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.

His wife does work. She runs the household. Maybe she writes novels or paints portraits. Or looks after aged mum - I suppose that would be more acceptable? I never wanted to go out to work, though I had to. I wanted to do the work I needed to do and now I do do it (though a little late).
If you mean go out to work for money, it might not be cost effective. With that large a mortgage it might be desirable, I suppose - but some couples prefer one to be at home.

Because they can’t afford the house they want on a single salary?

Running the household isn’t a full-time job. Most people manage to do that while working.

If you live in London then your wife will be able to find a job. Even if she is working a fews days a week in a minimum wage job you would have an extra grand a month which woukd make it much easier. I would go for it. Its got to be better than private renting in London.

OP there is a Times money podcast on mortgages that was really good recently.

What stuck out to me was the advisor on it said during Covid was a good time to buy and lot of people bought as much house as they could afford. They said those people were now struggling now cost of living has hit versus those who had bought something more in their budget. Something to consider.

I think consider a smaller house / cheaper area whatever is driving the high house value. I think you’d be living too close to the bone based on those figures.

With a smaller house there’s a lot you can do with space if you are clever with it, look up tiny apartments on YouTube!

The rule with rent is 1/3 if your salary but it you have other costs such as childcare you might have to decrease that.

Why do you keep saying EMI?

I'm no stranger to mortgages, and I never hear that term.

Depends on what you mean by running a household but it is a full-time job - esp. if it includes all the social stuff, budgeting, cooking, preserving, baking, keeping the fabric in good order. And most women do the full-time job of running a household in addition to a second full-time job outside it because men do few of the domestics. And maybe she illustrates books or something but it doesn't pay much. I don't understand why they want such a huge mortgage, though. Sounds like champagne lifestyle on beer income.

Ha yes, you can probably gather I’m quite risk averse, grew up poor and don’t want to continue to be so, my house is modest and I have worked very hard to advance my career over the years to get the balance to that point. So you are probably right, I’m not typical.

Are you living in the 1800s or something? Most people don’t do preserving, baking (other than as a hobby) or “keeping the fabric in good order”, whatever that is.

Sounds like non-essential make-work to me.

I was wondering too, I had to look it up as I'd never come across that phrase before.

Ultimately it comes down to what the real numbers are.
But great advice I received starting out back when I was on 21k - pay yourself first 20%, then split the 80% for everything else.
By keeping mortgage to 20-25% of total take home pay, I can always find money for savings and emergencies.
We find that annually we need approx 1% of the home cost to maintain the home outside of the standard building insurance, contents, council tax, utilities etc. so that's an extra 6% to find each month. Bills alone probably another 6%.
That's before you factor in the general cost of living. Food is another 6%-10%. Cars, childcare, hobbies, vacations, clothing, gifts & xmas, special occasions, private healthcare when needed, life and critical illness cover, 6mths cash savings for job loss etc. it all adds up. No doubt someone will tell me they do it all on minimum wage but ultimately if you want to have financial security you have to find your own answers to these questions.

As everyone else has said that's far too tight. We have 2 kids, pay rent of £1200/month and for several months were living on a single income that is marginally higher than your take home pay amount. Most of those months we were spending every penny that came in, we have no childcare fees, that's just simply paying utilities, petrol, buying food and paying for kids leisure activities and the odd fun outing, there is no way we could afford to have doubled the rent. When I am working and we have 2 incomes it's a different story.

We have roughly the same household income as you and our mortgage is £350 a month. We are looking to move to a bigger property but nothing more than £550 would be affordable for us. We do have childcare fees of £600 a month though

@Grammarnut what is keeping the fabric in good order?

I'd say that's not remotely sustainable. We're also a single income household (by choice) and our monthly mortgage is 12% of my husband's monthly take home. We have a nice car, so the payment on that is somewhat significant, no other debts. We have a good bit more left over each month than you're planning and, whilst we have a good standard of living, we're by no means wealthy (we can afford the standard things that make life enjoyable - meals out, and things like theatre trips; nothing extravagant though!).

Doing household maintenance.

We take home slightly more than you (but two wages) and our mortgage is only £1.1k, I cannot imagine paying an extra grand on top of that. You would have to cut right back in other areas I.E holidays

Honestly it’s fine FOR NOW (literally just for mortgage purposes) and 5 years is the smart choice (if not 10 tbh) and at 13 you don’t really have childcare costs which is great but if your income stays flat you are going to struggle - forget holidays forget branded food / Waitrose / m&s

Every time we got a new house there were significant costs every month for unglamorous maintenance for about 6-10 months… (window blown, rad leak, new tap blah blah blah)
you also need to rebuild savings so you need to fat in your plan.

IMO your wife really needs a job - any job…and she needs it now now.

FT minimum wage would be £23,873.60 gross per annum with a net annual wage of £20,684

That’s an extra £1700 pm approx (ie you’d have 70% more disposable income)

is your wife chronically ill or can she work?

if not, once you get the mortgage locked in you need to be looking for a promotion or job change for pay rise.

an alternative idea is if you get a 3 bed property sublet a room to either to a mon-Fri lodger of an international student.

In the first 5 years of a mortgage (you didn't say how long the period is for, but let's say 30 years) you hardly pay back any of the principal - maybe only 10% of it in total. So if the interest rate increases by 10% by the time you renew (e.g., from 4.0% to 4.4%) the monthly payment will be the same. You could hope for inflation and corresponding cost-of-living increases to make those £2400 become less as a fraction of your take-home pay than today, but that's not guaranteed.

So what you are proposing might be doable, but there's a possible large downside looming up in 5 years, plus you are about to reduce your net monthly outgoings by 30%, from £2700 to £1800. Since probably half of that £2700 is incompressible (transport, council tax, food, bills, etc), you are about to reduce your discretionary spend by 66%, from £1350 to £450. It's not going to be much fun. On the other hand, if your wife can get a 50% FTE job at minimum wage it would make up almost all of the difference.

No point living in such an expensive house if you can’t afford a family day out or to eat?

Our mortgage fixed term ended during the rate rises, and our rate went from 0.96 to 4.98, doubling our monthly payment. You’ve absolutely no wriggle room if rates go up when your fixed term ends.

Our joint take home pay is similar to yours.

Our mortgage is £700pcm

Perhaps plumping the cushions? If I was invited round for some homemade preserves, I’d be disappointed to see flat cushions.

If your wife gets a job and can bring in atleast £2000 you should be fine, else no. We earn a combined £10K a month, our mortgage is £2200 and we struggle some months due to unexpected bills. We manage to pay them but it is tight. We have no other debt other than mortgage but with a house there is always something that comes up!

No, it’s not affordable. I earn more with the same mortgage repayments and my husband pays half. We have a good standard of living combined but it would be impossible on single salary or with a child.

Well I manage all of that and work outside the house full time, and did so with a young child. The ds here is a teenager. I cook, clean, make cakes and jam, look after chickens, do the life admin of sorting out direct debits, car tax, order groceries. By all means it’s fine for one half of a couple to not work but then those choices potentially have an impact.

Because you’re right about the champagne lifestyle on a beer income. So either up the income and wife gets a paid job or don’t work and get a smaller house. Or buy this house and struggle, scrimping and worrying. 🤷‍♀️