How much disposable income?

Glen0000

truescot wrote: »

THanks for the comments so far...

The reason I am asking is that we have a take-home pay of roughly £2500 a month(as my wife works very part time to look after our son). the maximum mortgage the bank will lend us (155k) would work out as monthly payments of up to £1100 depending on deals. Our direct debits amount to £430 and we save £200. We are about £400 a month on shopping and £200 on fuel for work/leisure. This leaves us £170 per month on other stuff, which we think is a pittance, but it's hard to work out what we actually spend, as up to now we have had about £800 but tended to spend without thinking bad I know!). We know we could save less but think that it is good to have holiday money etc. Also have £1500 overdraft facility between 3 accounts.

Finding all the comments REALLY useful. Who needs a financial advisor.

Your mortgage amount is eye watering. We are on a similar level of take home pay and there is no way we could afford a £1100 mortgage payment. Gas and electric are about to rise 40%, food and petrol are going up every week. You are living VERY tightly. In 6 months that 170 quid extra could be nothing as prices keep rising. Not to mention negative equity! The bubble is about to burst, who in their right mind would buy now?

I wouldn't live on a pittance just be be a homeowner. There is more to life.

Please read one of my posts.
http://forums.moneysavingexpert.com/showthread.html?t=911277
We have decided to stay renting for at least another 2 years, see how the crash pans out.

floss2

truescot wrote: »

THanks for the comments so far...

The reason I am asking is that we have a take-home pay of roughly £2500 a month(as my wife works very part time to look after our son). the maximum mortgage the bank will lend us (155k) would work out as monthly payments of up to £1100 depending on deals. Our direct debits amount to £430 and we save £200. We are about £400 a month on shopping and £200 on fuel for work/leisure. This leaves us £170 per month on other stuff, which we think is a pittance, but it's hard to work out what we actually spend, as up to now we have had about £800 but tended to spend without thinking bad I know!). We know we could save less but think that it is good to have holiday money etc. Also have £1500 overdraft facility between 3 accounts.

Finding all the comments REALLY useful. Who needs a financial advisor.

Start a spending diary to track how much you actually spend and on what.

Savings are a good idea - do you have cash to pay for your solicitor & estate agents fees? Will you have anything in case the boiler dies / roof needs fixing / car breaks down?

Also, do you really have to move house?

searching_me

i be honest im left with anywhere between £50-£100 pm and i think this is more then enough... and thats between me, my oh, dd and a very hyper dog i think you you have to look at what you really need... i mean disposable no money is really disposable... theres always something (well in my book there is) wouldnt it be nice to save it for a rainy day xxx

Lunar_Eclipse

truescot wrote: »

THanks for the comments so far...

The reason I am asking is that we have a take-home pay of roughly £2500 a month(as my wife works very part time to look after our son). the maximum mortgage the bank will lend us (155k) would work out as monthly payments of up to £1100 depending on deals. Our direct debits amount to £430 and we save £200. We are about £400 a month on shopping and £200 on fuel for work/leisure. This leaves us £170 per month on other stuff, which we think is a pittance, but it's hard to work out what we actually spend, as up to now we have had about £800 but tended to spend without thinking bad I know!). We know we could save less but think that it is good to have holiday money etc. Also have £1500 overdraft facility between 3 accounts.

Finding all the comments REALLY useful. Who needs a financial advisor.

Well personally, I'd go for it. No question. You're doing well to have any disposable income! As long as you can afford to pay all your bills, anything left over is a bonus. You are at a very expensive time of life (one income, young family) so IMO this is probably the hardest time for you financially - having recently come out the other side (2 children now in school). I don't think you're really stretching yourselves beyond a manageable amount, but it does depend on your comfort zones and money management skills.

Having said that, I would be tempted to fix the mortgage, especially in the current climate. You could get your shopping budget down (by half without too much bother) and reduce/stop the savings if times get harder or you have emergencies. And you could always opt for an interest only mortgage for a while too - 155k on interest only @ 6% works out at £775/month, much more affordable than the £1100 you mentioned.

At one time just a few (4) years ago (kids now 8 and 6 to give you an idea) we had a mortgage of 252k and an annual household income of £42k (which I think was around £2300/month?) That was tight! But do-able. The mortgage took over half our take home salary, from memory. Costly day trips and meals out were seldom although we always had an overseas holiday. Things are much better now. Partly due to increased income but also mostly due to a significant attack on our expenditure! I think you will be fine, but the decision must be yours of course. Fortune favours the bold.

EDIT - Sorry, I didn't answer your question. In response to your first post, I was going to reply that anything from zero up is a good place to be. Seriously.

Lunar_Eclipse

Glen0000 wrote: »

Your mortgage amount is eye watering. We are on a similar level of take home pay and there is no way we could afford a £1100 mortgage payment.

You make a very valid point, but the reality of high house prices in some parts of the country (home counties?) is high mortgages and thus high monthly repayments. 30-40% of income must be the norm for many families.

This reminds me that in the US, mortgage companies work out their lending figure based on 40% of income, ie they will lend up to 40% of family income for mortgage purposes. I live in the South-East and think that is a fairly good guideline. We've had it at over 50% (NOT on something like a six figure salary either) which wasn't much fun.:o

Glen0000

Lunar_Eclipse wrote: »

You make a very valid point, but the reality of high house prices in some parts of the country (home counties?) is high mortgages and thus high monthly repayments. 30-40% of income must be the norm for many families.

But in 3 years time you will be able to buy a house for at least 30% less than current prices. Why take the risk? That 155k mortgage could be £100k for the same property in a few years.

Glen0000

searching_me wrote: »

i be honest im left with anywhere between £50-£100 pm and i think this is more then enough... and thats between me, my oh, dd and a very hyper dog i think you you have to look at what you really need... i mean disposable no money is really disposable... theres always something (well in my book there is) wouldnt it be nice to save it for a rainy day xxx

My dd when on a school trip a few weeks ago. £270 for the trip and another £100 for the equipment. All but one kid in the class went, so it is not like we could let her miss out. It was fathers day last week, that cost us £60. School uniform alone, will probably cost us in the region of £300. Trip to the zoo, £50 at least.

£100 a month, how do you cope? It goes nowhere.

DigitalJedi

truescot wrote: »

We are about £400 a month on shopping...

Food shopping? For 3!?! Mine comes to about 50% of that on average for my family of three. Get yourself down to Aldi/Lidl!

Lunar_Eclipse

Glen0000 wrote: »

But in 3 years time you will be able to buy a house for at least 30% less than current prices. Why take the risk? That 155k mortgage could be £100k for the same property in a few years.

Or you might need another 30% to buy the same house.
(Which you don't have and can't afford to borrow due to income multipliers).

You could be right. Or you could be wrong. Making such forthright assumptions about what is going to happen to the housing market is the risk IMO.

Glen0000

DigitalJedi wrote: »

Food shopping? For 3!?! Mine comes to about 50% of that on average for my family of three. Get yourself down to Aldi/Lidl!

I don't find Aldi /Lidl that much cheaper any more. I went a few weeks ago. I still spent £70 and the dog refused to eat the food. Some of the stuff was rank. Fresh stuff not so bad, but tins / packets were awful. Plus I had to use my car rather than get free delivery with a Tesco voucher. I have not packed my own shopping for years!