Salary to afford £70k loan

mr_stripey

housebuyer7 said:

How much do you think we might be able to save on our salaries on the basis of a mortgage of £1685 but no other fixed commitments for our outgoings? We both pay student loan and around 5% into pensions.

In my experience it is this kind of thinking which causes a budget to unravel and lead to problems. Fixed outgoings are the easy thing to budget for since they occur regularly and are consistent amounts. Where people (including me) trip up is by deducting these fixed expenses from their income and thinking the rest is free for spending. 

Utility bills, food, phone contracts, gym memberships etc all add up but they're not even the most difficult ones to budget for.

Birthdays, holidays,. Christmas, unexpected boiler breakdown, car MOT all destroy your budget if you don't "save" for them. 

So you need to allocate a portion of your income to these "pots" so that when they do crop up your budget isn't shot to pieces.

Only then can you realistically work out how much you can save.

Just my opinion from many years of being crap at budgeting!

housebuyer7

Brie said:

First thing I'd look at is how long your mortgage payments are likely to stay at the current level.  If you are on a fixed rate for a couple of years yet then there's likely to be a big jump when you renew.  If you're on a variable rate that will be creeping up every couple of months for the foreseeable future.  How affordable will that be for you?

Next consider that any bank will look at how easily you can afford both amounts you want.  So can you afford to make payments on £462k?  And it won't matter if you think your salary will go up in a couple of years as that isn't real quite yet so of no importance.  At least not to the bank.  Maybe they will consider things when you're making £60k a year, OH has edged up to £39k and the interest rate is 12% or whatever.  

I know my salary of £60k isn’t real yet but I wouldn’t be approaching or even discussing this with the bank until it is real so it is of importance.

HampshireH

housebuyer7 said:

How much do you think we might be able to save on our salaries on the basis of a mortgage of £1685 but no other fixed commitments for our outgoings? We both pay student loan and around 5% into pensions.

But you do have other commitments which would affect your true affordability 

- Gas/elec/water

- Council tax

- Insurances (house/contents/life/mortgage protection/car)

- internet/phone/TV packages

So our mortgage is £830 a month but our commited spend on home related stuff is £1660 includes all the above as well as a surplus spend, the dog cats amongst some others.

You are the only person who knows your actual spend and can determine how much you can save a month. How much were you saving before your became homeowners?

Grumpy_chap

housebuyer7 said:

How much do you think we might be able to save on our salaries on the basis of a mortgage of £1685 but no other fixed commitments for our outgoings? We both pay student loan and around 5% into pensions.

No-one can answer that for you, at least not from a blank sheet.  

One tool you could us is to prepare a SoA (Statement of Affairs) as referenced in the DfW (Debt-free Wannabee) area of the forum.  The SoA is a useful took that can be used by anyone, not just those facing debt crisis.  Once you have everything down, you can look at where you could make savings and where you would be willing to make savings.

housebuyer7

Apologies yes, I meant I don’t have any childcare costs or loans. I have all the usual bills and my only loan is the mortgage (and student loan which just comes out my salary).

MalMonroe

housebuyer7 said:

It could be done in stages but would still need a large lump at the start I think. What about a loan with a different bank separate to my mortgage?

I'd also advise against this. Not saying this will happen to you but my friend and her husband have just divorced after 23 years. All very amicable. When they took out their mortgage they also took out a separate loan and her ex said he'd take care of the loan when they split (still not paid off after all these years). Mortgage was paid off out of proceeds of sale of property BUT her ex cannot get his act together and has, to date, defaulted on two loan payments which has also affected her credit reports. He's not even being malicious either. Just dozy. 

As I said, not that this will happen to you but it's something to think about. My friend is still liable for a loan she thought her ex was going to take over and because it's in joint names she's suffering. (Her ex can't now take out a new loan to pay off the old one because of his defaults.) It's a catch 22 situation for her. And she didn't go into her marriage thinking that it would be ending in the future. 

MrFrugalFever

Flat_Earther said:

MalMonroe said:

housebuyer7 said:

It could be done in stages but would still need a large lump at the start I think. What about a loan with a different bank separate to my mortgage?

I'd also advise against this. Not saying this will happen to you but my friend and her husband have just divorced after 23 years. All very amicable. When they took out their mortgage they also took out a separate loan and her ex said he'd take care of the loan when they split (still not paid off after all these years). Mortgage was paid off out of proceeds of sale of property BUT her ex cannot get his act together and has, to date, defaulted on two loan payments which has also affected her credit reports. He's not even being malicious either. Just dozy. 

As I said, not that this will happen to you but it's something to think about. My friend is still liable for a loan she thought her ex was going to take over and because it's in joint names she's suffering. (Her ex can't now take out a new loan to pay off the old one because of his defaults.) It's a catch 22 situation for her. And she didn't go into her marriage thinking that it would be ending in the future. 

Again, as seems to be the case with you, you've not actually read or understood what they're saying.

They were talking about taking a loan with a different bank to their mortgage to try and skirt affordability issues, not because they don't trust their partner.

Eventually, the MSE staff will see you as such a liability they'll jettison you.  Until then we all live in hope.

I don’t believe there’s any call for distaste towards MalMonroe over her comment because i believe it appears to be valid, albeit it could have done with some more meat around the bones for the OP. There’s nothing wrong in playing devils advocate here and highlighting the worst case scenario of a unsecured personal loan with financial association upon divorce. I’m sure MalMonroe’s friend & husband didn’t plan to divorce or mistrust each other either, but life can change.

As mentioned above by other MSE members, saving like mad and doing in stages would be the most cost effective or unless you’ve got access to a 0% lending facility with the supplier I.e. new kitchen via Wickes at 0% as example.

Exodi

housebuyer7 said:

How much do you think we might be able to save on our salaries on the basis of a mortgage of £1685 but no other fixed commitments for our outgoings? We both pay student loan and around 5% into pensions.

I think a joint income of £83k and an outstanding mortgage balance of £392k is already top of affordability for most mortgage lenders.

Personally, I think it would be madness to add a £70k loan on top of this.

My partner and I actually earn slightly more than you and our mortgage is £1300 per month.

Despite this, I couldn't imagine paying nearly £400 month extra AND adding on another £300+ month in a loan.

I feel like you'd be on a slippery slope being saddled up to your eye balls in debt - you only need to slip once (e.g. job loss) and the whole thing will come crashing down.

Do you need the extension?

Herzlos

housebuyer7 said:

How much do you think we might be able to save on our salaries on the basis of a mortgage of £1685 but no other fixed commitments for our outgoings? We both pay student loan and around 5% into pensions.

How much do you currently have left over at the end of the pay cycle? How much are you already paying into savings?

Sncjw

What is the works actually for. Do you have children or think about having them in the future. Would you be able to afford repayments on top of your current mortgage even when your fix deal ends on mortgage. The interest rate may differ when your mortgage deal ends this means paying more to the mortgage.