be tightened

HTH

Smoggy_2

Cheers Herbie, according to the BBC Mortgage Calculator, an interest only mortgage would be £1500 over 15 years, how do i calculate what the capital payments would be please?

getmore4less

The thing that stands out for me is you are on good money and say you are carefull with it but have debt and no savings, so how carefull have you been?

If you have been spending it all up to now, where is the money to pay this mortgage, OK there is the rent you have been paying but is that enough to cover the mortgage and the other costs of owning over renting(lots of them).

Have you done a SOA/budget to show you really can afford this.

You need to have the finances totally under control so think like a Debt free wanabee because, that's what you are going to be .

herbiesjp

Smoggy wrote: »

Cheers Herbie, according to the BBC Mortgage Calculator, an interest only mortgage would be £1500 over 15 years, how do i calculate what the capital payments would be please?

It depends what interest rate you are looking at, but say at a 6.44% fixed 100% mortgage deal it would work out to £2603.44

There are cheaper and more expensive deals

HTH

Smoggy_2

Ive not always earned the money that i am on now..i had a big pay rise when i started a new job 4 months ago (my pay doubled overnight), so we now have a nice surplus to put into a mortgage on a nice house.

Herbie, i'm confused by the £2600 figure, would that be capital and mortgage? (please say it would be!!)

herbiesjp

That is indeed a capital and interest mortgage

Libra1975

If you are thinking about a 3rd child have you thought about the salary drop she will take whilst on maternity leave. I would be awfully wary of a monthly mortgage that size for the simply reason it DEPENDS on both of you being in work the whole time for the next 15 years, and what happens if mortgage rates do rise to 10% or more?

Bestthingsinlifearefree

Smoggy wrote: »

Ive not always earned the money that i am on now..i had a big pay rise when i started a new job 4 months ago (my pay doubled overnight), so we now have a nice surplus to put into a mortgage on a nice house.
? (please say it would be!!)

Hi !

If you buy now you will have a 300K debt and no savings, any change in circumstances and you are heading for repossession.

If your salary halved over night would you still be able to pay the mortgage on say 30K - 40K ?

I would rent for 12 months, clear your debts, build up your savings and then review it.

I would make sure that AFTER you have bought you still have 6 month of mortgage payments as savings as an emergency cushion.

That would be the sensible approach

Good luck.

meanmachine_2

Jeez - a mortgage were you wave goodbye to £2600 every month?

Sounds crazy - especially when all your figures are predicated on a job you've only had for 4 months.

I suspect the rent on a family home would be half that £2600. In which case, rent cheapily, get rid of that loan and at the very least build up a 5% deposit, plus a cushion of at least 3 months.

Of course, expect the mortgage advisors to tell you to go for it, but they wouldn't wouldn't they?

Pulse

Sounds fine to me personally - we've gone all out for our mortgage, and left ourselves £300 per month between us (after everything, inc bills, car etc), and we're happy. So you certainly should be fine.