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

Murphybear

YoungBlueEyes said:

EssexHebridean said:

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... 

This is basically what I was going to say. Just because they have £x doesn't mean you've got that much to come. There could be debts/Benidorm timeshares/dog's home ready to take big bites out of it. Please don't rely on this to get your spending back on an even keel. Spot on with the "timeframe" comment too - we were assured daddy was circling the drain, at most a month or two left. Well he lived a few years longer than that. You never can tell.  

EH has given really good advice, listen to her. 

I had a favourite childless aunt who said she would leave everything to me.  She died a few years ago and the family were horrified to find out she had massive debts/loans that took most of her money.  She had been renting her bungalow as well so no property to leave.  I was sorrier to lose her than the money as I didn’t actually need it.  

As others have said, you can’t rely on inheriting money.  

bigolsausage

Murphybear said:

YoungBlueEyes said:

EssexHebridean said:

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... 

This is basically what I was going to say. Just because they have £x doesn't mean you've got that much to come. There could be debts/Benidorm timeshares/dog's home ready to take big bites out of it. Please don't rely on this to get your spending back on an even keel. Spot on with the "timeframe" comment too - we were assured daddy was circling the drain, at most a month or two left. Well he lived a few years longer than that. You never can tell.  

EH has given really good advice, listen to her. 

I had a favourite childless aunt who said she would leave everything to me.  She died a few years ago and the family were horrified to find out she had massive debts/loans that took most of her money.  She had been renting her bungalow as well so no property to leave.  I was sorrier to lose her than the money as I didn’t actually need it.  

As others have said, you can’t rely on inheriting money.  

Ok and as I have said, I'm not relying on it. I'm saying it is coming (because I know it is) and it will be helpful but not necessary. 

Thank you for reading. 

spoovy

bigolsausage said:

EssexHebridean said:

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. 

I have £6k for stamp duty, legal fees. No removal costs as I can get that from work free. We have a house full of furniture already so can make do with what we have. White goods are included in purchase. 

We've spoken with a mortgage advisor and have been advised it's affordable for us - I'm not just pulling out numbers out my !!!!!! and guessing. I'm just worried about having more expensive outgoings than I've ever had. 

We have decided to cut back on spending now and not be so frivolous. We went from having no money and spending it all on rent to having disposable income as we moved to a more affordable area so have been enjoying not having to worry. We won't worry when we buy the house, but we will need to keep on top of things more. If only to save for a holiday rather than spending on random crap. 

I've done the MSE Budget Planner and over-egged a lot of the options just in case, still come out £1,300 in the green. 

Sounds like you have it all worked out and your mind is made up. What are you asking exactly on this thread?

EssexHebridean

So the boxes are all ticked in terms of affordability - that's good. Your OH has had the financial scare that sounds as though it might have been his Lightbulb Moment in terms of spending and budgeting - also good.

Worrying about a massive, life changing, huge sum-of-money event is entirely normal and natural. I lost count of how many "my goodness me can we really do this!" panics I had before we bought first time (2003) and again last year - and this time was in some ways all the worse because everything in terms of the housing market and the mortgage market had changed in that timescale too. Ironically enough our new mortgage (33% LTV on the house we have just bought) is slightly bigger than the first one we had (one of those quaint old 110% offerings that the likes of Northern Rock used to peddle!) but is at the lowest interest rate we have EVER had on a mortgage product - we're currently at 4.04% and our previous lowest ever was the final 5 years of our previous mortgage - at 4.34% from 2011 - 2016. Ultimately though I could counter those panics with the fact that this time round we already know where we stood in terms of finances - we'd done the sums over and over and over again, we KNEW things added up. If you have done that as well - both of you, sitting down together, as well as separately, then all you can now do is trust in that analysis being correct. It won't stop you worrying about it though- I can promise you that! 

Be wary of borrowing money from family at this stage - if it is forming part of your funds for the purchase then the family member will have to complete the gifted deposit protocols - and this will include them signing to confirm that the money is a gift and not a loan. 

