Mortgage advice - financial suicide?

Anon12

Hello you lovely lot (buttering you all up for good advice ),

DH and I are thinking of moving this year. We are particulary interested in a move to a new home using a part exchange scheme. But i'm not entirely sure if its too risky a move. Once the fixed rate term is over our mortgage payments would go up to an eye watering £1000 a month. After the mortgage payments, bills and petrol have been paid each month we would be left with around £450 a month for savings and £200 a month for food and any other misc costs. There would be a couple of months a year where we wouldn't save (Christmas and MOT month!).

Now on paper it looks doable and we certainly need a home upgrade in terms of space. But I am worried about interest rates going up or if one of us would be unable to work, we do have insurance but you never know. We have accounted for the increase in bills and council tax. Currently we are actually saving the same level of money that would go to the new mortgage and bills so our lifestyle wouldnt take a hit.

That mortgage cost just seems so steep and I can't wrap my tiny tightwad brain around it! :eek: Thoughts? Anything ive missed?

BWZN93

If you feel like this is too steep; follow your instincts and don't go ahead with it. Not worth losing sleep and skinting yourself for IMO. I work on a principle that if me or OH becomes unemployed, I want all our outgoings viable on one income. I want to have spare cash to live a happy life, not scrimping. Just my 2p anyway.

kinger101

Once the fixed term ends, it would probably make sense to remortgage, particularly if the debt v equity puts you below an LTV threshold providing a lower interest rate. It might cost £500-£1000, but it should pay itself back within the year.

However, you are right in needing to consider what would happen if the base rate climbed by say 3 % over the next five years. Are you in jobs where you can expect salary increases above inflation?

Anon12

Just reread my post it would actually be £200 pound a week for food and other misc costs. No way we would consider it if it was per month!

Thanks both, lots to think about. Very good point about remortgaging. DH is in a position where his wage his likely to increase (he is the main breadwinner). I work on healthcare so not so likely for me!

Anon12

Hopeful bump

Foxy-Stoat_3

Part exchanging will see you probably overpaying on the new house or them giving you a low value on your current one.

Can you not just sell it on the open market and negotiate the price of the new house?

If your in a position to save £450 a month, its not a bad place to be, depending on your total household salary.

getmore4less

monthly £450 to save and over £800 for things is loads unless you have a ton of kids.

You can always look at a retention product rather than go to followon rate.

Do a proper budget and you will have a much better idea of what you can afford.