Just had an offer accepted on a house - our deposit is smaller than we thought. Panicking.

bigolsausage

FlyMeSomewhere79 said:

Only you can answer whether you can truly afford the repayments. My partner and I are on a similar joint income to yourselves and we are buying a 240k house currently with about 110k of equity to pay straight off it from our sale and thats as much as we are comfortable with especially as we want to pay it off over ten years. 

The question is should you be looking at a cheaper home because you don't want to tie up nearly all your income just on mortgage payments and find yourself having no life and your home repossessed especially if your partner keeps losing thousands of pounds! You don't want to be on an extremely tight budget with someone that's not great with money. 

£4444 total take home, less £1355 mortgage. Another £150 or so for insurance (no idea if that's right, over-estimating). Bills = £600 max. 

Leaves £2,339 per month for food, savings, everything else.

bigolsausage

grumbler said:

bigolsausage said:

grumbler said:

bigolsausage said:

...We have a joint income of £68.5k. ...

Would this be affordable on our income? What is a comfortable amount to spend on a mortgage for an income like this? ...

This question makes no sense with so little information given. Only you yourself can answer it - after careful calculations, that can be not easy when your partner can "spend ...without realising" £5K from just £20K savings he had.

You current LTV was 85% - very high. With £40K deposit you are moving to extreme 90% area that will make your mortgage even more expensive (in terms of both interest rate and monthly payments) and less  afordable.

I thought a 10% deposit was normal? Don't think "extreme" is the right word to use? 

I'm no expert, but I think 10% deposit is the lowest acceptable nowadays. If so, then IMO it's extreme by definition.

"EXTREMUM is a maximum or a minimum of a mathematical function"

You can have a 5% deposit.... 

nicmyles

If you can swallow the more expensive payments for a couple of years, and you think you will be able to build savings back up quickly, then can't you just do a lump overpayment during your initial fixed term and then look to move to a lower LTV when you refix?

bigolsausage

nicmyles said:

If you can swallow the more expensive payments for a couple of years, and you think you will be able to build savings back up quickly, then can't you just do a lump overpayment during your initial fixed term and then look to move to a lower LTV when you refix?

Yes that's the plan! We have £5k emergency fund which we can build up. We can also save bonuses and monthly etc to overpay the max we can on the mortgage until the end of the term. 

I think that's a smart plan - obviously who knows what will happen. 

Not to be morbid, but we may also have some inheritance coming within the next 5 years from both sides as well to help.... 

diego_94

Go and see yourself a mortgage advisor, they may cost but for your situation to get you on the ladder, they will be worth their weight in gold. 

I'd be more worried how someone can spend £5k without realising! Not the most reliable person to be buying a house with.

EssexHebridean

bigolsausage said:

We've just had our offer accepted on a house for £325k. We have a joint income of £68.5k. I thought we had a £50k deposit, 50% from me and 50% from my partner. 

I forgot that my partner spent £5k on paying off overdraft and buying a car (which we agreed he could), and the other £5k has just gone missing i.e. he's spent it without realising. He still has £11k for the deposit.

I'm incredibly mad at him, but I can also see he's disappointed in himself. He thought he'd put the money to the side with the other half and had money to spend but he didn't. He's annoyed and very remorseful. 

But this means we now have a deposit that's £10k less than we originally thought and now I'm not sure if we'll get a mortgage and if we can afford the house. 

I've run the numbers with a rough estimate of £1500 for mortgage and insurances, and we come out with £2000 after bills and food. But I'm just not sure if I'm missing anything or if I'm calculating it wrong. 

Just very worried that we now might not get the house. 

Would this be affordable on our income? What is a comfortable amount to spend on a mortgage for an income like this? 

We don't really have any debts, or spend a lot on fancy things. Our money disappears mainly on food/coffees/takeaways which we know we need to cut down - but aside from that, we're homebodies with cheap hobbies lol. 

