Looking to move house- are we over stretching ourselves?

minibbb

Hi

My partner and I have seen a house we really like which is priced at 350k. Our current house is worth 185k and we have just over 50k in it so a 15% deposit on the new house.

I am 29 and earn 34k a year and my partner is 25 and earns about 30k. The mortgage will be £1200 a month so double our existing but I think it's manageable. This is a 5 year fixed and I'll try to overpay so maybe reducing the mortgage to 250k ish after this period.

We don't have loans or any debt. Just the prospect of having children in a few years time which concerns me as my partner will need to reduce her hours.

Is a 290k mortgage for people in our situation sensible or are we being daft?

Many thanks!

Thrugelmir

Affordability is assessed at 7% rates by lenders. Would you feel comfortable at level of interest rate. Do not assume that today's rates will last the next 30 years.

If moving is an objective spend some more time building additional equity in your existing property by overpaying the mortgage. Thereby reducing the gap you need to bridge.

Malmo

Try the affordability calculators that lenders provide online. Enter your details, income & commitments and you should get an idea from the guide calculations.

audigex

Based on the old fashioned "4.5x joint earnings" measure, you're just about right.

That doesn't mean you'd necessarily pass affordability checks, but as long as you have no debts and live a reasonable lifestyle (no big spending) I'd say you'd get a mortgage. My main concern would be when your partners hours drop, as you'd lose income while your expenses also go up (kids are expensive!)

Work out your budget, work out how much you can sensibly overpay in the next 5 years (assuming your plan is to have children in ~5 years?) and then work out whether you can afford a mortgage on whatever's left, at 7%, with your wife working part time. The answer to that question is probably your answer.

Paully232000

audigex wrote: »

Based on the old fashioned "4.5x joint earnings" measure, you're just about right.

That doesn't mean you'd necessarily pass affordability checks, but as long as you have no debts and live a reasonable lifestyle (no big spending) I'd say you'd get a mortgage. My main concern would be when your partners hours drop, as you'd lose income while your expenses also go up (kids are expensive!)

Work out your budget, work out how much you can sensibly overpay in the next 5 years (assuming your plan is to have children in ~5 years?) and then work out whether you can afford a mortgage on whatever's left, at 7%, with your wife working part time. The answer to that question is probably your answer.

I would second that, our monthly nursery bill for one child is well in excess of our mortgage payment. Quite a hefty chunk of your budget not taking into consideration things for the child like clothes, food etc etc (and a few more etcs)

bcfclee27

Near identical situation I was in 18 months ago.
We did it and our 1st child is a year old.
We are doing fine and overpaying.

That said we get free child care from the mother in law.

pinkteapot

Follow Audigex's excellent advice re doing the sums first. You know your budget and whether you're spenders or savers. I'd go for it if the new house is one that's easy to sell in the future if you need to. That was the view we took. We upsized to a really popular area where houses always sell fast. Our view is that if we ever get into trouble, we'll downsize again, but you only live once. We're overpaying heavily while rates are low.

If you were actively trying for kids now I'd say maybe not, but you'll have a few years to live frugally and get saving or overpaying before they come along. Saving may be better than overpaying as you'll have a pot you can dip into to top up your income during the tricky few years when the kids are little.

And you'll get a big mortgage much more easily on current salaries/commitments than when the kids arrive.

And, you don't know what life will bring. We've been trying for kids for a long time - no previous medical issues so didn't think about the fact it may not happen easily for us. We gave up putting our lives on hold in case kids come along a while back.

chelseablue

I'll second that about the childcare fees.

My mortgage is £475 a month and childcare is £887 a month


Im looking at doing similar to you (although no idea when)


Houses round here are about £350k, hopefully I can get about £200k for my flat
With the equity and savings as deposit we would need a mortgage of about £190,000 :-O

minibbb

Blimy some superb replies- all very helpful thanks!

I should have said the house does need updating.... Will eventually want a kitchen/bathroom doing but on the whole is mainly decor and I'm fine with that. It's in a lovely area of Eastbourne and I think would sell easily once modernised.

Would definitely try to overpay if we bought it. Currently I have about £400 a month which I could potentially save/overpay if we went for the house. This doesn't include my monthly spending money etc so is disposable funds so to speak. The Gf has about £300 so between us a safety net.

I suppose it all depends what happens with the interest rates in five years time and how many/if any children we have!

I've taken out payslips to the mortgage man today so will see what he comes back with. I am excited about the prospect of the house, just the money side of things which make me slightly hold back.

Thrugelmir

minibbb wrote: »

I suppose it all depends what happens with the interest rates in five years time and how many/if any children we have!

Not just 5 years. A mortgage is going to last for many more years than that. I'm guessing you are looking at a 30 year term to make it affordable. In 20 years time you are still going to have a sizable mortgage debt hanging round your necks.

nearlyrich

Have you thought about putting the additional sum you would have to pay in a savings account that you won't dip into for 6 months and see how you manage in the real scenario?