Stretching ourselves to the limit for the chance of our dream house?

ShilvaA

My husband and I are both first time buyers.

His salary - £31365
Mine - £27200 base. Get paid weekly and do a lot of overtime.

No debt, no CCJ’s, no missed payments... though my husband pays child maintence and student loan.

We currently private rent. We have been saving 19 months and have saved a deposit of £50k (so far). 6k of that is from our LISA’s.

Nationwide seems to be able to lend us in the region of £325000 with their helping hand mortgage.

We have been looking for houses for over a year now... we lost out when the 95% mortgages got pulled... so we kept saving.

We have just viewed our dream house, almost perfect in every way. The seller hasn’t found a place to buy yet, they are going to start looking when they sell their place.

It’s on for £400k.... obviously we can’t afford that. 

I am considering putting a £376k offer on.... (we should have increased our deposit to about £56k by mid-august). 

If they do miraculously accept that... we will gather our fees and stamp duty whilst we are going through the house buying process... 

Maybe we could even increase the offer a little to £380k if Nationwide lend us the max £323-325k?

i know it is going to be tight, but does that sound doable? It is honestly exactly what I want from a forever home and I have quite a few very strict criteria. Its a rare find  

The mortgage payments wont break us... we will have a 15% deposit. The payments will be around £1100 a month, thats only £400 more a month that we pay in rent now for a teeny tiny property.

Maybe I just need some sense talking into me.

julicorn

We're in a similar position, i.e. getting cold feet about taking out the largest mortgage we are being offered. 

In your specific situation: I'd assume from your salary that each of you takes home about £2k a month. So even if one of you lost their job and wasn't able to find one for a few months, you may well be in a position to cover the essentials with just the one salary for a while? Depends on your other outgoings of course, but it doesn't sound like that big a gamble to me. 

[Deleted User]

Personally I think it sounds very tight and all of your eggs in a very tight basket.

We were in a similar position (although home move) earlier in the year but it would have left us in the position that one lender *may* lend us enough. If they didn’t, even by a small amount then we would have to pull out. Firstly I didn’t want to do that to the vendors and secondly I didn’t know if it was worth putting ourselves through that.

In the end we found somewhere over £100k cheaper that ticks more boxes and leaves us money spare.

if I were you and you’re set on it then I would get a DIP from nationwide first as it would be your only hope and pointless without that. Then you can at least make that decision on one less ‘maybe’.

Did you include the outgoings in that because those figures look like just the multiple of your income?

Regardless it’s taking a big chance you’ll be able to raise additional for SD, fees etc etc 

Loza2016

Do you have any children or plan on having any in the future? 

ShilvaA

Yeah, I am not worried about affording the mortgage payments... just more concerned about whether we can actually wangle that amount of borrowing in the first place.

Our outgoings are minimal, really minimal. And that £325k estimate from Nationwide included our outgoings.

Definitely never having children, so any loss of income would hopefully be a very short-lived inconvenience.

SameOldRoundabout

We are with nationwide and the estimate was actually quite a bit higher than they actually would lend on the DIP. I’d get a DIP before you think further on this so you have a definite budget. 

HampshireH

Do you have other income?

£6k to save in a month is a lot! If your able to save at that rate then your income must be far far higher with overtime.

It may be easier for others to advise with a true reflection of your income.

If you are earning min £7k a. Month between you (factoring in your current rent/bills etc) then you are pushing yourself a lot less than if you're earning around £4k as previously suggested.

ShilvaA

SameOldRoundabout said:

We are with nationwide and the estimate was actually quite a bit higher than they actually would lend on the DIP. I’d get a DIP before you think further on this so you have a definite budget. 

That’s concerning, how much less was your DIP for if you don’t mind me asking?

HampshireH said:

Do you have other income?

£6k to save in a month is a lot! If your able to save at that rate then your income must be far far higher with overtime.

It may be easier for others to advise with a true reflection of your income.

If you are earning min £7k a. Month between you (factoring in your current rent/bills etc) then you are pushing yourself a lot less than if you're earning around £4k as previously suggested.

 My overtime isn’t 100% guaranteed, I just did a lot to save for the deposit. Have wound down the last few months now.

I get an annual bonus, only a few hundred quid. 

And as of this year I should receive a £2k annual payment as dividends from shares in a family members company. That £2k should be received sometime this month. I haven’t included that in the income calculation (just in my projected deposit).

Crashy_Time

How much does your lender value it at?

amyr

This sounds extremely tight. Particularly if interest rates rise.

There's a good MSE article about this and how it could affect you. I.e. "the latest 0.25% rise means roughly £200 a year more per £100,000 of outstanding mortgage."

Even if you're considering a fixed rate mortgage, it could be a huge burden at the end of the term. 

[Deleted User]

@ShilvaA it sounds like you just need to progress quickly to that DIP because it all rests on that.

Essentially it may be doable but you only have one lender who will lend you the amount you need.

You have variables in there that will need to be checked over with the DIP such as overtime and child maintenance payments. The figure you have quoted is the absolute max ceiling offer but can vary due to many things.

Get that DIP asap and go from there so you know where you stand x