Is Our Mortgage Sustainable? Advice Needed

[Gabaru]

We are first-time buyers, and our mortgage for £575,000 has been approved. We are putting down a £11,000 deposit. My take-home income is £4,200 per month, and the mortgage repayment will be £2,430 per month.
Given the current cost of living, I wanted to ask if this setup seems sustainable.Any advice or insights from those in a similar situation would be greatly appreciated.

@dreaminggardener Thanks for this. May I ask you to please look at this budget planner which I have updated with all the expenses I think. Can you please let me know if I have missing anything crucial. May also ask how did you manage any unexpected expenses

https://docs.google.com/spreadsheets/d/1TyvrVIa9FCmg_GkOoiJGPm7IY1N8l8Zd/edit?usp=drivesdk&ouid=100685407561018836275&rtpof=true&sd=true

Seems totally unrealistic

200 a year days out? Cinema for 2 is 20 minimum do you never go anywhere?
Holiday budget? Even camping will be 20 or 30 a night
Do you visit family or friends? Where do they live

100 a year for haircuts? For 3? Really?

Clothes? New laptop for school?

Smaller house more ££ for fun etc makes a nicer life?

Totally agree with @cestlavielife , the figures are ridiculous .

Positives are your son will be 18 in five years and will be able to do part time job.

Please say you're not suggesting the son should work to help alleviate his parents' terrible financial decisions?

Thoughts - £100/year on clothes for 3 people is not really possible.
£10/month on school lunches
Your gas/electricity cost seems extremely low. Is this based on a year's expenditure or your estimates? Remember the house you move to would have increased council tax/heating costs.

You'd spend £100 per year on presents for all birthdays/festivals? I.e. £33 per person in your household per year with no gifts/cards bought for anyone else at all?

Normally people say to budget 1% of house price per year for repairs etc. that would be £5000/year for you.

No replacing appliances fund.
Haircuts extremely low.

No miscellaneous category, which is just impossible. Everyone has a miscellaneous spend category!

This is a budget. There is no way this is your actual expenditure given you say you can only save £100 per month with £1500 rent. You need to trawl through your spending over a 1 year period categorising each spend to see what you're actually spending as it's likely hundreds of pounds over what you think you're spending given what you're able to save and what you could save based on this spreadsheet are wildly different.

And what on earth?! You don't have life insurance. Your family are in so much trouble if anything happens to you!

Well I spend a lot less than most on a lot of things, think a lot of MN are ridiculously profligate and even I can see that's not a realistic budget.

Less than £100 a month on electric and oil (no gas)?
No life/income insurance
£200 per year on all eating out/lunches/coffees?
£250 per year for all car maintenance/MOTs etc and no parking fees?
£200 per year for all days out and no holidays?
No clothes or shoes for adults and only £200 per year for a 13 YO
Nothing for Christmas and only £100 per year for birthdays.

I hope this house is nice because you're not going to be able to afford to leave it very often unless you increase your income and/or reduce the mortgage

Agree about looking at actual spending. Most banks and credit card providers allow you to download transactions. Do this for 2024 and put them in a spreadsheet.

Did you save the £110k deposit yourselves and if so, over what period?

Your wife needs to lower her expectations and get ANY JOB (even NMW)

Agree! let me check my account past 1 year and recheck all the expenses. 110K savings are from the past 10 yrs.

Agree with all the above posts about your spending figures being unrealistic. No contents insurance? £20 on phones - is that for all your mobile phones or just yours? £16 a month on clothes for 3 of you? Presumably 13 year old needs new clothes as he grows/school clothes etc?

If in reality you have £200 left over per month now, you surely have to see that taking on this mortgage which is higher than your rent will leave you in debt each month? Also, the costs of owning your home rather than renting mount up - there’s always unexpected things - boiler breaks, gutter needs replacing etc.

You say a smaller budget wouldn’t get you the house you desire, but the reality is as a first time buyer most people have to make compromises to get in the ladder and only later get more of what they want from a house.

