What mortgage would you be prepared to pay on this salary?

[Ricepops]

Not stealth boast, we're just rethinking after quite a big change in household finances. Our household income is £6800 per month. We have 2 DC. Childcare costs are approx £200 per month. We run one car, which we own outright, but will probably need to get a new one in a couple of years.

We are in our late 30s and currently pay £1200 on our mortgage per month. Since our childcare costs have gone down a lot and our salaries have increased a bit, we think we could pay more and move to a bigger house. However it feels crazy somehow to spend as much money in real life as we worked out we could afford on paper, if you know what I mean.

What monthly mortgage would you be prepared to pay?

I think it’s more complicated than that. When will your mortgage end? Before the kids go to uni? What would the running costs and up keep of a larger house. My friends with older kids tell me they start to cost more as they become teenagers.

If you like your house and you're happy to stay there, you could look to over pay as much as you can while you can. At least do it for the next year or so then you know if you can really afford to part with the extra money while paying off some of the capital.

Your income is slightly more than ours, and your mortgage repayments slightly less. Outgoings aren’t linear, so we have regular monthly payment to cover the basic repayment requirement, and make an additional over payment most months. This could be £1000, it could be £50, the month we needed a new washing machine at Christmas it was £0.

One thing to reflect on is whether you really need to move house. It’s a big long term commitment to do another step up.

What else could you do with the money in terms of financial security and options for you, your DH and DC?

Yup know that feeling re mortgage size and spend. To answer your question we have been up in the 35-40% net income before for mortgage yet it felt a bit tight due to being I. the midst of peak childcare - now with job changing, DC older etc our mortgage is about 20-25% of our net take home and we over pay by a chunk

I earn similar and am jealous of your low childcare bill! Mine is €3000 per month for 2 kids. My mortgage is €1700, but I overpay to €2100.

I wouldn't approach from that angle.

What's not ideal at the moment? How much more space do you need? Where do you want to live? What are your other outgoings? Would you like to spend some of your increasingly disposable income on something else like pursuing a hobby or saving for the children.

I'd weigh up all of the above and look at what's available that fits your needs in an area which suits. Then see how that matches your income and lifestyle and work out if compromises are necessary.

I find "how much could we spend" quite misleading. Our mortgage lender would have loaned us around 50% again but we preferred to get a house which ticked all the boxes and overpay the mortgage when we can and otherwise, enjoy a better work/life balance.

When we took out our mortgage in 2018, we were getting about 6300 pm. Our mortgage is about 1700 & felt very manageable, but we deliberately upped our deposit and are paying off on a 20 year term.

Now we’re on just over 7k pm, with childcare of 1k pm. Still more than manageable but I wouldn’t have liked to have stretched ourselves.

It's down to what house you have, what you desire, increased running costs, other debts if any, expectations for holidays, private school fees in the future and definitely saving for university ... so personal. We have a similar income but adult children, our mortgage is £1100 and will be paid off in November. My advice when working out the payments to to set the term on the would be new loan to no older than 60, ideally 55 years old whoever is oldest because you will want to be able to potentially retire or go part time and none of us can predict bad health

I think our combined income is somewhere around yours (it’s variable as Dh is self employed). Our mortgage is nearly £1700. We are happy with that. We have a lovely home which also has income potential, so well worth the investment. I guess it depends on how much you spend day to day. We do have a car on finance (not a very expensive one), other car owned outright. But we don’t spend money on days out really, or meals/takeaways, bring coffee and lunch to work, etc.

It’s not just mortgage OP. We’ve moved to a bigger house which means higher council tax band, over £200 a month. Increased utilty bills etc

We have a combined income of just under 5k a month, no car to run, and childcare of about 700. We've just moved and our mortgage is 1600 a month, but we weighed it all up and this has got us a house over twice the size of our old one, so it felt worth it.

@afinethingindeed I like this idea, this is definitely what we intending to try - try and overpay by £800 per month and see how manageable it is. If we did that we would pay off the mortgage within 10 years.

@Polkadotties I definitely would take this onboard too - how much extra would you say it is costing you in extra utilities etc?

It’s hard to be exactly comparable due to the ridiculous energy bill increase. Our most recent combined engergy bill was £340. I am frugal with heating so this was a shock!

In terms of what we would be looking for in a new house - it's forward planning really. Currently have a small four bed (was a 3 bed semi which we extended). It's right in the centre of our lovely village and school is a 5 min walk away. However, it is on the small side for a 4 bed (~1200 sqft) so we would definitely benefit when the kids are older with having a larger house. We would be looking for an extra bathroom upstairs (currently only one bathroom and one downstairs loo), bigger bedrooms (all bedrooms are currently compact, particularly DD's) and more downstairs space for older kids to spread out in. We use one of the bedrooms as an office/spare room as DH permanently WFH. However, there isn't enough space for a bed and desk in it, so we have to move things around and use a folding bed when visitors (DM) visit.

Basically I feel like the house is fine for now and ideally located, but in a few years we would benefit from somewhere bigger. But by then we'll be in our 40s and might become outpriced.

@user1471604848 childcare bill is about £500 in total actually, but some of it comes out pretax as we get childcare vouchers. It's only this low as recently the younger one has started getting 30 free hours. We've definitely had our share of high childcare bills over the years!

I agree with the advice to overpay and see how that affects you.

For reference, we bring in more than you per month and our mortgage is £1,020. We overpay to bring that up to c. £3k a mth, but it's good having the flexibility to stop overpayment if needed.

(We have no childcare or car lease costs though.)

£2,500

Obviously lots to consider but around £2-2.5k seems roughly sensible.

My husband and I have a slightly lower combined take home than you, though I'm on maternity leave at the moment so it's even lower currently. Our mortgage is £1350 usually and we pay an additional £250 each month. When I go back full time, I'm hoping to increase that by another £150 so we'll be paying out £1750 total. We could stretch further but we do like to enjoy some luxuries and comforts.
Our childcare costs will be roughly £500.
I should add we're not as good with our money as we should be - we could probably go even further with mortgage payments but that would require budgeting more strictly!

"might become outpriced", this is a concern, so once you've overpaid for say 6 months, how soon do you think you could move again, 2-3 years max?

from another perspective - we pay almost 3k for rent. and it's money out the window. But we managed okay for 4 years now on rent. I'd happily pay same amount for a time just to actually own something. slightly jealous of 1200/pcm outgoing for living costs.

Well if you spent 3K on mortgage you'd still be loaded and able to save up for a new car/ make repayments but I'd want to also think about security of jobs and future plan before taking on such a big loan. Also I'd want to think about priorities for cash as if you want to do v expensive hobbies maybe you need even more than 3.8K a month to live off. Certainly a 4K a month mortgage is more than doable if that's your priority though (make sure you can afford interest rate rises though).

On the same income roughly

Very low childcare costs as getting the 15 hours

X3 kids

Mortgage is 1,500 pcm and I do not want to pay more

Our income is less, childcare and car costs are more. Mortgage is 1600 but that’s over a relatively short term so that it can be finished when we’re in our 40s (unless remortgage to extend or something).