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If you've taken a bigger mortgage based on 2 salaries does it worry you that one of you might lose job/not be able to work etc..

(16 Posts)
Honey1975 Tue 04-Apr-17 16:46:00

We've had a mortgage agreed which will enable us to upsize to a much needed bigger family home. We currently have just one smallish reception living/diner room which is trying to cater for 4 people's very different needs!

We won't need to borrow the full amount available to us but it will work out at being an extra £250 per month.

Me & DH both have secure jobs but I'm kind of worried about if one of us were to be out of work in the future for whatever reason as you just don't know do you.

Surely most people these days have to base a largeish mortgage on 2 salaries especially here in the south east where house prices are so high.

Just wondering what other people have done. I am a real worrier wheres DH is not!

minipie Tue 04-Apr-17 16:55:01

You can get income protection insurance to cover the risk.

I guess most people either take out the insurance, or perhaps they have back up in the form of parents/other nest egg they could dip into if necessary - or they just take the risk and try not to think about it smile

Notyetthere Tue 04-Apr-17 17:25:20

Minipie guessed it - dh and I took the risk. Our 1st mortgage came with higher monthly payments. It is a gamble that paid off in the end but a risk nonetheless. Our monthly repayments were almost 40% take home pay, budget was tight but we knew that our 1st house was potentially going to be a 'forever house' for us so we leaped at the chance. We have recently remortgaged to a more favourable fix rate taking about 24% of monthly household income. My salary can now service all the monthly bills but the 1st 4yrs were a gamble for us.

Tbh part of me always thought that if we struggled we could always sell up and move to somewhere smaller or cheaper.

Obviously now that we are expecting our first dc, we might not have such a blasé attitude and probably concentrate on having a stable affordable home.

namechangedtoday15 Tue 04-Apr-17 17:45:55

I don't think many people (these days) have a nest egg or income protection (we certainly don't) and just take the risk. We are quite risk averse as a couple, but simply couldn't have bought in the area we wanted (for schools etc) without doubling our mortgage.

Even now (7 years on), we need 2 salaries to service our outgoings. I've recently been made redundant so yes, it is a concern, fortunately I was offered a new position to tie in with leaving my old company without a break in salary - but it was worrying for a time.

minipie Tue 04-Apr-17 17:52:52

grin namechange I didn't really think so. I think most people take the risk too.

As notyet said, it's possible to sell and move if you really have to (last resort obv), or rent out your house and rent somewhere smaller/cheaper for a while, or take in a lodger if you have space... I think these are people's back up plans.

Honey1975 Tue 04-Apr-17 18:02:28

Thanks you for these replies, it's reassured me a bit. My mum always used to tell me (about 20 years ago😁) that you should always make sure you could afford the mortgage on one salary just in case. Things were clearly different in her & my dad's day when their first house cost about £3k, my dad was a bank manager and my mum stayed home to look after all of us! Oh how things have changed.

We do have mortgage protection currently and will continue with it but I've heard it often doesn't pay out for a while and doesn't pay out on everything.

I agree it is a risk but if people want an even slightly bigger house these days I can't see there is any other way.

Middleoftheroad Tue 04-Apr-17 18:02:28

We have just brought our second, larger home. An extra coupke of hundred a month and reliant on both salaries.

We did have a hefty deposit too which was our nest egg so nervous we don't have that, though it is reinvested in our home.

Our previous property was based on 2 salaries. It lost money over the 10 yrs we were there and if we had chosen differently we may have made a profit. I was made redundant and we managed on one salary - it was tight. Then I got a new job and we carried on living frugally and saved our lump sum.

If the same happened now we would downsize or release equity. we have no insurance. Most people take that risk. my mom held down three cleaning and bar jobs in 80s to keep.our overly priced roof. she loved that house but it left us with no disposable income. I alwaus aid that i would never overstretch so if it did come to it I would downsize.

Nobody knows the future - my parents lost a fortune on that beloved house as they wanted a quick sale due to divorce.

I would say try not to worry too much. If you can afford insurance great, if you could downsize fine and if you had to stack shelves to keep your roof then you will find a way. If you are ill or injured then it is different and in that respect, I guess I should have some protection...basically we are winging it too! Moved in 6 weeks ago, house loads problems so need to spend but I think once you move in you get used to the figures. we had 15 yrs left on our mortgage. not great at 43 - but we were overpaying and couldve prob used our nest egg to be done in 5 yrs. Now we are back to 20 yrs and will be nearly drawing our pensions by the time we pay this off.

would i do it again? yes. we had four of us one lounge one bathroom. no space. now we have 5 beds and 4 bathrooms in a better area. even if it does leak and creak right now!

