Advice need please! What monthly rent/mortgage would be affordable for me?

DayTripper1984

Hello, due to a separation from my (now ex) partner, I will need to live on my own. We own a house together on a mortgage and she has agreed that we can either sell it and split the money from the sale, or that I can buy her out and keep the property myself. My preference would be to buy her out and keep the property, as I have done a lot of work to the house.
I have spoken to my mortgage lender and I would be able to borrow the required additional money to pay her off and keep the house; however, I am wondering if, although it might be technically possible, whether I would practically be able to afford this.

The monthly payments are going to be around £750 and my take home wage each month from fulltime employment after tax and pension contributions is just over £2100 (circa £36,000 a year before deductions). I also do some other casual work, which on average means I get an additional £200-£250 a month.

My only other committed spends per month is £260 for a car on a 4-year lease, for which I have 2 years left to run and then petrol, which is about £30 a week. I have no kids or dependants either. 

What are your thoughts on whether those monthly mortgage payments are realistic for me and what level of spare cash I might have at the end of each month?

[Deleted User]

It doesn't look desperate, but only you can calculate what spare cash you'll have at the end of month. 

Add up your spending (make sure to include everything) and deduct that and the mortgage from your income. Having an accurate budget is going to be very useful in your situation.

bargainbetty

You are in a good position because it is the house you are currently living in, so you can find out the utility bills costs - gas, electric, water, oil etc. You can also see the council tax and would have an awareness of the state of repair (if you know you need £50k worth of new windows etc..). 

Use the budget planner on here to work out all your monthly outgoings - haircuts, mobile phone, tv/internet costs etc. The budget planner is very good at including everything you haven't thought of. 

Plug in all the numbers and it will give you an idea of affordability. Personally, unless you have a lot of extra outgoings, I think you may well find it affordable. 

https://www.moneysavingexpert.com/banking/budget-planning/#planner

eskbanker

DayTripper1984 said:

The monthly payments are going to be around £750

At current rates - they could obviously increase (or decrease) if the deal is variable, or once a fixed rate has expired....

DayTripper1984

eskbanker said:

DayTripper1984 said:

The monthly payments are going to be around £750

At current rates - they could obviously increase (or decrease) if the deal is variable, or once a fixed rate has expired....

Currently on a 5 year fixed at around 3-4%, with two years remaining. I have considered paying the early repayment charge (around £4000) to a secure a lower rate of around 1.4% for the next 5 years, but not sure if that would be a wise thing to do, or not?

eskbanker

DayTripper1984 said:

eskbanker said:

DayTripper1984 said:

The monthly payments are going to be around £750

At current rates - they could obviously increase (or decrease) if the deal is variable, or once a fixed rate has expired....

Currently on a 5 year fixed at around 3-4%, with two years remaining. I have considered paying the early repayment charge (around £4000) to a secure a lower rate of around 1.4% for the next 5 years, but not sure if that would be a wise thing to do, or not?

Sounds worth it to me - £750 per month would be £18K over two years, whereas the lower rate would presumably be more like £6-8K, so the incremental £4K to access that would pay back quickly.  The only downside would be if spot rates plummeted during that term, but sustained sub-1.4% rates seem unlikely to me....

Incidentally, perhaps not a hugely significant issue, but, in the context of detailed financial calculations to evaluate viability of a plan that's potentially on a knife edge, describing the fixed rate of the major commitment as "around 3-4%" seems oddly vague!

DayTripper1984

eskbanker said:

DayTripper1984 said:

eskbanker said:

DayTripper1984 said:

The monthly payments are going to be around £750

At current rates - they could obviously increase (or decrease) if the deal is variable, or once a fixed rate has expired....

Currently on a 5 year fixed at around 3-4%, with two years remaining. I have considered paying the early repayment charge (around £4000) to a secure a lower rate of around 1.4% for the next 5 years, but not sure if that would be a wise thing to do, or not?

Sounds worth it to me - £750 per month would be £18K over two years, whereas the lower rate would presumably be more like £6-8K, so the incremental £4K to access that would pay back quickly.  The only downside would be if spot rates plummeted during that term, but sustained sub-1.4% rates seem unlikely to me....

Incidentally, perhaps not a hugely significant issue, but, in the context of detailed financial calculations to evaluate viability of a plan that's potentially on a knife edge, describing the fixed rate of the major commitment as "around 3-4%" seems oddly vague!

Just checked the exact figures. It's 3.49% on Part 1 of the mortgage and 2.38% on Part 2 (current payments are £611pm, with £191pm on part 1 £420 on part 2).

If I were to take on the mortgage on my own, with the additional borrowing it would be around £750-£770 in total at those same rates.

Daliah

Can you take in a lodger?

DayTripper1984

Daliah said:

Can you take in a lodger?

It's something that I would look at doing, but I wouldn't want to rely on it as it's not guaranteed income I suppose.

theoretica

Where is your money currently going?  Are you currently putting aside savings or have spending you can cut? 

elsien

The amount you have left over after the mortgage is similar to what I have and I live in my own in a 3 bed house perfectly comfortably.
However I’m not in a stupidly expensive part of the country, and I’m not a big spender on clothes, socialising etc, although I do like my holidays. 

As a previous poster said, it does very much depend on your lifestyle so you need to work it out on your current known spending and what you’d have to compromise on if you needed to.