People are suggesting what's important to them,everyone is different. Some people prioritise holidays and dining out over mortgage and some don't. It's important to be optimistic otherwise it's hard to achieve anything in life. you are in strong position. Emergencies funds for house repairs, or boiler gave up etc 10k would be healthy. you can paint the house by yourself, wouldn't cost a leg and arm. It's important what you can give up in a financial hardship- Sky tv , netflix, takeaways, holidays. If these things you can't give up and takes more priority over your mortgage then yes you need to re think.
In terms of food shopping, one can spend £200 or one can survive on £50. If you're in financial hardship would you be able to live on £50 a week shopping etc , these are the questions you should be thinking. Healthy food does not cost that much. it's junk we buy cost arm and leg. You have bonus coming in as well which we did not have. We have three children to support and you have one. Our children are in grammar schools.

we did not need any emergency funds but we did put 5k on put one side.
I trust Bank's stress tests and affordability.

You didn't specify your mortgage term.

Nonsense I bought a lovely 3 bed in zone 3 for 370k lovely big back garden

that’s all you need surely if it’s just the 3 of you!

buy a cheaper house you can’t afford the one you’re after

This is a totally inadequate budget: for example I doubt that you could even buy your son's school clothes for £100 per year, and school lunches are well over £10 per week.

@dreaminggardener our mortgage for a house of £575k has been approved with an interest rate of 4.44. Loan term is 28yrs. Got it with Nationwide with 5.5x of salary and they counted my annual bonus (5k ). We are putting down a £110k deposit(19%).So the mortgage amount is 465K and rest balance we are paying as deposit. We are about to exchange the contract in 1 or 2 weeks.
My take-home income is £4,200 per month (after the deduction of medical insurance) , and the mortgage repayment will be £2,430 per month.

That's a good term. what was the maximum term available to you ?

you have saved £110k in the past years, Not a average person would be able to do so. This is good.

Also my husband did sort out taxi drivers badge etc as a back up , should the worst happen.

My children go to secondary schools, i pack their lunches. It's less cheaper rather than buying from school canteens.

Sorry meant to tag the pp about the lunches cost.

Sadly I think you are going to struggle. It will be hard to save anything at all for an emergency fund or even a holiday, school trips etc. could you move slightly further out so you could have a smaller mortgage?

Sounds like you're well on the way to buying the house?

In that case, you'll just have to be focussed on minimising expenses to give you financial resilience as well as your DW taking any work she can get.

But if she's not working, will she be at least able to do the decorating, shop around for second hand items needed or even those being given away and do other minor DIY to avoid needing to pay trades?

Also mortgage interest rates have gone down , presumably you have offer few months ago if you're close to exchanging. It's worth speaking to the bank if rates has decreased in your loan to value range.

From reading your other thread the survey has highlighted quite a few things that are going to need to be done on this house. All houses need maintenance it's just a fact.

I just can't see how these figures stack up.

You need to keep the £20k spare for your emergency fund. If you are adamant you want to proceed with this house and you seem to be so (even though you must have worries otherwise you would not have started this thread) it's imperative that your wife gets a job.

But personally I think this mortgage is just too high for you at the moment.

You are a ftb. It would make more sense to pull out of this purchase and buy a more affordable house that reduces your mortgage payments.

A house is somewhere you live, but you need to be able to enjoy your life as well and if this means buying a cheaper house that still offers you the space and kind of in the location that you want that is a far more sensible option.

When did you buy it?

We also paid less than £300k for a house in London…twenty years ago.

Right - I earn pretty much the same as you.
Here are my actual costs to live in a 3 bed semi. I've taken off childcare costs and my husband's income as these are irrelevant to your situation.

This is the level of detail you need to go into.
My budget for what I thought I was spending looked pretty much like yours (i.e. underestimated my expenditure to a crazy degree - I buy kids clothes second hand and had written that I thought I would spend £100/child per year for clothes, it was actually £400). I was shocked to see what I was actually spending when I sat down and worked it out.

Please do not exchange contracts until you have seen your ACTUAL expenditure for the past 1 year with every single transaction documented.

If you proceed without doing this work, I wouldn't be surprised if your house is repossessed within 2-3 years. Based on all that I am seeing, you cannot afford this house and need to pull out.

