To buy a £700k house on £67k

[Polledja]

My wife and I are looking to buy a house. I was very foolish with my money during my younger days so am behind my peers.
we want a house near a good school and houses in that area range from £550k to £700k. The ones my wife likes are at the higher end but I don’t think we can afford these. She has become withdrawn and depressed during this process and it caused allot of tension.
I have approx £280k for a deposit (this is all our savings bar £18k). We can borrow £350k based on our joint salaries of £67k. It leaves me £90k short. I think I could borrow this from family.

our net pay is £3900 per month. We would have £2000 tonoay on our mortgage leaving us with £1900 to pay everything else. We have two young kids at school. Our monthly expenses excluding our mortgage are about £1600 so it would meaning having nothing left each month

I haven't got any issue at all with taxes being used to fund universal child benefit. None.

@SplunkPostGres the demographic switch is a huge issue that is one reason for the countries low growth. We already have more over 65s than under 15s, universal CB is not going to be thing that breaks the bank!

On the back of this thread, and an article on the new pension regs, I ran some pension contributions options through income tax calculator. OP is getting much more benefit from income above the 40% threshold by putting it into pension. Looking at the calculations, I can double my pension contributions from 10% to 20%, and only reduce take home by about £300pcm; Person pension contribution doubled, HMRC contribution doubled and around £2,500 a year less tax. There’s a definite incentive there.

If working hard up the career ladder, making a conscious choice to pay off our mortgage as quickly as possible and saving and investing is luck then maybe?

but I don’t see it that way.

I think the vast majority of people work hard but I think luck is involved in it coming to fruition. I feel lucky that I got on the housing ladder when I did, that I secured promotions, that I have my health, that my investments paid off, etc. That's just the way I see it.

Because PP have a £110k income. They can borrow 550. Not to mention they should have a whopper of a deposit with that kind of salary.

Sure they don’t have to spend it all if they don’t want to. But PPs partner does want to spend more and for pp to say they can’t afford it is disingenuous. They have double the household income and are buying a first time house less than the Stamp duty free band for ftb.

Financially it makes sense to at the very least max out the free 425,000.

Just my opinion. FTB for me is the place where you stretch yourself the most. And a 425 home is not even a stretch for pp. It’s just sensible.

Do you want a nice life or a nice house?
You'll never be able to go on holidays with the kids, give them experiences as you've no money to spare.

I can definitely see you heading for divorce once money starts being a strain as she sounds like she 'wants' a certain lifestyle.

Rethink

You would be mad to attempt to take on a property of that price on your salary. I bought a property in that range, but earn a few times your salary, so I find it manageable as my monthly mortgage payment is 27% of my take home salary.

The maximum house you should be buying with those figures is £500k OP, and perhaps stretching to £550k for the perfect house.

The mortgage you'll need of £270k will be just over 4 times your salary after pension deductions, and will be much more affordable.

The £700k plus house should wait until your next step up the ladder; either when you're earning more, or can build up more equity in your property.

My mortgage is 380,000. We pay £1980 a month. We got this mortgage on self assessment when our household income (take home pay not salary) was £6-£8k a month. Obviously we could afford it. Since Covid our circumstances have changed dramatically abd now our take home pay is between £4.5k and £5k a month. With the rising cost of living things are tough. We've also had a couple of large business bills to pay (hangover from Covid) and have had to borrow it from parents.

Don't forget your house bills will be higher too. Council tax, energy bills.

Ideally we wouldn't live here anymore but can't get a mortgage for any amount currently due to business changes post Covid Also locked in on mortgage so very expensive to get out.

In short I don't recommend it. With less debt we'd be better off but we don't owe our family anywhere near as much as £90000.

We drive old cars and have second hand furniture. Not keeping up with the jones' in anyway. Luckily I don't give a crap what we look like just that we can afford what we have!

Your wife needs a reality check I'm afraid. If I could get a cheaper, smaller house right now I would.

@Polledja Her reasoning is that we are only going to buy a house once so we might as well make it the most we can afford

However it doesn’t sound like you can really afford this. With everything else else going up, she needs to be realistic. Go and see an IFA and get a dose of reality. Hope you resolve this 🙂

I bought a property in that range, but earn a few times your salary, so I find it manageable as my monthly mortgage payment is 27% of my take home salary.

I don't think the OP should go for such an expensive house however the vast majority of FTBs cannot stick to 27% mortgage vs income because salaries are crap & house prices so high. And let's face it rent would likely be an even higher %

I thought the standard mortgage was 25-30% of take-home @bibbybox? Is that not the case?

you say you have 280k deposit. How much of that has your wife put in?

@Starseeking for FTBs? I doubt that!

I know hardly anyone who would be able to make that work where I live, where anything remotely decent is 500k upwards. Our mortgage is 33% of take home and that's low amongst our friends in the same area.

If that was true the housing market would grind to a halt!

It will vary massively depending on where in the country you are. Our mortgage is 16% of our take home pay, but we live in a cheap area.

"The average first-time buyer spent 39pc of their net take-home pay on mortgage payments in the final quarter of 2022, according to analysis by lender Nationwide"
"The last time this share was higher was during the financial crisis in 2007, when the share rose to 46pc. The last time the share jumped above 40pc was in 2006, in the run up to the crash"

Life is for living not for being in debt over a house to the point you can’t enjoy other aspects of your( and dc) life.

Financial pressures can break a relationship.

I’m sure there is a compromise

I’m not interested in tips, I think your advice is flawed. Each to their own, but just because it worked for you doesn’t mean everyone should do the same.

Wow, that is huge! And OP here is talking about spending more than 50% of their take-home on mortgage payments 😬😳😬

Pahahaha the same can be said of anything written on this thread or forum 🤣🤣

Yes I know, I was just spelling out why I was asking questions. It was because I disagreed with your advice but you took it as me wanting to copy your life 🫤

I think you’re very disparaging of someone whose sensible lifestyle choices have worked.

I think you need to re-think where to live and possibly a lower cost area.