Will i be overstretching myself on monthly payments?

Soundofmusic123

Can anybody advise me on endowment mortgage shortfall back in 1996. We discovered that there was a shortfall in our mortgage hence why we are still paying a mortgage today in our 70s. Can we make a claim against this shortfall that occurred?

getmore4less

gboy25 said:

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

what are you paying in rent and saving each month now.
That is often a decent estimate of what you can afford on a mortgage.

if you had a budget for living in the house  you would have your answer 
simple format is the SOA  do one for now and one for in a house.
https://www.lemonfool.co.uk/financecalculators/soa.php

Borrowing £118k  2.79% 5y fix  £999 fee there is a no fee option. 2.99%

add fee pay the same

1 £118,999.00 2.79% £558.96 £100,846.35 2 £118,000.00 2.99% £558.96 £100,876.86

not much in it for that level of borrowing.
what about the 2y fix and see whats left after 2 years.

1	£118,999.00	2.79%	£558.96	£112,039.94
2	£118,000.00	2.99%	£558.96	£111,455.89
3	£118,999.00	2.49%	£558.96	£111,328.76
4	£118,000.00	2.74%	£558.96	£110,865.91

You could hit 85% LTV after 2 years.

if you really want to drop the 25y  limit you need to find another 5% and will lose the cashback

520d2012

gboy25 said:

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. 

If it helps - my mortgage is just over £400 at the moment, total direct debits for the month are around £1100 - that is everything - sky, council tax mobile insurances etc.
On top of that I need to think of fuel, food, shopping etc.
My partner pays most of the things over the bills, so takeaways, shopping, holidays etc.
If you can do it - go for a house mate, it’s a massive commitment, but at the end of it it’ll be something you own, and you can always sell

ElizabethRose

How are you affording furniture etc? I rented before my mortgage on my own so I knew what I could afford based on that but I had everything to furnish my new house.

I would definitely recommend a spreadsheet. You also need to factor in buildings and contents insurance. Don't always choose the cheapest as the levels of cover massively differ. You'll also have tv licence, broadband etc. Look at the direct debits you might currently pay to Netflix etc.

Good luck and it can certainly be done with planning. 

gboy25

ElizabethRose said:

How are you affording furniture etc? I rented before my mortgage on my own so I knew what I could afford based on that but I had everything to furnish my new house.

I would definitely recommend a spreadsheet. You also need to factor in buildings and contents insurance. Don't always choose the cheapest as the levels of cover massively differ. You'll also have tv licence, broadband etc. Look at the direct debits you might currently pay to Netflix etc.

Good luck and it can certainly be done with planning. 

Thank you. I have a little put aside for furniture and will be just getting the basics to begin with and slowly increasing what I need as time goes on. I've considered all the other factors and have been budgeting and planning as best as I can at this stage. I suppose I'm just worried about lifestyle and maybe I'll need to make some cutbacks regarding that. 

RelievedSheff

We usually aim to spend about 25-30% of our take home pay on the mortgage. That leaves plenty of money for the bills, food, car running costs, etc. As time goes by and you earn more money the mortgage becomes less of a percentage of your income and things do get easier. Before we moved last year out mortgage payment had become less than 10% of our take home pay. At that point we decided it was time to move on and we are back at about 27% again.

You will find that you manage to budget to what spare money you have.Almost tripling our mortgage payment was a shock for the first few months but actually now that we have gotten used too it, we don't find it a problem.

MovingForwards

@gboy25 I kitted out my last rental from BHF, only new thing from them was the bed / mattress. The curtains were picked from the sale section at Argos, later on I then ordered a large freezer. Everything then came with me to my home where I made do without a fridge for a while before ordering that, again from Argos. The cooker was built-in at my home, they left the washing machine for me.

Two large tubs of trade white, to create a blank canvas.

I have spent about £1k now in total.

Gumtree and local FB selling groups are often giving things away for free or selling cheap.

You can do a lot on a budget, not everything has to be new. It gives you a breather while deciding exactly how you want your home to look after living in it a while. Plans change when you move in, put furniture in place and start looking from the comfort of your sofa.

gboy25

MovingForwards said:

@gboy25 I kitted out my last rental from BHF, only new thing from them was the bed / mattress. The curtains were picked from the sale section at Argos, later on I then ordered a large freezer. Everything then came with me to my home where I made do without a fridge for a while before ordering that, again from Argos. The cooker was built-in at my home, they left the washing machine for me.

Two large tubs of trade white, to create a blank canvas.

I have spent about £1k now in total.

Gumtree and local FB selling groups are often giving things away for free or selling cheap.

You can do a lot on a budget, not everything has to be new. It gives you a breather while deciding exactly how you want your home to look after living in it a while. Plans change when you move in, put furniture in place and start looking from the comfort of your sofa.

Ooh yeah I'm more than happy in doing it on the cheap and not going mad on everything brand new. 
Argos and gumtree will be my new best friends!