Did you panic when house buying about mortgage amount...

(44 Posts)
Greyhorses Sun 08-Dec-13 21:02:26

We are starting to get the ball rolling with mortgage figures and speaking to an advisor.

We take home 2500pcm roughly and have been advised that we are looking at about 800pcm on a repayment mortgage on the cheapest style of houses in our area (small terraced/semi) Houses here are expensive and moving isn't an option!

Did anyone else panic at the sheer amount of mortgage you are paying out? It does not seem to leave a lot after mortgage is paid? I am worried we will get in and regret our decision or get ourselves into a mess!!


specialsubject Sun 08-Dec-13 21:04:18

not necessarily panic, but you are wise to think hard.

do a budget with realistic figures. Check your savings and insurance - lose a job and the mortgage doesn't stop. Check the fix - rates can only go up.

bundaberg Sun 08-Dec-13 21:06:16

that's about the same ratio of mortgage to pay that we have and it's absolutely fine!

it's normal to worry about it though I think, it's a big commitment to make!

muchadoaboutsomething Sun 08-Dec-13 21:07:53

Yes. Bought 3 houses, each time completely panicked, even though could still afford it if rates rose a lot. Last time was also pre crash so had 2 mortgages for a while. Dh always did the numbers, it has always been fine and we've gone back to saving within a few months. I think it's just the thought of how much with me, rather than the thought of what else I'd do with the money. But I save by habit so telephone number bills frighten me. Best thing I've ever done though all3 times.

claretandamberforever Sun 08-Dec-13 21:10:35

I'm sorry but that figure would frighten me to death; nearly a third of our income on a mortgage. There won't be a lot of disposable income left over. What is the interest rate, bearing in mind over the next few years they will be bound to increase?

Ours is £467 on joint salary of £2650

Lucylouby Sun 08-Dec-13 21:13:15

My DH worries about this far more than I do, but he is the major earner in our family, so the majority of the earning responsibility is on his shoulders. We bring in about £500 month less than you and our mortgage payments are only about £100 less than yours. We manage. We have some savings and try to overpay if we can to try to cushion us should we hit a rough patch at all.
Write down all your outgoings, including holidays, Christmas expenditure and other thing that are seasonal over the year and see how much you can afford for a mortgage each month.

MrsTittleMouse Sun 08-Dec-13 21:18:11

What sort of mortgage would that be? A long term fixed rate, and I think it would be fine. A short term discounted rate, and I think that you could be struggling when interest rates go up.

Neverhere Sun 08-Dec-13 21:19:10

How much do you pay in rent? We are actually better if with a mortgage than in rented!

Our mortgage is 15% of our joint salary so doesn't worry us. We would like to pay it off early though.

LynetteScavo Sun 08-Dec-13 21:28:46

The figures mentioned in the OP are easily doable, even with 3DC. smile

MotherIsTheBestBet Sun 08-Dec-13 23:00:03

Same ratio here - roughly a third of our take home pay.

Things are a bit tight but by no means desperate. I could feel terrified if I thought hard enough about it, but we didn't have a lot of choice. I don't imagine there are many first time buyers in the South of England who are paying much less than this ratio nowadays other than the super rich. Housing is just very very expensive now.

I take home £2200pcm and my mortgage is £800pcm. Infact I make overpayments of £100 each month on top - actually thinking of increasing my overpayments to £200pcm. I am not worried and it doesn't concern me but then again I don't spend much money and am quite frugal.

Message withdrawn at poster's request.

Greyhorses Mon 09-Dec-13 08:43:03

Thank you everyone, I feel much better now! I haven't had any real debt up to now except car loan when I was living at home (10k) and nothing of this amount!

Luckily OH is a teacher so is expected a pay rise this year and hopefully the year after. He is in his NQT year at the moment.

We have not finalised a mortgage yet however are looking at 4-5 year fixed rates at about 5%. We only have a 5% deposit hence the higher interest, however putting 10% doesn't reduce the monthly payment much, approx £50, so it may not be worth the months of waiting where we are.

The maximum the bank would have lent us was roughly 140k I think however we have chosen to look at 125k maximum to avoid stamp duty. It's a shame most of the houses we love seem to be sitting at £135k though!!!

I have tried to draw up a spreadsheet however having never paid bills before I have no real idea where to start!

