To think our mortgage is not affordable ?

[Anxiousaboutmortgage]

I am watching another thread on this topic and it got me even more worried about what we are about to do!
We are about to buy a property that costs 680k with a deposit of 115k
Our take home pay (both working) is 7980 per
Month our monthly mortgage (fixed) comes around 2888
Is that too much ? We are moving for better schools our kids are 5 and 7 and ideally this will be our "forever" home
We will have around 20k left from our sale for any needed work and we have another 20k of savings
We don't have any car loans etc . Our current mortgage is much lower though which scares me A-lot !

Hi OP ignore all the unhelpful comments from people who can’t accept that others can earn high salaries and still budget and try to manage finances responsibly.
We bring just under 10k a month in combined salaries after tax and our mortgage is 2.2k per month. Yours feels to me a bit on a high scale, but it does depend on what sort of lifestyle you want to maintain. If no private schools you will be ok ,but again for me it feels about 500-1000 per month too high to feel comfortable. We are working towards early retirement though, so depends on priorities and of course your house will be an investment too.

@Anxiousaboutmortgage yes I know- that's what I said 🙄🙈

I think your housing costs so mortgage, home insurance, taxes etc should not exceed 25% of take home income -that’s the recommended approach to ensure you have enough for savings, investments etc

For comparison, our combined income is about 6,500 a month (net), our equity in the house about £230,000, the outstanding mortgage £270,000, and with the deal we are on this is about £1,200 a month -- leaving us with a similar £5,000/month after the mortgage comes out.

On paper, that's an incredible amount. In practice, because of other bills, council tax, electricity, car and what not, we have about £3000 in total bills. Leaving us with £2,000/month or £500/week for groceries, sports clubs, subscriptions, clothes (multiple kids), fuel, and holidays (2/3 modest ones a year). There are some months, notably around Christmas, that we are tight on money.

That's one possible option but whether and how much you can overpay and how overpayments are treated and whether you can draw on them as a sort of banked overpayment, if your circumstances change, all depend on the mortgage terms and conditions.

It's true that monthly overpayments, if permitted, could reduce the term of the mortgage which would mean you would pay less interest in total over the life of the mortgage but overpaying may not be what you want to do, depending on your circumstances at a particular time.

For instance you might decide instead to extend the term of the mortgage in order to bring down your monthly mortgage payments, if finances were tight because of a change in circumstances or mortgage rates or you had a temporary need to spend on something else or you wanted to boost your ready cash reserves.

I've had a flexible mortgage and have, at different times, overpaid monthly or by occasional lump sum, or extended the term to reduce my monthly mortgage payments.

What's important is to find out and think about options and a contingency plan as to how you would manage a change in circumstances.

So i did the budget planner on moneysaving expert . I put in what i think we spend plus 500 a month in savings and i get 1000 pounds left per month

Feels a bit too tight, you’d be better off having a smaller mortgage and more disposable income ( in my opinion)

The loan to value isn't great because of your poor deposit amount, but as long as you are staying with state schools then it should be doable.

@Salohlah the reason for the move is to get good state schools as i don't want to send them to private even if i could afford to (which i don't)

Honestly “what I think we spend” without looking at figures in detail could be way off.

Surely you can tell how much of a buffer you have by looking at your “spare” money on your current mortgage cost?

The other poster was left with under 2500 per month after mortgage.
You will have 5000 which is twice as much
So you will likely be fine

But calling someone 'utterly clueless' isn't rude? OK.

I was giving you the benefit of the doubt, but your drip feeds show you to be totally disingenuous.

Ignoring the fact that the figures are higher than most households… You’re worrying about a £2800 mortgage when you’re essentially paying £2200 mortgage now (overpaying £1200 by an extra £1000).

Youre also saving £1000 per month. So worst case, you’ll have to continue as you are but only save £600 per month?