Income

• Salary (take-home): £51,993 / £4,333 per month
• Child benefit (take home): £1,111 / £93 per month

Expenses
General Expenses

• Home repairs/improvement: £3,241 / £270 per month
• Holidays (all costs inc. travel/accommodation/Passports/insurance/eating out etc.): £2,896 / £241 per month
• Presents/parties: £1,251 / £104 per month
• Home items: £1,224 / £102 per month
• Christmas: £1,132 / £94 per month
• Personal spending (clothes/prescriptions etc for adults): £1,115 / £93 per month
• Emergency: £701 / £58 per month
• Eating out: £666 / £56 per month
• Food: £7,846 / £654 per month
• Health: £627 / £52 per month
• Work lunches: £510 / £43 per month
• Adult time/babysitting: £500 / £42 per month
• Days out: £368 / £31 per month
• Miscellaneous: £75 / £6 per month
• Takeaways: £54 / £4.50 per month
• Unknown: £28 / £2.33 per month

Bills

• Mortgage: £9432/ £786 per month
• Council tax: £2,093 / £174 per month
• Gas/electricity: £1,979 / £165 per month
• Life and critical illness insurance: £1,168 / £97 per month
• Water: £355 / £30 per month
• Home/contents insurance: £295 / £25 per month
• Professional fees: £243 / £20 per month
• TV licence: £169.50 / £14 per month
• Window cleaning: £122 / £10 per month
• Phone: £96 / £8 per month
• Investment fees: £11 / £0.92 per month
• Internet £300/£25/month

Car Costs

• Fuel: £2,009 / £167 per month
• Car repairs: £415 / £35 per month
• Service/MOT: £388 / £32 per month
• Insurance: £279 / £23 per month
• Parking/tolls: £91 / £8 per month
• Breakdown cover: £73 / £6 per month
• Taxes: £70 / £6 per month
• Driving licence: £14 / £1.17 per month
• Bus/Park & Ride: £38 / £3 per month
• Car wash: £3 / £0.25 per month
• Other: £0.50 / £0.04 per month

Kids

• Clubs/swimming/regular activities: £1,554 / £130 per month
• Clothing: £801 / £67 per month
• Other: £636 / £53 per month
• School trip: £3 / £0.25 per month

Subscriptions

• Music lessons: £905 / £75 per month
• Charity: £124 / £10.33 per month
• Amazon Prime: £107 / £9 per month
• Other streaming service: £50 / £4 per month
• Apps/other: £24.67 / £2 per month

Total Income: £53104

End of year:
Leftover money assuming mortgage of £2430:
DEBT OF -£12766

So - as previously mentioned, I take home around the same salary as you.

The home repair/improvements is low cost in my expenditure this year as we had a lot of maintenance tasks to do last year so not much requiring urgent work this year.

Generally people would pay an average of £5000 per year for the house you're looking at, ie £416 a month. You'd therefore need to spend ~£14500 less than me to break even with the mortgage you're intending to take on if we're being realistic.

This house is unaffordable and you're minimising the fact you have so little left at the end of each month with rent of £930 less each month than your mortgage would cost you. You will sink deeper and deeper into debt each month if you buy this house. Frankly it sounds as if your mortgage company have accepted your unrealistic expenditure information without doing due diligence here.

'If you proceed without doing this work, I wouldn't be surprised if your house is repossessed within 2-3 years'
I agree with @borborygmus1 and think the above is very likely if you proceed with this purchase.

There are so many glaring holes in your spreadsheet and so many essential expenses are missing. It's not a question of frugality eg what @dreaminggardener suggests about making packed lunches. That's a grand total of £10/month according to the current budget.

There is no budget for life insurance/critical illness/ income protection
Nothing at all for house maintenance, despite it apparently needing 'renovation'
Nothing at all for car maintenance. What happens if you need a new car (I'm assuming you only have one)
Nothing at all for public transport
Nothing for dental treatment which can be expensive
£200 a year for all clothing and shoes is ridiculous. Have you never bought children's shoes? When you need to buy your son more school, football boots and trainers, that will nearly use all of your budget immediately.

You really need to pull out of this purchase or you will very likely lose the house anyway down the line and end up in a small rental, much poorer and very unhappy. I expect you would still call that 'unlucky'. No, it would be due to really poor planning and decision making. Still, perhaps this is an elaborate windup.