Thanks again

You can easily put in an offer of 125k on a house that's on for 135k

struggling100 Mon 09-Dec-13 09:56:00

I totally panicked the first time I bought a house. It felt very FINAL, and when I signed the final documents I almost expected to hear bells tolling and dies irae kind of music playing! You get used to it really quickly. smile

HairyPorter Mon 09-Dec-13 09:58:03

How are you affording a roof over your head at the moment? We worked out a figure that we were comfortable with base on a mortgage that would be less than our current rent.

specialsubject Mon 09-Dec-13 10:36:23

rough ideas for bills;

council tax (big one) - ask your council
fuel: average is supposed to be £1400 a year
house insurance: again big variations, try for £400 a year on the safe side (you can do much better in many places)
water: £250 a year on a meter, can be more or less depending on where. Here in Severn Trent land it is cheaper NOT to have a meter.
broadband/landline: £30 a month
TV licence: £12 a month

then add food, car costs/transport costs, clothing, kids costs and 'fun budget'.

Shit my pants every time, never been a problem though. I think it is a natural emotion grin

FoxMulder Mon 09-Dec-13 16:39:07

I thought the stamp duty threshold for first time buyers was higher?

Fox under 125k no stamp, 125k-250k is 1%, 250-500k is 3%, I think over 500k is 5%

Message withdrawn at poster's request.

Sorry thought it was 5%, still shocking though.

Nojustalurker Mon 09-Dec-13 19:18:30

Take care with your assumption your husband's pay will increase as moving up the pay scale is nolonger automatic.

Have you worked out a detailed monthly budget. Money saving expert has a very helpful tool.

You will need to account for increases to petrol and ultilties and even think about the impact of maternity leave and child are costs.

Message withdrawn at poster's request.

LEDPenguin Mon 09-Dec-13 19:28:19

It sounds pretty awesome to me but then we're paying almost £600 rent on £1270 take home... Gotta love private rentals.

Seminyak Mon 09-Dec-13 19:34:57

Our mortgage (£800pcm) is less than our rent was by £400! For us it was the deposit that was horrific!

Seminyak Mon 09-Dec-13 19:36:21

That was rent on a crumbly 1 bed where you had to walk through the bedroom to get to the lounge as well! Bah!

AnitaManeater Mon 09-Dec-13 19:45:04

I did panic about it, but that's because the mortgage is in my name only. I take home about £700 a month, plus child benefit, tax credits etc. My mortgage is £236 a month. I went for a house and repayment figure I could cope with if I ever ended up a lone parent again. I pay 2.79% interest as I had a big deposit.

In reality, I live with DP and our joint take home each month is £3k. However I overpay the mortgage and save religiously. I am a born worrier and whatever the figures were it would have scared me

Hotbot Mon 09-Dec-13 20:08:29

Have you worked out the difference in repayments for a 135,ool , there may be very little difference it may surprise you .some vendors may ask pay the stamp.

Mrsladybirdface Mon 09-Dec-13 20:16:47

our mortgage is £800 about 17% of take home but that was still £100 cheaper than when we rented in the same area for a similar property.

In saying that we have a loan to pay for renovations so actual "house" is £1100 but in 5 years time that will be cleared (and we can have a holiday).

There was no panic here because of the rental prices round here.

Greyhorses Mon 09-Dec-13 20:35:14

At the moment we live with parents (both sets!) and pay no rent hence no real idea. We have been saving for the deposit but have paid off some debt etc too and OH has only been working a few months doing supply work (although he has a contract to start fully in the new year) but this sort of explains why we only have 5%. We have approx 10k in savings for deposit, legal fees and the cost of basic furnishings. We have lots of small items but would need sofa/ white goods. We can't really stay at home much longer for a number of reasons although we have a few months to pick somewhere!

I have thought about maternity leave etc and this does worry me but I thought most people just muddled on!!

We have worked out a spreadsheet and factoring in all costs (2x cars, 2x cats, 2 dogs, petrol costs, bills, loans and a mortgage figure of 800pcm) I have worked we will have roughly £350-£400 left over for food/emergencies/xmas/holidays/ going out. I think this will be tight but manageable?? However if anything changed this could be swallowed up easily...
I am not sure if we could cut down anywhere though as I have not budgeted for sky or anything that is a luxury (except pets but they are not going anywhere and only cost 40pcm as I am a vet nurse and get massive discount on everything!!)

How else do people do this though as there is not much cheaper than this price in the area, I am envious of those 200pcm figures but we would not be able to buy a garage for that here :-(
We have not looked at any figures above 125k as we want to avoid the stamp duty, I didn't know the vendor may pay it?? I don't think the mortgage would be too different a month as the difference between a 5% deposit and a 10% deposit is tiny, hardly worth the extra months of saving!

Thanks again!

We pay about £750 a month (which includes an overpayment) on quite a lot less than your joint income. It's totally possible. Shop at Aldi wink

merryxmasyafilthyanimal Mon 09-Dec-13 20:53:29

Sounds fine but at 12% interest it could be £1,500 a month, for example.

CalamitouslyWrong Mon 09-Dec-13 20:59:54

You need to move out soon, so comparing the possible mortgage with what you'd need to pay in rent will probably help you to decide what to do. You have to pay one or the other.

