Single parent mortgage

Thrugelmir

Thurlow40 wrote: »

Thanks all, I checked affordability of my current mortgage based on 5% interest rates and it shocked me.... and then the increase if I do go ahead and move. It wasn’t a huge hike but it’s still got me thinking.

Nationwides SMR is currently 4.24%. Stress testing your finances at 5% is on the low side.

Thurlow40

Thank you!
I’m making it sounds very incorrectly like I’ve got loads of money here.....
The situation is this, I earn £30k. I also get £300 child maintenance per month.
I entered a new 3 year fixed rate very recently at 1.7% for 3 years. I pay around £560pm, I would be going up to £610 I think if I move and increase my borrowing further.
That’s affordable to me I think, I don’t really spend much on anything other than my son and I have no debt. There are a few luxury items that could go if needed, just silly things like amazon music, Netflix, SkyTV...
This entire thread is maybe making me rethink moving, maybe I’m being very naive!
Is my situation far worse than I thought?
I have savings and every so often I make over payments on my mortgage....bonuses from work, that kind of thing....
I would just love to get into a slightly bigger house sooner rather than later, for my son really but sadly the area we’re in is expensive, hence this large amount of borrowing.

Annisele

I'm a little puzzled by your figures - mostly because I can't square your numbers with a new mortgage cost of £610.

You earn 30k, and you want a 5.5x salary mortgage. So I think you want a mortgage of £165k. At 65% LTV, you're looking at buying a property around £254k.

You also say you want to increase your mortgage by £30k - so your current mortgage must be around £135k. If your rate is 1.7% and you're paying £560pcm, then I guess you must have pretty much a 25 year term.

But - I think a £165k mortgage over 25 years at 1.7% on a repayment basis would cost more like £675pcm than £610pcm.



How much equity do you have in your current property? Given that you say you only need to increase your mortgage by £30k in order to buy a £254k property, I guess you must have more than £89k in equity.

I guess that number because you'd need the £89k to cover the 35% of the purchase price you're not borrowing. Then you'll need around £2.5k for stamp duty, some amount for the early repayment charge for your current mortgage, and then easily £1k in fees and moving costs (probably quite a bit more).

I might be very off base with my numbers, particularly as to the length of your mortgage. It sounds as though you've had your mortgage a while, so I'm not sure I'm right to assume a 25 year term.