Affordability Concern

looknohands

I've been assessed by broker and told affordability I can get a mortgage for £200k, I've given her all our income details. Now I've seen a house I really like that is lower than this, £190k mortgage with 10% deposit. I'm tempted to put an offer in today. But am a bit concerned as in affordability terms it seems like quite a lot, the mortgage repayment calculator is working this out to around £800 a month which is about 20% of our monthly income after tax, our broker hasn't found us a product yet, so a bit concerned it could be even higher than this when we apply. We currently rent and pay £500 a month.

I'd worry that if interest rates went through the roof we'd be spending a lot of our income on the house, it's also a bigger house so repairs, council tax, heating etc would be a lot more. What is a safe income / mortgage ratio, do you think the broker has assessed correctly? If I'm worried I should probably just leave it right?

betmunch

Or rather than just giving up you could ask the broker about the products available and the monthly cost before deciding if you're comfortable with it.

Just an idea

looknohands

Thanks, Can't get through to broker, house will probably go today (agents words).

libf

My mortgage will be about 30% of my net income when I move, and I plan to overpay up to 35%. That still leaves me enough for bills, food, savings and some disposable money. I'm fixing for 5 years to protect against nasty interest surprises, but it's expected that rate increases will be steady when they do come.

Depends on what you spend the other 80% of your cash on, I guess...

betmunch

looknohands wrote: »

Thanks, Can't get through to broker, house will probably go today (agents words).

Agree a price on the house subject to securing a mortgage you are happy with.

looknohands

Mostly into savings around 60% of income, I'm self employed so am cautious of having enough money to pay for things if worst came to it.

Edit: I am now looking to spend a large chunk of my savings on deposit and moving costs, so savings will be seriously depleted afterwards, hence concern at not being able to rebuild this, also part of this amount is for savings future / pension not easily accessible if something were to happen.

abundantia

20% of net monthly income seems very reasonable at that level of income, unless you have children (high childcare or school fees costs could make it tight) or very expensive hobbies

lisa110rry

Very nearly 29 years ago when we were moving from the Midlands to the North, we saw a house we rather liked and were told we could have the mortgage we needed - the sale price was £80,000 and we had a deposit of about £13,000. Sounds little now, eh? Well, I was a bit worried about this and discussed it with my husband and we decided not to go ahead with it as it made me nervous (I'm the more financially cautious of the two of us). We ended up in our current wonderful home which we bought for about £40,000 and made many repairs and upgrades on. We were lucky as the mortgage interest rate went up to 15% not long after (not saying this will happen now). I guess my point is that if you feel uncomfortable about it, you may regret it. Perhaps you should go with your feelings?

kingstreet

Moving to Liverpool in 1988.

Could have bought a MDC flat in the first wave of the Albert Dock for £44k but girlfriend at the time wanted a garden, so we ended up in a semi in Croxteth Park instead.

Not a good result.

Senior_Paper_Monitor

What's an MDC ?

kingstreet

Merseyside Development Corporation. They did the first conversions on the site.

Absolutely kicked myself for that for nearly thirty years, sad as it may seem.