Will i be overstretching myself on monthly payments?

gboy25

I'm aware that this is difficult to truly judge however I am just after some general advise from people who have mortgages. 
I have a DiP in place and a broker applying for my mortgage. I am a FTB on my own, no dependents, roughly 1600 a month wages (after tax etc.) although this will likely go up to around 2000 in the new year. The monthly payments on the mortgage will be 551 a month. (25 years 5 year fixed 2.79%). Initially I'd been hoping for a 35 year mortgage and lower monthly payments but due to the situation nationwide are only doing 25 years for someone in my position (10% deposit). 
Council tax will be around 120 a month. I'm predicting other house related bills at about 200 a month (likely overestimated slightly). 

My question is - am I mad? Is this too much? Bare in mind I live fairly frugally most of the time but do have a car to run and like the odd weekend away, theatre trip, holiday etc.
I am due a pay rise (fingers crossed) around new years time so will likely feel things are a bit tight in the first 4-5 months of my mortgage but may feel more comfortable in the future. 
I'm a natural worrier and just dont want to put myself in a position where I am totally broke. But really need to start the process of having my own place etc.

Thanks

520d2012

Can I suggest you get a excel spreadsheet and put your income against all your commitments.
Work out from what you have left whether you can carry on with your odd weekends or luxuries.
Honestly before I did that money was not well managed.
I try to get all my commitments paid 1st of the month so I know what I have for myself for the rest of the month - that way if I don’t have the money I won’t have the luxury.
You might think 4/5 months might be tough, but if something unexpected happens you could get in to trouble real quick and scupper any chance of a good mortgage in the future.
Will anyone else split bills with you?
Is £1600 household income or is there more?
This is where you be true to yourself - it’s a massive commitment

[Deleted User]

Firstly you need to consider your other expenditure, food, travel, leisure etc.
Go through your bank statement / bills over the last 12 months and get a realistic figure (things like insurance, car tax, repairs, xmas etc often add a surprising amount).
If I read your message correctly you are estimating that you will be spending £2000 per months with an income of £1600, that should give you your answer straight away!

Secondly as a single borrower you should seriously consider a suitable income protection insurance or how you might be able to pay if you lost your job or were not able to work

gboy25

520d2012 said:

Can I suggest you get a excel spreadsheet and put your income against all your commitments.
Work out from what you have left whether you can carry on with your odd weekends or luxuries.
Honestly before I did that money was not well managed.
I try to get all my commitments paid 1st of the month so I know what I have for myself for the rest of the month - that way if I don’t have the money I won’t have the luxury.
You might think 4/5 months might be tough, but if something unexpected happens you could get in to trouble real quick and scupper any chance of a good mortgage in the future.
Will anyone else split bills with you?
Is £1600 household income or is there more?
This is where you be true to yourself - it’s a massive commitment

Thank you. I have an excel spreadsheet and I think I would be okay in some respects but I may need to be more critical. I will be the only income. 
At the moment I live with my parents and pay roughly 230 a month in rent and have been saving well the last few years for the deposit which I will no longer need to do. I think that's why I'm finding it hard to truly judge. If I had been renting independently I may have had a better idea of outgoings etc. 
I'll try the excel spreadsheet again. 

comeandgo

Do you mean other household costs are £200 a month, not £2000?  You can't possibly have £2000 a month plus mortgage, even a family of four would not spend that.

gboy25

nerox said:

Firstly you need to consider your other expenditure, food, travel, leisure etc.
Go through your bank statement / bills over the last 12 months and get a realistic figure (things like insurance, car tax, repairs, xmas etc often add a surprising amount).
If I read your message correctly you are estimating that you will be spending £2000 per months with an income of £1600, that should give you your answer straight away!

Secondly as a single borrower you should seriously consider a suitable income protection insurance or how you might be able to pay if you lost your job or were not able to work

Thank you. But the 2000 a month is what I will be getting in wages in the new year after a pay rise, its currently 1600 a month. My job is as stable as can be at the moment (nhs worker). Yes I've considered critical insurance etc and am aware I'll need something in case I can no longer work. Cheers  

gboy25

comeandgo said:

Do you mean other household costs are £200 a month, not £2000?  You can't possibly have £2000 a month plus mortgage, even a family of four would not spend that.

Yes sorry that's a typo!! Thanks.

sam121285

When I got my first mortgage I was in a very similar situation. Things where tight for the first year, especially decorating and buying furniture but my wage rised and things got easier. 

I would absolutely do an excel budget. Work our all your outgoings and see if the money you have left over you would be comfortable with. There’s some free apps which you could use. I used “fudget” 

comeandgo

gboy25 said:

comeandgo said:

Do you mean other household costs are £200 a month, not £2000?  You can't possibly have £2000 a month plus mortgage, even a family of four would not spend that.

Yes sorry that's a typo!! Thanks.

I think it can be done with a bit of commitment and penny pinching.  You will need a few thousand pounds for solicitors fees as well as your deposit.  What I did when things got tight was take on a casual job in a bar, couple nights a week for a few months. 

MovingForwards

My take-home pay is now just over £200 less than yours and I budgeted to put £350 into savings each month after my purchase / move was done, my mortgage is just under £430pm with a 5 fixed higher rate APR due to prior credit issues; makes it easier for long-term planning by having fixed monthly payments for a set period. I also make £100 overpayments.

I moved further away from my work, got better value for my money.
Due to working from home I'm saving an extra £200pm into savings, plus I run a car (my last repair bill was just under £530 and I didn't blink when paying it), I pay a small amount into a private pension and do normal things like have my hair cut, buy from local businesses etc.

When I get paid, the first thing I do is move money to savings, then I can add extra as the days / weeks go buy and I've not spent the allocated budget in my current account. Dropping the remainder in the night before payday.

I run a spreadsheet for income / outgoings and another for my savings. 

Gas / electric usage can be reduced.
Council tax spread over 12 months instead of 10.
Water on a meter.
Shop around for a sim only deal when the contract is up.
Pay home and car insurance / car tax annually, as that saves money.
Don't buy too many take-away, cook at home, don't think you need branded foods etc.
Save instead of taking further credit after you get the keys for your home.

mustiuc

I pay £580/month at 2.69%. When I was renting, based on what I used to save monthly at that time, I said it would be impossible not to manage a mortgage. I was right BUT,  my monthly bills/DD are £1200/month. You need mortgage/income/life insurance, broadband, phone, council rax, water, electricity, gas, car insurance/repairs, etc etc. After £1100 I will add the petrol, repairs, food, day to day small expenses etc. With my wife, i average around £2200 a month expenses. We do not eat out, no take away orders, no pubs, no holidays. Working at least 240hrs a month.
The boiler needs change. The location is doggy as well. Quoted 3k to change it. If the roof/floor/pipe/window/door/etc will fail, you need to have the money to replace it. There will be no landlord/agent to call.
After I bought the house I finally realised what it means to own. It's nice to have conversations with friends or spreadsheets about it but when you move it, the reality hits.
I do not think anyone will like living 25 years stretched or budgeting every single month until they clear the mortgage.
At the end of the day, everyone is doing what they want or believe is right. I chose to save as much is possible instead of having a nice/forever/posh home and paying for it until I get the state pension for it. (and to be forced to sell it afterwards due to no savings/income).