The bits I've marked in bold contradict one another - while you may not have debts now, clearly, until a short time ago, your partner HAS had debt. The £5k just being frittered is a massive red flag as well - as it suggests that "spending money" isn't being budgeted, and that savings are routinely being dipped in to just for incidental spending - that's a problem. 

You clearly do have sufficient funds for a 10% deposit, but what about the other costs involved in the move? Do you have stamp duty to pay? Removal costs? There will be the solicitors fees and disbursements as well of course. Are you going to be needing to spend on additional furniture etc for the new house as well? I think you need to sit down and go back through ALL your finances, as a couple, before you proceed here if I'm honest - it just feels as though you've got to the "making an offer" stage without having really thought about and checked the nuts and bolts - and I say that as someone who has recently been through a house purchase - I checked the financials countless times from the very start of the process, including doing the MSE  budget planner sheet with various different scenarios of expenditure dependent on the level of property we bought and so the mortgage that we could afford. As for money "disappearing" on food/coffee/takeaways - if that spending will need to change once you have a mortgage then make that change now - and start learning to live with it as that will make life far easier later on. 

I'd suggest that the two of you sit down and put together a proper budget, and that should include a set amount of personal spending money each month, each. That personal spending money should be able to be used for whatever each party wishes, but should be on the basis that "when it's gone, it's gone" and ideally I'd suggest that each of you should be looking to make some savings from that where you can as well towards a personal savings pot that cane be used when something larger is wanted - new personal tech perhaps, or a weekend away with friends and without the other partner.  You also need to list out ALL your spending in relation to the move - including a bit over and above for contingencies - and then be informed by that whether in fact you are able to continue with the purchase of the house you've offered on now, or whether you need to step back a notch on pricing levels. 

You've had lots of good advice above on the specifics around affordability as well. 

FlyMeSomewhere79

Your budget is pretty much the same as my partner and I with enough left over for some savings - and travel in our case as it's a passion of ours. 

You should be fine as long as your partner is careful with his spending. I once had a first boyfriend that was bad with money and getting a mortgage with him was a nightmare and he sign up to things in my name because of his dire credit score which then ruined mine for a short time. I left him 21 years ago for my current partner who is brilliantly shrewd with money thank god.

EssexHebridean

Oh - and never pin your hopes on an "expected" death - not wishing to be brutal, but sometimes the people you expect may die don't, or at least not in the timeframe that might reasonably be expected, and even if they do, there is never an absolute certainty that they will choose to leave their money where you expect that they might... Even if an inheritance should arrive, then take time to consider whether in that instance the person leaving the money to you would really have wanted it to be frittered away on day to day expenditure, or whether perhaps you'd feel it was more appropriate to their memory to use it for more notable things - a future upsize in housing perhaps, or some of it on a holiday-of-a-lifetime that you could never have dreamed of affording otherwise... 

RHemmings

For £10K, is it possible to approach family/parents or friends? 

In the end I didn't need it, but I was thinking about what I would do if I ended up too close to the wire in terms of money on hand after buying. My plan was to get a £10K bank loan after purchase. So, I could run myself right down to zero on house purchase, and then get a £10K loan (I was going to put 'house improvements' down as the reason, and that would give me a buffer until finances improve. 

I was surprised how cheap the loan would have been - I've never had one before. It was going to be approximately £370 or so in total charges to repay the loan back over a year. 

Getting a £10K loan to put it towards the house price would mean that you would have to lie about the reason for the loan, which I would NOT advise doing. (In my case, the loan would have funded things I need to do to the house so only sort-of a lie). 

Risky if finances don't improve - and the OP's partner makes me worried about that as other posters are worried as well. 

Herzlos

Can you sell anything to raise cash quickly? It'll be less for you to move, too.

Can you downgrade a car?

Also, are there any options for recouping money on some of the purchases - how much of the holiday is refundable?

I'd avoid taking out a loan until you actually need it, too.