Scared To Death!

WF3

Am I about to commit financial suicide?
I earn £28,000 and my fiancé earns £24,000 – Joint income of £52,000 a year
The houses were about to buy is £247500 and we have 30k deposit to put down.
So I’m looking at around £220,000 mortgage and using rough calculators on the internet comes out over 35 years at £1300 a month!
Now my fiancé does not seem bothered by this, but my last mortgage was about £400 a month, so it’s a bit of a jump for me.
Can we afford this? We have no debts and the house is carpeted/finished and we already have everything we need furniture wise, just seems a big debt to take on and it’s keeping me awake at night worrying about it.
Is this a normal mortgage these days or are we trying to live outside our budgets?

Help!

Mark.

merlinthehappypig

It's a difficult one for anyone to advise on as only you know whether you can afford this or not. It's not a big mortgage by some standards, but it isn't a small one either. Plenty of people will tell you it will be fine, others will tell you house prices are going to collapse so don't do it.

My opinion, from personal experience, is if it is keeping you awake at nights with the worry it's too big!

herbiesjp

Have you taken a fixed rate?

How much money do you have left over at the end of the month after you have taken into account all expenses including the £1300pm mortgage payment?

herbiesjp

Just had a look at some deals - should be around the £1200 to £1250 pm figure

Could be cheaper but those deals appear to have excessive arrangement fees

HelpWhereIcan

I have to say that I think the fact that you appear to be so spooked tells you more about the truth of the matter than I can.

Do a full monthly budget being realistic about the amounts you will need to commit to various things.

My fag packet guestimate figures give you a joint take home of approx 3285 pm.

Take say 1285 off that for the mortgage, leaves you approx 2000 to pay your bills and have a life. Can you do that?

Are you likely to go and get a loan costing X pm to allow you to furnish the place/extend/get a car to match the house etc etc?

The only way to know is to sit down and be honest with yourselves about the standard of living and therefore expenditure you want. Only you know the real truth.

From the sounds of it, you may want to consider a fixed or capped rate to avoid rising interest rates (if it happens) giving you sleepless nights or worse.

Griptool

When you borrow money you are promising the lender to pay them your future earnings, ask yourself these questions.

How positive do you feel about the state of the economy and your future earning prospects?

Count out £220000 out onto the kitchen table (use your imagination if you don't have the spare cash lying about) and think about how hard you will have to work to pay it back with interest.

Can you afford to pay £2242 pounds a month if interest rates go to 12%?

Always remember the price of the house is an opinion but the debt is real.

antilles

Some good advice here. At the end of the day, it's up to you really. Depends on how big a repayment you're comfortable with.

If you can comfortably afford it and will not struggle with what you have left at the end of the month, then if you really want the house you should go for it. You should also consider things like interest rates going up.

However if you're having sleepless nights about it then maybe you should reconsider. Go with your gut instinct. No point having a nice house if you'll never enjoy it because you're spending your time worrying about the repayments!

Good luck!

carolt

Also, given the fact that you are about to get married, would you be able to support the mortgage if you had children? Maternity benefits, unless you're very lucky and work somewhere that pays over the statuary amounts, are currently 90% of salary for I think the first 6 weeks, and then just under £110 a week for the rest of the period (currently 9 months but due to go up to a year). So could you still survive on that? Even if you both went back to work asap, could you afford childcare costs? (not cheap!).

While this may seem a long way off right now, if prices were to fall, you might be stuck in the house long term, unable to sell at all or without incurring negative equity.

That said, I think your figures are just at the far edge of plausibility - they can be done, if you're strict - easier if you were fairly sure one or both of your salaries were likely to rise beyond inflation in the not-too-distant future. Only you will know that.

I'd view it as a home, not an investment - as the latter it may (it may not) be a bad one, at least in the short term, but if you are happy with it as a long-term home (I'm assuming it is big enough not just for now, but for future eventualities), then do the maths, and if it works out, buy with confidence. If it doesn't, rent knowing you are doing the right thing.

By the way, don't be a lemming - don't buy because friends have or family are nagging, buy because it's right for you.

FWIW, we were in a similar situation, and decided not to buy, earlier this year, and I think we made the right decision. But your maths may work out differently....

poppy10_2

Exactly - what happens if you want to start a family or if one of you is taken ill? Could you pay the mortgage with just one wage coming in?

MortgageMamma

my income is comparable to yours. approximately as it varies, but i manage 1250 a month plus 534 for my car, and I am the only one working. that said, I live a simple lifestyle, few drinks locally on a saturday and I dont do designer labels, - I dont think I'd be comfortable stretching any further than this though

meanmachine_2

Personally I wouldn't go over £1000 on a repayment, but I'm on my own.

£1300 between two is 650 a month, but remember that kids could be out of the picture for a while.

How did we ever get into this mess? Homes in the US are half the price and twice as big.

Isn't that better?! Crazy.