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

getmore4less

amyr said:

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. 

Interest only would be £250 per year extra payment that's the worst case

when you go repayment the impact is a lot less on the monthly costs and it is split over bigger payment and bigger debt. .

25 years 2.5%

amount	rate	payment	owing
£100,000.00	2.50%	£448.62	£97,083.33
£100,000.00	2.75%	£461.31	£97,178.89

~£13pm £152py extra cost  leaving you around £96 more debt

those on the low 60% LTV rates

amount	rate	payment	owing
£100,000.00	1.25%	£388.30	£96,570.83
£100,000.00	1.50%	£399.94	£96,677.99

~£12pm  £140py  £107 more debt

ShilvaA

Hi @getmore4less

That’s really informative thank you!

so we just did the DIP, Nationwide can lend us £320450 under the helping hand mortgage, adding a 15% deposit on top should make about £377k.

That is the offer I have just submitted (fingers crossed!)

Our savings will be decimated, however. We should be back to a healthy couple of K after a few months.

My husband has just started on a new banding in the NHS, so in 5 years, he should have an extra £6k(ish) on his salary.

I put my base pay in as £27200. And that is what the DIP is based on (plus a £400 annual bonus). But usually my earnings tap out at around £35k.... £44k last year due to me powerblitzing overtime for deposit related purposes haha. I just can’t include them in the calculation because I don’t work OT 8 weeks in a row.... and Nationwide need the lowest amount of OT showing on the last 8 weeks of payslips... which would be a zero.

.... I refuse to work OT every week for 8 weeks. Especially as someone who gets paid monthly only needs to have done OT once a month for 2 months to be able to include some.

Guess now the long arduous wait to see if they accept.... I expect not, but I am hoping that by throwing my little hat into the ring, should they get messed around by the buyer that they pick and then need a quicker sale...... maybe we might eventually get a look-in.

Getting_greyer

[Deleted User] said:

Getting_greyer said:

No. You should continue to rent for the rest of your life because interest rates may become unaffordable at some unspecified point in the future. 

What an odd response.

Renting for the rest of their life is clearly not what they want to do, they'll be very aware that interest rates fluctuate and they're going into home buying because it suits them - not everyone has your viewpoint. 

Bricks and mortar is a good investment - renting is dead money and this couple choose the former.

Thanks for the tip.  Clearly I was taking the !!!!!!.  Do you feel foolish now? 

getmore4less

That looks OK from that extra info

Bottom of band 6 is a decent stating point and depending on specialization there may be options for a 7+ later in career.
at least some visibility of pay progression.

Having the potential to bring in extra with the OT can rebuild saving or loosen the lifestyle with some spends

£377k  85% LTV to get to 75%(~£283k) in 5 years (looking at all 3 rate options adding the fee.

amount	rate	payment	owing
£321,499.00	2.54%	£1,300.00	£281,910.53
£320,999.00	2.59%	£1,300.00	£282,148.96
£320,000.00	2.79%	£1,300.00	£284,245.57

With 4k+ coming in I think that £1300pm is feasible al o give a good margin for rate rises.
(with saving rather than overpaying it needs a bit more

if you could stretch to £1,500pm.

amount	rate	payment	owing
£321,499.00	2.54%	£1,500.00	£269,129.62
£320,999.00	2.59%	£1,500.00	£269,352.02
£320,000.00	2.79%	£1,500.00	£271,384.27

LTV 71%  20% price rise as well would get you to 60%

One other thing not mentioned is the interest.

For that first 5 years  that will be ~£700pm sounds like it is similar to the current rent but you say you are getting a lot more for your money.

seradane

ShilvaA said:

Hi @getmore4less

.... I refuse to work OT every week for 8 weeks. Especially as someone who gets paid monthly only needs to have done OT once a month for 2 months to be able to include some.

Okay, yes, working OT for 8 weeks straight would suck, but if this house was enough of a dream house that you really, really want it... wouldn't that be worth knuckling down for? Especially if that would up your DIP enough that you could offer closer to full asking price if needed to secure the house?

GDB2222

Getting_greyer said:

No. You should continue to rent for the rest of your life because interest rates may become unaffordable at some unspecified point in the future. 

Very droll, but there's clearly a middle ground between continuing to rent and taking on the largest possible mortgage. 

lookstraightahead

Getting_greyer said:

No. You should continue to rent for the rest of your life because interest rates may become unaffordable at some unspecified point in the future. 

Although this is clearly sarcasm, the advice you give would have served me well as a youngster, instead of everyone banging on about house ownership.

I borrowed to the max, interest rates skyrocketed so I had to swap to interest only, split up from my spouse and lost one heck of a lot of money as house values plummeted. Wish someone had told me to keep renting.

Op, do not push yourself to the max, make sure you can comfortably afford your mortgage if interest rates double or triple. Think about if one of you list your job, think about other expenses. 

Im not for one minute saying you won't think about these things, but you don't want your dream house to turn into a nightmare house.

Sunsaru

Live within your means.

ShilvaA

Hi @getmore4less

That is very reassuring! After we accrue some buffer money, we were going to an extra £150 a month on overpaying... more if I do an OT shift. If we could get ourselves into the below 75% LTV for the remortgage time in 5 years.... that would be awesome!

@seradane

I can’t rely on the OT for the mortgage, I work factory shifts and yes I can do a lot, it’s not guaranteed that there would be availability for 8 weeks in a row. I have grabbed everything I can for the last year and a half and still haven’t managed to secure a continuous 8 weeks of extra income. I only know a week or two in advance or what shifts I am doing, sometimes less than a day.... my shifts are 12 hours each.

So to an extra 12 hours a week for 7 week and then find that there isn’t an extra shift available for the next week..... thus ruining my “streak”. I can’t do it, I barely see my husband as it is atm. I have my marriage to think about and that is the most important thing, way more than any house.

 seradane said:

ShilvaA said:

Hi @getmore4less

.... I refuse to work OT every week for 8 weeks. Especially as someone who gets paid monthly only needs to have done OT once a month for 2 months to be able to include some.

Okay, yes, working OT for 8 weeks straight would suck, but if this house was enough of a dream house that you really, really want it... wouldn't that be worth knuckling down for? Especially if that would up your DIP enough that you could offer closer to full asking price if needed to secure the house?

getmore4less

I would not fret over the OT  this is backup/bonus money, you are covered by the base,

You don't say how many 12hr you do (3/4) if already on 4 then moving up to 5 is not sustainable long term.
one strategy I quite liked when it was an option(not fixed pattern) was to string more together but have longer gaps.

  

It is important to balance life with work and moving into a new house you need to think about that as a joint project where you try to be there together and if that means dropping the OT for a while that is the right thing to do.


Depending how flexible your workplaces are and doing 12hr shift there may be scope to ensure you do have no work days/hours that sync up might just need a bit of effort to make it happen.

if hubby gets more holiday than you(NHS it's good)  then maybe he could utilise a few of the extras to fit in with your days off to get a few days together.

Does he do shifts as well or is his more a regular pattern?

Once you get closer to moving in to any new place perhaps think about a week off together.