Need help with budgeting worse-case scenario

mortgagewannabe_2

Hi everyone,

We are about to move home as we need a larger size home for our growing family. We are looking at getting a detached house, but unlike the terraced house we currently live in, we have been given a reality-check about moving up the ladder, such as more council tax, higher utility bills etc.

I know there is no perfect answer , but if I could get help to budget for worse-case scenarios, such as loss of job and mortgage interest rates shooting up, gas/elec bills, council tax etc......I mean, I don't want to end up in debt and I'm so confused :undecided:undecided:undecided.....

How would you do it?

SmlSave

A basic thing is to have 6-12 months wages in savings for emergency.

Should you lose your job, could your partner cover the household costs?

mortgagewannabe_2

Thanks very much SMLSave. I hope you don't think I'm being panicky or silly...it's just I don't want to find out later that had I worked my sums out correctly, I could have avoided this disaster.

I've already got savings to cover me for mortgage, but what I didn't anticipate is the fact when I move from a 4 bed terrace to a 4 bed detached that almost every other on-going cost will double.

Examples of these costs are:-

Council Tax - £1050 going to £1750
Gas/Elec - £1300 to £2600
Water - £400 to £1000

Whilst I'm working, the above is not an issue, however if god-forbid I lost my job and ended up on benefits, then the above would most likely put me into serious hardship.

How do you guys manage this?

melstar11

Why is your water bill going to go up so much? We halved our water bill (based on rates) by having a water meter installed. We intend to do the same in our new house which has a higher rateable value.

How do you know what your energy costs will be in a four bed detached? Things like improved insulation, thermostatic radiator valves, etc can help you heat a house more efficiently.

Ultimately it comes down to whether the benefits of a four bed detached out way the increased costs and how risk-averse you are. If your worst case scenario doesn't arise, might you be in a situation where you can increase your earnings - the reverse.

mortgagewannabe_2

Water Rates - because of the size of house and large garden.
Energy Bills - again because of the size of house, zero loft/cavity/floor insulation, v.old boiler, current owner showing me his gas/elec bills @ £250pm.

I had thought about water meter, however due to growing family, this is not something I currently find feasible.

The house itself is excellent as it's a decent size, has a lot of potential to expand/improve and would be good for my ill health,however I am worried that that once I've taken on such a debt, there is no going back.

If god forbid I did end up losing my job and back on benefits, what help is there available for me and how would universal affect this once it starts in my area?

giddypenguin

I live in a 5 bed detached with 3 adults and 2 kids (under 3 so share a bath) our water DD is set at £35pm. I suspect if you get a meter you won't be paying £1000 for water.

As for the energy bills - they seem stupidly high. Our house is modern (5 years old) but we pay £85pm for gas/electric. If you are worried about the cost of these bills either upgrade the insulation & boiler etc or do not buy the house.

Obviously the tax going up by £70pm is unavoidable- but not really that much in the long run! We were unaware of the band our house was in until we moved in - went from band D to band F!! :eek:

melstar11

When we had our water meter installed we had the option of having it deactivated if within the first 12 months we found the bills higher and didn't want to keep it. All that would have happened would have been a return to billing based on rateable value and the meter would have stayed in place to be reactivated for whoever bought the house after us.

We had a period when our water consumption rose significantly for various reasons. The bills were still £20 less than before the meter was fitted. I would try it and see.

marksoton

mortgagewannabe wrote: »

Water Rates - because of the size of house and large garden.
Energy Bills - again because of the size of house, zero loft/cavity/floor insulation, v.old boiler, current owner showing me his gas/elec bills @ £250pm.

I had thought about water meter, however due to growing family, this is not something I currently find feasible.

The house itself is excellent as it's a decent size, has a lot of potential to expand/improve and would be good for my ill health,however I am worried that that once I've taken on such a debt, there is no going back.

I'd manage it by buying a different property!

If you're worried about simple bills how on earth do you plan on financing expansions or improvements?

comeandgo

When we had high mortgage and bills I had an income protection insurance. As others had said, have 6 months living costs laid past so if anything does happen you have at least six months to sort it out.

getmore4less

You are buying the wrong house unless you plan to fix its issues.

AnotherJoe

You say you are moving because you need more space but are moving from a 4 bed house to a 4 bed house. On the face of it that doesn't seem to work? Is there more space downstairs? Bigger kitchen?

The gas and elec bills seem mad, mine are well under half that for a 3 bed detached. No doubt the OP is just careless about them or maybe is on a terrible tariff.
The loft hasn't got insulation ? Fix that in a day for a trivial amount.
Get a water meter fitted, and in any case why would your water use double just because you moved house?
These are all trivial issues easily fixable. Are you sure you want to move and you aren't just looking for excuses not to?