What a pointless, attention seeking post. The thread you originall referenced was a household that could genuinely not afford the mortgage masses on their numbers

I've seen so many posts on here lately that are along the lines of "we're so poor, we bring in £10,000 per month (eg) but we can't afford holidays or new cars and never have any disposable income" etc.
In nearly every instance, the issue has been that the poster was paying a HUGE chunk of their income on a mortgage, not leaving much for "fun stuff".
My opinion is that you can't have everything - well, not unless you're a millionaire. For most people, it's a choice. Smaller house / smaller mortgage/ less desirable area, but money left over for stuff like holidays, kids' activities, meals out and so on. Or, mortgage themselves to the hilt but be happy that they have their dream home in a lovely area, with not much to spare for anything else.
The only people who can decide if it's "too much" are you and your partner. You need to do a detailed budget plan of ALL your income and bills/food/outgoings per month, plus occasional costs such as birthdays, kids' clubs, haircuts, clothes etc. If you are left with a figure that you think you can happily live off, then go for it. If you're left with having to make massive cuts to your spending and lifestyle, personally I'd swerve it.

@Derbee i don't have to overpay the mortgage now what i am worrying about is that i wont have the option with the new one . What worries me is the uncertainty of everything at this point in time. mortgage rates general economy etc
I am wondering if we are overstretching ourselves too much and if we should wait a few years until we "have" to move for secondaries

@Streetsofkenny you are right is ultimately a choice of better area with better schools for dc and less money to spend or leave them here even though states schools require improvement so we can be "safer" and have more money to spend/save
I think your post made it clearer in my mind that intimately we want better for them and we will need to make it work !

It might be affordable. Not sure I could stomach paying £22k a year on interest repayments though.

1. if the bank has approved you, they deem your income as enough to cover and they will have taken into consideration your outgoings
2. they also apply a "stress test" - i.e. if the rates went up by X amount would you be able to afford it? (You can see an example of this on your KFI)
3. even if house prices go down, if you're not looking to move soon, then this doesn't matter that much so long as you're paying C&I (which you will be, I don't think you're allowed to take a new mortgage on interest only payments on resi properties anymore). What matters more is that BBR is decreasing which will mean your payments will reduce not increase over time as you gain equity and the rates decrease

Whether or not this is "affordable" to you is entirely based on whatever else you think you might want to spend on. Lender will get you to consider insurances, for example, but not that you might need to get a second car in a few months, or that your work is relocating increasing your travel costs.

Oh. Just seen you're worrying because £2k of your current spend is overpaying the mortgage and investments

I did what you did - bought in a catchment for one of the best state schools. However we earn more than you and I wouldn’t go that high. Mutiple reasons really. Although we are insured with in demand careers - the jobs market is dire in the UK and it’s getting worse. We wanted a nice house that we could easily afford should the worst happen. Our mortgage is 1k less than yours.

We have looked at similar mortgages on those nice big farmhouse style houses around here. Sure it would be more reflective of our incomes but we prioritise making sure we can keep a decent roof over our heads should the worse happen. Personally I’d find that tight whilst still having a reasonable standard of living.

OP earns £60k she’s hardly an investment banker!

@Andwhoisasking the thing is that we cant get much cheaper in that area even if we went for 3 bed instead of 4 it would still be around 650. And it's a very small catchment so we didn't have many options ! I guess its a big risk to take

Is this for Secondary catchment, with your eldest being 7? And its a small, tight, catchment?

Personally, I wouldn't move for a Secondary catchment 3/4 years in the future. Too much risk of change. We did choose a house carefully for a Secondary school when our eldest was 9 (moved Easter Yr5).

Could you sell your shares and put more towards your deposit to get your monthly payments down? This is what we have decided to do and it’s a lot better. The cost of your mortgage in interest rate payments will be way higher than what your investments/shares might bring and I’d be looking to pay as little interest as possible.

Yeah I wouldn’t do that. Anything could happen with your jobs and the market. How long can you cover a 3k mortgage and essential bills for? Not very long with 20k savings. Also, with Labour taking a wrecking ball to education and the frameworks, your desirable school may not be soon enough.