Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Eels100
    • By Eels100 5th Aug 18, 1:21 PM
    • 976Posts
    • 1,068Thanks
    Eels100
    How much would you be comfortable with? Affordability Q
    • #1
    • 5th Aug 18, 1:21 PM
    How much would you be comfortable with? Affordability Q 5th Aug 18 at 1:21 PM
    We're looking to buy a family home after a few years in rented. We will have 50k to go towards it. Current total income just under 65k. Both jobs very secure but high travel costs (400 a month).

    We've been offered to borrow up to 228k but that's way more than we're prepared to take. Thinking that under 200k seems much more reasonable - although considering a property which will need work, looking at 180k to buy (scary LTV but would allow us to buy the space we need albeit very dated), 30kish to fix and an eventual value of 230ishk assuming prices don't bomb, which we can't assume. Although we wouldn't be looking to move for years, we might eventually look to extend, so that's on the back of my mind too.

    Any nuggets of wisdom or words of warning?
Page 1
    • ruperts
    • By ruperts 5th Aug 18, 1:53 PM
    • 760 Posts
    • 1,263 Thanks
    ruperts
    • #2
    • 5th Aug 18, 1:53 PM
    • #2
    • 5th Aug 18, 1:53 PM
    Your combined take home pay is what, 4k?

    Minus the travel costs leaves you 3.6k.

    A 228k mortgage plus 50k deposit over 25 years would cost less than 1k per month on a 3 year fix. Seems quite comfortable to me tbh
    • sal_III
    • By sal_III 5th Aug 18, 1:57 PM
    • 578 Posts
    • 563 Thanks
    sal_III
    • #3
    • 5th Aug 18, 1:57 PM
    • #3
    • 5th Aug 18, 1:57 PM
    It's one of those "how long is a piece of string questions". Everyone is different in terms of lifestyle, spending habits and appetite for "risk".

    But usually people will advise you to stretch your budget as much as possible (without resorting to beans to toast and no hot water for months etc.). If you can comfortably afford the monthly payments for the max amount of mortgage and can safely extend that if the rate goes as far as 4%, I see no reason to hold back. The difference between 180k and 228k mortgage is about 200/month.

    You are likely to regret, not going for that extra bedroom or better location (with lower travel cost etc.), or god forbid buying a money pit.
    • Eels100
    • By Eels100 5th Aug 18, 2:19 PM
    • 976 Posts
    • 1,068 Thanks
    Eels100
    • #4
    • 5th Aug 18, 2:19 PM
    • #4
    • 5th Aug 18, 2:19 PM
    SLC and childcare vouchers reduce take home pay to under 3.5k. I think we need to up our budgeting game to be honest, you're right that we shouldn't be finding this daunting.

    The house we want has the potential to be a money pit but it's the only way really to afford the home we want in the area we want, and the travel costs are a choice - we could move closer to work but we adore this town and our children are settled here. I think these factors contribute to the anxiety in that we could be more financially sensible about this but family and sentimental reasons will probably keep us here.

    Time to knuckle down.
    • Thrugelmir
    • By Thrugelmir 5th Aug 18, 2:34 PM
    • 59,543 Posts
    • 52,839 Thanks
    Thrugelmir
    • #5
    • 5th Aug 18, 2:34 PM
    • #5
    • 5th Aug 18, 2:34 PM
    scary LTV but would allow us to buy the space we need albeit very dated
    Originally posted by Eels100
    See past the property being outdated. The property will become your home. What the value subsequently becomes is irrelevant. If the debt level is scary, spend a few months reducing it. In the longer term the reduction may prove beneficial. Debt only only has to repaid one.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • DD265
    • By DD265 5th Aug 18, 5:03 PM
    • 1,419 Posts
    • 3,250 Thanks
    DD265
    • #6
    • 5th Aug 18, 5:03 PM
    • #6
    • 5th Aug 18, 5:03 PM
    I've subscribed - we're currently trying to work out the same thing though our income is a little lower and we'll want a 95% LTV. For us, the LTV is less of a problem because we're aiming to buy for the long haul and that theoretically pushes us towards stretching ourselves. The actual repayments are daunting until we actually start crunching the numbers!

    We're planning to sit down and create a totally new budget from scratch then work out what repayment we'd be comfortable with. Obviously if we buy a 'done' house we can go for a slightly higher repayment, than if we go for a 'needs a lot of work' house where we'll need to pour money into it. I think the compromise is a 'needs cosmetic work but we can live with it for a few years if we have to' house!
    • Eels100
    • By Eels100 7th Aug 18, 8:43 AM
    • 976 Posts
    • 1,068 Thanks
    Eels100
    • #7
    • 7th Aug 18, 8:43 AM
    • #7
    • 7th Aug 18, 8:43 AM
    Just coming back to this ... Assuming we go for a relatively long fix - probably 5 years - and in the interim the house is modernised (rewiring, installation of central heating, insulation, redecorated). Say we decide, having done that work, to extend the house but to do so would need to release equity.

    Obviously all this depends on what the market does and what the house will be worth (although fortunately the location has a little housing microclimate so has been protected from the worst of the downturn since 2007/8), but within the fix period would a lender consider this or would a remortgage be required?
    • chelseablue
    • By chelseablue 7th Aug 18, 8:55 AM
    • 2,512 Posts
    • 2,971 Thanks
    chelseablue
    • #8
    • 7th Aug 18, 8:55 AM
    • #8
    • 7th Aug 18, 8:55 AM
    We earn around the same as you (take home 4k a month)

    Our outstanding mortgage is 218,000 and the monthly payment is 791 on a 5 year fix with Nationwide.

    Most months we manage to save around 1,000 so its doable
    Mortgage starting balance 231,000
    Mortgage after Year 1 225,000
    Mortgage after Year 2 218,000
    • xyz123
    • By xyz123 7th Aug 18, 5:03 PM
    • 1,549 Posts
    • 375 Thanks
    xyz123
    • #9
    • 7th Aug 18, 5:03 PM
    • #9
    • 7th Aug 18, 5:03 PM
    As said, it's an individual choice. One way to look at it, might be to look at the affordability with only one of two salaries. You did say, secure jobs but this is one way of being "comfortable mentally" and also one never knows what will happen in future..
    • fiisch
    • By fiisch 7th Aug 18, 10:33 PM
    • 307 Posts
    • 174 Thanks
    fiisch
    Similar income (albeit, not equally split), current mortgage of 245k (originally 260k), and on an 80/20 help to buy equity deal, so that 245k will soon become 350k+....

    Depends how much of your income you're willing to put towards servicing a mortgage, but a house is the most expensive item you'll ever buy, and one of the few things we buy you might actually see a return on.....
    Save 6k in 2018: 1651.19 / 6000
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

178Posts Today

1,379Users online

Martin's Twitter
  • Ta ta... for now. This August, as I try and do every few yrs, I'm lucky enough to be taking a sabbatical. No work,? https://t.co/Xx4R3eLhFG

  • RT @lethalbrignull: @MartinSLewis I've been sitting here for a good while trying to decide my answer to this, feeling grateful for living i?

  • Early days but currently it's exactly 50 50 in liberality v democracy, with younger people more liberal, older more? https://t.co/YwJr4izuIj

  • Follow Martin