Up-sizing & mortgage affordability

thriftypatos

Hi everyone

We (wife, baby and me) are looking to move house. It would be a considerable trade-up and we are looking very carefully at our finances to decide whether it's financially viable and sensible. We are fortunate to have good salaries (c. £185k between us) but will have a relatively small percentage deposit on the new house (21%), leaving us with a mortgage of c. £630k. Our instinct is that this looks perfectly doable, and it's a good time to borrow given current rates, but the numbers are scaring us a little! We would be really grateful for any thoughts / opinions / advice. Of course we won't treat any advice as formal advice and will probably speak to a financial advisor before we commit anyway. Just wanting to check we are not completely away with the fairies, really.

If we achieve our target sale price, and complete on the house we are looking to buy (offer accepted already) then our situation will look something like this:

MONTHLY OUTGOING

Mortgage 2500

Bills (utilities, council tax, TV, car lease, transport, cleaner etc) 1300

Childcare 1250

Food / household stuff inc. baby things 1000

Entertainment (meals out together, weekend trips etc) & holiday fund 500

Child savings account 100

Additional (joint) personal spending money (personal hobbies, non-family trips, clothes, etc) 1800

TOTAL 8460

MONTHLY INCOMING

Joint salaries (net) 8900

On this basis we are looking at a buffer of 450 each month after we take into account all our outgoings. Given the size of our outgoings, this doesn't feel like very much, but we have been pretty generous with the outgoings budget so feel it is entirely realistic that we will be left with the full 450-500 as a monthly emergencies/contingency/savings pot (to be honest, it could be a lot more than that as our additional personal spending budget of 900 each is pretty high?)

Other information

- We are mid-30s, baby 6 months

- Both have excellent job security

- Almost certain to get pay rises this Summer (probably c. £10k between us)

- Joint savings / cash in the bank £33k

- No other debts (we clear our card each month, just using it to collect Avios)

- We usually get annual bonuses average c. £15k gross between us, though these are never guaranteed

- We have excellent pensions (wife is putting in 6%, her employer 19% and I am putting in 5%, my employer 10%)

- Own FTSE 100 shares valued roughly £20k currently (can't sell them for 3 years)

- We would like to put in a new bathroom suite (short-term) and do a big ground floor extension (medium-term)

Really appreciate any thoughts, in particular whether on paper we are looking financially stretched and/or taking on excessive risk given our situation.

Thanks very much 

MovingForwards

Have you had a play with the nationwide mortgage calculator? I'm sure it's them who let you list child care costs.

It will give you an idea about how much you can potentially borrow, then you have the equity in your current place, plus savings.

Don't forget to account for sale & purchase solicitors fees/disbursements, plus SDLT and estate agents fees on sale.

thriftypatos

MovingForwards said:

Have you had a play with the nationwide mortgage calculator? I'm sure it's them who let you list child care costs.

It will give you an idea about how much you can potentially borrow, then you have the equity in your current place, plus savings.

Don't forget to account for sale & purchase solicitors fees/disbursements, plus SDLT and estate agents fees on sale.

Thanks but as per original post we have already done all the maths and we can borrow significantly more than the 630k we are looking at - my question is really about whether our contingency / leftover each month is sufficient given the numbers at play.

Chumy

Thanks but as per original post we have already done all the maths and we can borrow significantly more than the 630k we are looking at - my question is really about whether our contingency / leftover each month is sufficient given the numbers at play.

I would aim to have much more left over than that! You could still get the house but you need to cut cost other places that you are over spending

MovingForwards

thriftypatos said:

MovingForwards said:

Have you had a play with the nationwide mortgage calculator? I'm sure it's them who let you list child care costs.

It will give you an idea about how much you can potentially borrow, then you have the equity in your current place, plus savings.

Don't forget to account for sale & purchase solicitors fees/disbursements, plus SDLT and estate agents fees on sale.

Thanks but as per original post we have already done all the maths and we can borrow significantly more than the 630k we are looking at - my question is really about whether our contingency / leftover each month is sufficient given the numbers at play.

Only you can answer your question. 

You know how much you actually spend in reality, how much you really have left the day before payday and whether you feel comfortable with the figures.

amnblog

@movingforwards is on to the point here.
This is not about us making arbitrary calculations. It’s up to you to decide what feels comfortable for you.

The other point is that property you decide to buy will be the deciding factor as it may be well within your budget, or alternatively a stretch that you absolutely have to have.

Moneyminded

Are you planning on having any more children? If so what would the impact of additional childcare costs/ reduced hours have on your outgoings. Personally with the income level you have I would be looking to save/ invest at least £1k per month but that is just me. I know I like to save a good 20% of my salary per month but that's what I am comfortable with. As others have said only you can decide what is comfortable for you. 

SMR710

Bloody hell I'd love that monthly income!!! Hahaha!!