Am I out of touch with reality?

[Dreamhols]

Basically I can’t work out what’s affordable or maybe I should say acceptable (as in personally acceptable) to pay as a mortgage. Hands up, I’m used to and accustomed to my low rate of 2% meaning my current mortgage is £700 for a 4 bed house. My fix is coming to an end and rates are, well not 2% anymore, so despite being in the 60% LTV bracket payments are, in my eyes, huge.

so I’d like to hear from other people, given our circumstances (which I’ll list below) what they think would be an acceptable amount to pay on a mortgage. Atm I’m having moments of panic and then thinking it will all be ok, and I’m just out of touch with how much people pay on rent/ mortgages and was lucky with such a low cost for so long.

so both dh and I work. Combined income of 95k (before tax) take home after tax and deductions 5.4k. Childcare costs about £800per month. Protection is part of deductions. Energy is £150 a month. Food about £500. No debts. Car owned outright, petrol £100, Netflix and phones £50 a month. Internet £50, council tax £145.

how much would you consider acceptable or ok to pay? What would your ceiling be?

Our net income is slightly less than yours and we pay £1250 a month very comfortably. Overpay an additional £500 and we have much higher council tax and energy bills than you. I think you’re being a bit silly!

We pay £1600 mortgage a month and have similar outgoings to you. Our icons is slightly higher though about £6k take home a month.

Insurance and building and contents we pay as lump sums annually about £500.Life insurance, health, dental and CIC and IP and disability are all covered through work place deductions

services and MOT again we pay once a year about £250

lunch we don’t buy it’s provided by work and kids lunches are included in the childcare figure.

we obviously do have other expenses here and there but they aren’t set in stone

That’s what I needed to hear! Thank you!

I cant comment on the council tax as it is set by the council tax, just checked and it’s £150 we’re band D.

our home is really energy efficient, prior to the hike in prices we paid £80 a month for both and then when arvo went bust it was £100 and now we are with SO on their green tarif and that’s what it is. We were paying £170 with octopus before but were in credit and got £100 back from them

Cheap is relative… our house was £310k when we bought it, it’s about £400k now, maybe more like £380k given the dip lately. We bought with 20% deposit and as we were ‘young’ had a long term . I’ll be keeping the term long for now and reducing the balance when we have spare income when childcare years are over

id be happy paying up to £1500 for a 4 bed as it would cost that in my area to private rent a house that size ( devon) but its more about what you can afford and most people dont realise the amount they could save if they just pulled back a little on theyre lifestyle. Also depends what they want, either they get the best house they could afford but they go without any luxeries or they go the other way OR they find a nice middle balanced lifestyle.

I rent social housing in London and my rent is nearly half my take home. (Work 4 days though)

When DH & I bought 22 years ago our mortgage was £750, our joint salary was £30k gross with 2 DC so got some WFTC for childcare costs.

Seriously 30-40% of your take home for a mortgage is fine. I think you are indeed out of touch on what housing usually costs people.

Where are you? what are local rents. I think up to 2k is manageable out of 5.4k, childcare won't be forever

Energy prices are going down, last October we paid £192 a month, then March £112 and now we’ve been told it’ll be £88 a month from October. This isn’t because our use age is reducing I received an email from our supplier saying prices are falling.

You also have good LTV.

I did say on another thread it's a huge mindset even for those who can afford it to get their head around paying so much more to service debt.

Currently have 65% equity and on a 1.2% fix so we’re prepared for a big hike when it ends in 3 years.

won't you have paid a fair chunk off though? Rates are going to be 10% in 3 yrs time.

@bopbey Why do you say this please? Is there a source for that prediction?

Your mortgage payments are driven by prevailing interest rates and not what is acceptable to you to pay.
The interest rates of the last 15 years have been unrealistically low, and this has lulled some mortgage payers into false sense of security.
In your shoes I would either ride it out and get a second job or sell up and downsize.
For context, the current interest rates are still lower than they were before the 2008 financial crisis, which makes me think they are going to remain roughly where they are now.

@RochelleGoyle nothing is indicating rates will be 10% in 3 yrs time. What have you read to the contrary?

Oops that should have said rates aren't!

We’ve got an exit fee of £75 so if it’s worth it and we see lower we’ll bite the bullet and switch

This is false! Actually predictions are the opposite (I work in finance) and the prevailing opinion is that inflation will be 2% by the end of 2024 and 2025 will be an opportunity for significant growth (meaning interest rates will be down, and people have more disposable income and are more willing to spend)

midlands

rent in my area for a bit of a run down 3 bed is £1000, more modern 3 bed about £1.2k and the one 4 bed up it’s £1.6k

@Dreamhols read my last point....

I meant aren't hence why I was confused why that poster was panicking about a big hike when they will have likely reduced their debt.

I would have thought 1.5-2k was manageable on your income. Assuming there's no massive missing costs from that list

i don’t think rates will stay this high, i don’t think we’ll see 1/2% again for a while but I don’t think this is the new norm. The base rate prior to the crash was 5.5 and then 2008 dropped to 2, to stimulate growth in the economy.

im not getting a second job. I could pick up some side work as a tutor but I’m not getting another job, I’m contractually prevented from doing so. Downsizing, I need the space I’ve got, upsizing would be handy actually as I’d love another child, but need to ride this storm out first

The OP doesn't need to get a second job!

Or to sell her house!