Is £950 per month on mortgage reasonable in this situation?

[bluebellls]

Combined income of approx 3800 a month after tax.

We are in our 20s and first time buyers. Looking at a brand new development. Taking out a 195,000 mortgage at today’s rates would mean repayments or anywhere between 870 and 970 monthly depending on the term. Due to our age we’ve had advice from family that we might as well take out the longest maximum term possible. Of course will seek financial advice too.

Overall the repayments would be 23-25% of total income. That is with both of us working full time and with DC in the future picture- I know childcare costs are horrendous but we would hopefully only be needing two days a week when the time comes.

Am I being silly for thinking this could work? We could find a cheaper property and pay £750 a month but that would mean compromising a little on area and running the risk that the older house hasn’t been maintained, whereas you’ve the 10 year warranty with the new one.

It sounds fine to me.

I'd also recommend choosing a flexible mortgage product so that you can overpay as much as possible before you have children. This will reduce your interest overall and give you a cushion during the most expensive years while your children are young.

Go for it. Try and overpay before kids though as you’ll be amazed at how even the smallest overpayments can reduce your term. We overpay by £100 a month and even if we only ever overpay by £100 a month, we will pay off the mortgage 2.5 years early!! The Martin Lewis calculator will help you to work the benefits using your circumstances.

It all sounds good for me and it would save you having to move again for a long time.

Thank you @DaisyBoop that sounds great. Well done to you! That’s a big difference

Agree that the monthly amount is fine, but agree with comments to overpay.

I would caution buying a new build unless you are set on being their long term, especially given the market is dropping. Does the house has room for you to expand e.g. have a child or two? Although you are young, you are often in a property longer than you think. Also a 3 bed property is a lot more marketable than a 2 bed for example when you come to sell.

@yoshiblue thank you. It’s a 3 bed yes. We were warned against buying a new build two bed for similar reasons as you’ve listed. Bet they’re harder to sell

I think it is manageable. When we bought our current house 5 years ago our monthly payment was similar with a similar joint net income and we were paying about £800 a month in childcare and we coped fine
Five years later income has increased and childcare costs are next to nothing and we are much more comfortable
Rent would always be more expensive where we live with rent on a similar property being at least £1400 a month

The house wasn’t suitable. Another development we are looking at today are priced 215k for a 3 bed. Don’t love the area but it’s not the worst either

Repayments are estimated to be £1080 on this for 35 years. I am literally agog with the prices….. £1080 in mortgage on a £3600-3800 net income. I am wondering if that’s just bonkers to even consider as bills would then come on top of that including 300 for car finance. When we have a child we will then need to afford two, possibly three days of childcare per week. I’m worried we’d never go on holiday again

Freaking out unnecessarily or does anyone else think it would be tight?

We earn a similiar amount and mortgage is £1060. We upsized significantly and were only paying around £650 before but saving hard to be able to move higher up the ladder. I was worried we would find it tight but being totally honest it seems no different at all too before. If anything I feel we are better off now as the constant need to save every penny has lessened! Obviously it depends on what other expenses you have - we only have one car and live fairly frugally.
We also got a 10 year fixed term rate for peace of mind that there won't be a significant increase in rates.
To me, I'd rather spend more on a nice house in a nice place as we spend so much time here and have less money for other things like holidays etc.

I hope that helps!

If we had a car on finance I probably wouldn't have done it to be honest though

You're the only ones who can decide whether that is adorable to you, but please take in to consideration that repayments could increase when your term ends.

Thank you @Deadinsidebutcaffeinated good perspective

What are you paying in rent? For us renting is cheaper than a mortgage

@Greensleevevssnotnose £600. So also cheaper just like you. I’m just concerned renting is wasting money

I am looking at similar repayments and similar income but we are borrowing £150 000 and have 40% ltv.
How are your repayments so low, what is the interest?

Sorry, hadn't seen your updates. That was in reply to the opening post.

Yep, can’t get it below 1100 which doesn’t seem like a smart thing to do when our rent is 600 atm so totally stuck. It seems extremely unfair that you’ve got a bigger deposit yet repayments are still so high for you?!

How long is the fix that gives you that payment?

5 years.

2 year fix is another £100 still.

Ok, could be worse. I would go longer fix rather than shorter in your position.