AIBU in thinking this mortgage repayment will be too much?

[BebeBelge]

Hello!

Looking for some advice ...We are hoping to move to a bigger house. DH proposes we take on a mortgage with repayments of £1400 per month.

I am just about to start a full time job which will mean our combined take home pay will be £5000 per month.

For reference our current mortgage is £730 per month and we just have DH's salary of £3400 per month. We have 3 primary aged children in full-time after school club costing £700 per month, we run one car, kids do the usual activities (swimming, rugby, beavers etc), we live very comfortably but not lavishly.

My worry is that one of us loses our job or gets ill etc. and the mortgage is unsustainable on one wage. DH says you can't live on what ifs. The house in question would be our dream home in the dream location.

AIBU?

I know this is a first world problem, I really do! I don't want this to turn in to a discussion about how lucky we are to be in this position because I know we are. But I am generally terrified of money issues and am feeling very anxious about this decision.

Thank you!

That sounds totally fine. Go for it - especially since it’s your dream home!

Would you both have to work full time until you are nearly 70 to pay for it thoug ? Or will you be able to pay it off early ? Personally I would not want a big mortgage round my neck at that stage of my life.

Although inflation is likely to mean that it doesn't look like such a big burden in a couple of decades time, plus once the children are out of clubs they can hopefully overpay a bit.

There is a principle (which I think is a good one) that of your available income one third should go on housing, one third on long-term savings (especially pension) and one third on living. Your mortgage payment is very comfortably within that, particularly if you have separate money going into a pension scheme over and above the monthly £5k you've mentioned.

I think it's alright. We bring in £4.6k per month and pay £1.35k per month. We had the same mortgage when we brought in £4k per month and it felt tight then, I was also paying double the fuel etc as was commuting further.

We haven't had an offer in principle yet, just rough guidelines from our mortgage advisor. The house is a new build so we might have quite a long lead time on terms of providing pay slips from my new job and we are in no way committed yet.

Kids have been in after school because I've been full-time at uni until a few months ago.

I think it sounds fine. To be honest you have probably had too low a mortgage against your income for too long and got used to having a lot of disposable income. Buying and paying off a capital asset will see you better off in later life. These things are just a balance but you will have a lot left over in my opinion. Council tax and utilities will prob cost more though.

Our current mortgage is just shy of £1200, then we pay FIL another £500 on top to pay back a deposit, so total £1700.

Our wages are just under £4000 together, so I think you will be fine!

Have plan b. Getting a lodger, renting house out, downsizing, going on interest only....
Then you will not be catastrophising and can relax

We earn about the same as you. Our mortgage is £1k with no childcare costs.
I probably wouldn't have a mortgage of that much. I enjoy having disposable income especially with teenagers!

We did something similar 2 years ago, although payments less and salary less but about the same percentage wise. Annoyingly since we moved the council have put our council tax up twice which we didn’t anticipate. Additionally our monthly outgoings for gas is much higher than we expected as heating a larger house with a baby costs a lot more (17 year old boiler) than we predicted. We’re still ok but definitely do your sums carefully.

Our current mortgage is 1200, we are looking to move this year with a top budget of a 1600 monthly mortgage.

We earn 5k a month between us, and put away 1k a month in savings currently alongside the mortgage, our own savings, and a lot of ‘fun money’, and we are perfectly fine.

We plan to overpay about 5k a year and we think that will be affordable even once we start paying childcare. I’ve done a lot of number crunching!

I think you should definitely do it- with the caveat of insurance for the entirety of your mortgage cost!

We went slightly lower than we could afford and then set up a reoccurring additional payment of £100 - we increase or decrease the additional payment as and when - so long as we don’t go over a certain amount we don’t get charged. We can pay off quicker, but have some flexibility

Personally, with high childcare costs we struggle with a mortgage of £1k and similar take home (i take him close to that and DH self employed so wages fluctuate) so I would say it’s too much. Mind you our child care costs are double yours (but the mortgage comparatively less too)

Oh - and we had been paying 1200 with a take home pay of 4000. 2 kids. We will probably increase additional payments more now that I’ve gone full time

I wouldn't go right to your limit now. Transport goes up every year. Council tax has shot up since we moved. Other stuff is likely to go up once we leave the EU, at least in the short term. Is it still going to be your dream house if you're lying awake at night in it worrying about money?

We live in a house that wasn't our dream house, but it had lots of our must-haves and none of our absolutely-nots. Now it's our home, we love it, and there's been enough leeway for maternity leave, flexible working and childcare. Works for me. I'm not saying I'd never move but I'll be fine if I'm carried out of here in a box.

I mean, obviously I won't be "fine"

I'd do it - we do!

Over the next six years your salaries will go up and your childcare down. Your equity will grow and mortgage debt reduce.

Think to where you'd like be in ten years time.

Do get a fixed rate mortgage though - five year deals are still pretty low and you'll have certainty.

I wouldn’t. Looking at the figures, your new job amounts to £1600 a month. If anything was to happen, you can’t afford the mortgage alone.

You have £60K as take-home and you are worrying that less than 1/3 will go on your mortgage? Nice problem to have!

How do you think single people cope? You just do. I pay that amount on my own and take home around £3600. If I lost my job,well, I'd probably be fucked. But that's what it costs.
You'll be fine.

I say do it. Our mortgage is 1150 a month and combine monthly take home. We have one set of childcare. Once childcare is no longer an issue we will overpay. You could do this. I reckon you'll be fine, go for it!

'DH says you can't live on what ifs'. He is correct

Even if you lost your job you'd still have £2000 to live on, bearing in mind you wouldn't need child care.
You'll be fine.

I think it is a lot but if you know that you will have more money accessible in a few years’ time, then go for it!

I'd be worried about interest rate rises, when we took out our initial mortgage the rate was around 14%,thanks to thatcher. If that ever happened again you may be in trouble.