Middleoftheroad Tue 04-Apr-17 18:03:07

bought...not brought!

Honey1975 Tue 04-Apr-17 18:06:11

Thank you middle' that sounds like a lovely house you have now!
Yes I guess there is always the option to downsize if worst came to worst.

Middleoftheroad Tue 04-Apr-17 18:11:29

The worst did happen at our old house in terms of losing my job. But I got redundancy, worked freelance and then found work again. In that respect we survived smile

Middleoftheroad Tue 04-Apr-17 18:12:56

Thankyou Honey. It will be great when it is done and good luck for your move - the space will be fab and the house an investment smile

Honey1975 Tue 04-Apr-17 18:38:57

Middle we are the same age so will also be retirement age and still paying it off which is very daunting. The house we want to buy needs some work doing too' it is very very dated. How did you work out how much you would need to put by for improvements? I'm not good at that sort of thing & have not much idea of what things like that cost. How can you work it out before you're actually living in the place?

How much have people been prepared to cut back on other things in order to have the bigger house?
I think that's what's worrying me - we will be able to afford it but will we have to forgo other things and to what extent. I think I need to have another look at our figures.

BrambleandCuthbert Tue 04-Apr-17 19:20:39

We bought our current property based on one salary. We had to really; when we moved, I was newly freelance and so didn't have the requisite proof of income or, TBH, much in the way of income at all at first.

Things were really tight at first. We were used to eating out lots, going away as & when, buying more or less what we fancied. That all stopped; a good life lesson in a way. It's easier now, thankfully, but we're still trying to live on one salary for day-to-day things. One never knows what lies ahead.

If it matters, our back up plan was (is) sell up & buy somewhere cheaper, but we are fortunate to have a lot of equity.

Good luck. I remember the worry.

Honey1975 Tue 04-Apr-17 19:27:38

Thank you Bramble, I guess it's about making some sacrifices which I'm ok with. It's the unexpected costs I'm worried about if we have less disposable income.
Do many people manage to have large savings as well as a large ISO mortgage? I can't think we will have any money left to save after paying for dc's needs etc!

Notyetthere Wed 05-Apr-17 18:20:46

Honey everyone will accept a different level of cutting back on other things in order to be able to enjoy your home. I am more willing to cut back o lots of things like holidays/days out to ensure I have that roof over my head that no landlord or bank will force me to move out of. DH on the hand likes to have the extra to do these things.

Our 1st fixed mortgage rate was high - we went from paying rent of £900 for a lovely 2 bed flat to mortgage payments of £1250 for a large 3 bed semi with a lovely back and front garden, drive for 2 cars, 2mins walk to outstanding primary school and within walking distance to DHs family for all that important support network. We bought 1 year earlier than we had planned as our landlord decided to sell the flat, we did not fancy the hustle of moving into another rented only to move again in 12 months so we leaped onto the property ladder with a tiny deposit. We quickly worked out that we hated moving so decided to borrow the maximum amount the bank would give us to afford us a home we would be happy to be 'stuck in'. For us that extra amount in payments per month was worth it for the extras. We knew that the 1st 4yrs would be tight but we were confident that come the end of the fix, we would have more equity to enable us to take on a more favorable mortgage product.

During the last 4 yrs the things we cut back on;

We have only had a 1 holiday abroad over the 4yrs compared to before when we used to have at least 2 holidays a year.

We drove very old rusty cars (I still do) till we were forced to replace DH's car after it miserably failed its MOT that we had to use all our savings to replace it with another more reliable car.

We never cut back on groceries and alcohol but we weren't too extravagant on these anyway.

We didn't have much left over after payday and saved very little sometimes going for months not having saved a penny. We were lucky that when the boiler broke down we somehow had the £600 to pay the repair bill. I think it was pure luck at the time as it had been saved to use towards our wedding.

We definitely didn't have the funds or the ability to save for improvements to the house. We would like a downstairs toilet, log burner and relay the drive as it is currently full of potholes craters grin. Now that we are on much lower interest, we can start to dream, even savings pot whilst tiny is growing faster than it ever did in the last 4yrs.

Basically what I'm saying, we knew things would be tight for a finite time so we buckled up. House prices also shot up in our area after we bought but if they had dropped, then it would have been infinite and probably a worry but then I think people adjust accordingly.

whatsthecomingoverthehill Wed 05-Apr-17 18:23:30

It's less risky than only one person working and having to base the mortgage on that. If they were made redundant then you wouldn't have any other salary to fall back on!

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