Our mortgage (on a 4 bed) is slightly less than what we paid in rent on a 3 bed. And our energy bills are much lower because it's not a draughty I've box. I used to pay £750 a month rent on an income of about £2000 PCM after tax and we were quite comfortable. Perhaps that's because it was better than £700 on an income of £1200, which is what I'd been living off for years before that (totally unaware that we probably should have had some housing benefit and FSM because they try to keep that as quiet as possible unless you're already on benefits).

CalamitouslyWrong Mon 09-Dec-13 21:00:59

But do factor in increased interest rates into the calculation, as they will go up at some point.

specialsubject Mon 09-Dec-13 21:06:12

vendor won't pay stamp duty unless you get a deal on a new build might as well live in a shoe box.

xmas and going out are luxuries and so are holidays - lose Xmas!!

also worrying that you have loans.

Greyhorses Mon 09-Dec-13 21:19:03

Thanks again everyone.

We don't really want a new build and are looking at something slightly older or possibly even something that we could do some cosmetic work too (nothing too much though!)

Looking at rental it is pretty similar to mortgage prices if not slightly higher, we could proberbly get a small semi for around 600 PCM if we were renting, however we have the problem of having two large (non rehomable) dogs and two house cats which make renting impossible!! The rental houses in our area all seem to be in the worst streets too, although maybe this is a generalisation!!

With regards to loans. OH has student loans and also a car loan which is £140 a month. It only has a couple of thousand left on it and it is paid, however we have factored this into a monthly spreadsheet along with my car finance which is £240pcm as I needed a decent car with good mpg as I commute a huge amount (and I got free service, tax and mot with the deal) however I do slightly regret this now I am stuck for another 2 years and I wish I had got something cheaper but it is in negative equity so if I get rid it will cost me a large chunk of savings and I will be car less for work.
I have been honest with the mortgage company and the max lending figures include the loans. (It was around 160k we could borrow without the loans and £135-140k with them) It also has helped my credit score a huge amount according to experian?

Both stupid mistakes made in early twenties we are paying for them now!!

Thanks again!

CalamitouslyWrong Mon 09-Dec-13 21:30:21

If you only have £350 left a month to pay for everything that doesn't come out by direct debit, then £40 on pets will feel like a lot. Also, you are responsible for stuff that goes wrong in the house. So the boiler breaking, or a leak etc will be incredibly tough with so little to play with.

Have you factored in buildings and content insurance? It's also sensible to have some kind of life assurance that will cover the mortgage because you never know.

Greyhorses Mon 09-Dec-13 21:50:58

Sorry calamitouslywrong maybe I worded that badly!!

I factored in everything I could think of including pets, insurances (home,contents and cars) loan repayments, bills etc, basically everything except food and included a £30 savings for an emergency fund . The £350 would purely be for food/entertainment/any extras which I'm sure will be swallowed up. I have accounted for everything I could think of in my spreadsheet.

I don't spend any money on extras such as clothes or bags or alcohol hence the pets ( in particular my dogs) are my hobby as I do work the younger one and we spend a lot of couple time walking etc soI don't mind spending £40 a month on them. My OH is always working into the small hours and they are my main company. They would not be rehomed under any circumstances as they are family, it's the only thing I refuse to give up!

I have not however thought about life insurance! That's another thing to look into!

OP, sounds ok to me.
Remember when in 5 years time you have paid off on your mortgage you can remortgage and get a better LTV (this should keep fears about rising rates at bay).
I would overpay as much as I can as long as you don't have kids.

We paid roughly the same renting as now on mortgage. And our ratio is rather 2/5th of mortgage/income as I don't work atm.

Both times we bought I had a few nights of panic, I think it would be unnatural not to feel a bit queasy. It means you know what sort of responsibility you are taking on.

Good luck with the house hunting!

Moreisnnogedag Tue 10-Dec-13 21:58:04

We are in this boat. I'm the sole earner and was shocked at what the bank was willing to give us compared to what I felt was affordable, especially considering that interest will go up.

I think you adjust to your income. I was getting all twitchy until I remembered back to our student/recently qualified days when we lived on a lot less. I also think that at least you are paying into something rather than just handing it to someone else.

cantthinkofagoodone Tue 10-Dec-13 22:09:11

I think it would be tight but standard nowadays. We're in the same boat.

Teaching should increase annually and can do marking to get extra pay

Greyhorses you can make that money work for you, switch to shop at Aldi's if you can. Whenever something is on offer I bulk buy e.g. washing liquid and softener and loo roll, so that at least for 6 months I don't have to rush out to buy it and pay full price.

When you do move don't plan to buy too much furniture, just the basics like bed, sofa, wardrobe etc. I had made so many plans of what I would buy but glad I didn't because after some time of being the place you really understand what you need and what you don't.

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