RHemmings

Like @EssexHebridean, I had quite a few 'my goodness me can we really do this!' thoughts during the house buying process. And compared to the average FTB, and in hindsight, I had an easy ride. It's natural to feel nervous and to seek reassurance. 

bigolsausage

EssexHebridean said:

So the boxes are all ticked in terms of affordability - that's good. Your OH has had the financial scare that sounds as though it might have been his Lightbulb Moment in terms of spending and budgeting - also good.

Worrying about a massive, life changing, huge sum-of-money event is entirely normal and natural. I lost count of how many "my goodness me can we really do this!" panics I had before we bought first time (2003) and again last year - and this time was in some ways all the worse because everything in terms of the housing market and the mortgage market had changed in that timescale too. Ironically enough our new mortgage (33% LTV on the house we have just bought) is slightly bigger than the first one we had (one of those quaint old 110% offerings that the likes of Northern Rock used to peddle!) but is at the lowest interest rate we have EVER had on a mortgage product - we're currently at 4.04% and our previous lowest ever was the final 5 years of our previous mortgage - at 4.34% from 2011 - 2016. Ultimately though I could counter those panics with the fact that this time round we already know where we stood in terms of finances - we'd done the sums over and over and over again, we KNEW things added up. If you have done that as well - both of you, sitting down together, as well as separately, then all you can now do is trust in that analysis being correct. It won't stop you worrying about it though- I can promise you that! 

Be wary of borrowing money from family at this stage - if it is forming part of your funds for the purchase then the family member will have to complete the gifted deposit protocols - and this will include them signing to confirm that the money is a gift and not a loan. 

Thank you. I think I just wanted reassurance that people DO spend this much on a mortgage and it's ok. I've ran the numbers SO many times and we wouldn't struggle even if our mortgage went up by £1000 a month (we might not have many luxuries but all bills/mortgage/food would be covered and that's what matters). 

It's just such a big purchase that I thought I'd never be able to make so I've spent the past day panicking and worrying rather than celebrating. 

Section62

bigolsausage said:

Thank you. A lot of the comments here are really baffling. Is a 10% deposit THAT much of an issue when house prices are through the roof? I feel like some people here need a reality check. 

It is because house prices are through the roof that a 10% (or less) deposit could be an issue.

If house prices fall 10% (not an impossibility) you'll be in negative equity.  Which is Ok if you have a nice long-term mortgage deal, but if you want/need to remortgage then your reduced/negative equity becomes a major issue.

When the housing market is on the up there is less risk in cutting the budgets fine.  If there's a downturn it is those who've stretched themselves to the max that suffer first.  And I use 'suffer' advisedly as the experience of having your home at risk is horrendous.

In terms of 'reality check' I suspect many of those who have already commented on the thread have long experience with 'reality' and know it intimately.

I'd also suggest you speak (on your own) to a solicitor who specialises in property and relationship breakdown, to make sure you are setting things up now so you are protected in case the partner becomes an ex.  It is easy to imagine that the outcome of a breakup would be "fair", but that isn't how things usually work out in reality.  Your good financial position and credit history can be trashed in an instant if a partner does something unwise.

prettyandfluffy

Do be careful borrowing from parents/family/friends, things can change.  When we bought our first house we asked to borrow 5% from my in-laws, they gave it to us as a gift.  A year later their circumstances had changed dramatically and they asked for it back.  To avoid bad feeling we repaid it but at that point we had little to no furniture that wasn't hand-me-downs or second hand and were trying to rewire, reroof and decorate the house on two very low salaries.  Everything worked out for us but it is far, far better if you can avoid borrowing from family or friends.

EssexHebridean

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

RHemmings

EssexHebridean said:

On the risk of negative equity though - ultimately a period of negative equity is only a problem if you need to/want to sell. It's going to be an uncomfortable situation for sure, but as long as you can ride it out, then things should balance again in most circumstances. 

What about if they need to or want to remortgage?