AIBU to take out this mortgage?

[helptodecide]

Hoping someone will tell me if this is a terrible idea or not before we proceed.
Myself (F24) and my partner (M29) have had an offer accepted on our first house. It’s £325,000 and we are putting down a deposit of £21,000. The mortgage we are going for is a 2 year fixed at 5.69% and it’s a 40 year mortgage. we can’t get any better without fixing for five years which I do not want to do in this climate. Our monthly payments will be £1600 gulp for 2 years. After the 2 years I’m hoping to remortgage at a better rate (fingers crossed the interest rates aren’t so abysmal by then!). For context although the house is expensive for a first home it is in exactly the area we want to be in, close to work and both of our families, and is a 3 bed semi with lots of potential for extension in the future (ie this could be our long term home). In this area we won’t be able to buy much cheaper (even a 2 bed terrace is £300,000).

I am trying to work out whether this is going to be affordable for us. Our combined income is at least £4500 (fluctuates between £4500 and £4800 depending on partners overtime, and I also do some online teaching as well). I’m a vet, my partner is a HGV driver, so both in secure work. We have no kids and definitely no plans for them in the next five years.

I’ve calculated our monthly outgoings on bills including mortgage, car payments to family for both of us (we both borrowed money from family to buy a car to avoid debt), car insurance for us both, council tax, gas and electric and petrol to be around £2800. This would leave us with £1,700-£2,000 month for food, social (we currently spend FAR too much on this and would hugely cut down), the cat, money towards the house (it’s liveable as is but lots of cosmetic work to do gradually) and savings.

I feel like this sounds okay, but I am currently saving £800 every month and to be honest not really having to budget at all as our current rent is only £800 between us. I know it’s an awful time to buy a house at the moment, but I’d rather take the hit for 2 years and then remortgage when times are hopefully better.

What do all you wise people think?

Nobody can predict interest rates or what will happen in your lives

If you take the 5 year fix, you will know exactly what you need to pay

Does a newly qualified vet, presumably with student finance to repay, really normally earn over £80k a year? Wow!

I only graduated 9 months ago and I’m on 34k. Honestly most vets even after experience aren’t on more than about 50k! We really aren’t paid as well as people think and definitely not to the tune of 4500/month after tax. Those expensive vet bills really don’t go to us!

I can assure you they absolutely do not. I don’t know of any vet even with years and years of experience on 80k. Perhaps some vets working at specialist referral centres with a lot of post grad qualifications but definitely not me or even a very experienced first opinion vet makes anything like that!!!

I would go for it but beware, 5 yrs will go by in a flash. If you aspire to having kids in 5 yrs, between now and then you will need to:
Renovate the house
Pay off student debt
Pay for a wedding
Overpay the mortgage to remortgage at something lower than 40 yrs (ideally)

And then be ready to come up with childcare costs and savings for maternity leave (assuming you are self employed as a vet)

It's completely doable as your salaries should improve too but you will have to be really disciplined about spending and your life plans if you want this house.

'There are people who went for 2 year deals 3 years ago who are absolutely kicking themselves (and were probably poorly advised) because they're now facing much higher rates when they could have been locked in at 1-2% for the next 5-10 years.'

But that's a completely different scenario. Interested rates were historically low and could not go ahh lower - obviously fixed would have been better back then.

Now the interest rates are expected to drop. I doubt they'd go hire.

OP can you ask your mortgage broker or a bank for a financial model you can toggle that shows savings and losses overtime if you are to borrow for fixed vs variable? I work in data and could prob build something simple in 1/2 day, maybe some of your friends (who have bought a home) have a spreadsheet/model they can share with you?

'Rates have been 8-15% in the past'

Yes and country was a s-show; I doubt it will go this high again. Sorry I would not be fixing my mortgage based on that figure.

People who fix for 5-10 years might be playing it safe, but they're more likely to lose financially compared to flexible folks. When you're flexible you don't get a piece on mind but usually win financially.

That's how life works with taking some risks.

It's up to you OP, would you rather safe, or some risks but likely to gain £££.

It seems do-able. Go for it.

As a side note, is there promotions or potential to earn a higher income in the future? It's always good to have a "buffer" if you need.

Best advice I'd give, is pay extra, from the very first repayment, if you can. Even $25 or $50. It adds up over the course of a year.

I won’t say if you should do it or not or 2 vs 5 fixed… Mostly because your info is a bit general.

That being said you are asking the right questions and thinking in realistic terms so on that basis I think you should trust your gut.

Hopefully if nothing else this thread highlights the reality if vet salaries. So next time you're in a vet surgery, please be appreciative of the overworked (and underpaid) vets you come across. To say nothing of the vet nurse wages, which are often minimum wage..

WHY are people scaremongering with "take a lodger" shit?

Mortgage is £1600 that leaves nearly £3000 for everything else, for a young couple with no children!

On short-vs-long fix, the way I see it is:

If you go for too long a fix, the worst case scenario is that you pay more than you need to buy less than you can afford, so you don't have enough money for nice holidays and other luxuries.

If you go for too short a fix, the worst case scenario is that you need to pay more than you can afford, so you don't have enough money to pay the mortgage.