To think we can manage this mortgage

[Whistlere]

House: 490k
Mortgage: 290k - 5 yr fixed at 3.86%
Net pay: 3400 per month
Mortgage monthly repayment: 1500

Savings: 90k
ISA stocks and shares: £60k

Looking to overpay the mortgage by 10% a year.

Early 40s with 2 kids in primary school.

I know it’s not sensible but I think it’s manageable, although I am worried what will happen if one of us loses their job.

I think with your savings it will be fine, if you're happy to dip into those if needed.

Our family earn around £5k net, and only pay £700 for our mortgage. It still feels tight across the year, factoring in annual bills like services, MOT, insurances, holidays, etc. But we have a toddler in nursery and pay around £600 a month for this.

It is a good idea to keep some savings for if one or both lose your job, or become too ill to work. Perhaps 6-12 months of outgoings.
Also remember if the market crashes, your S&S could reduce in value quite significantly so it would be wise to keep some in lower risk accounts.

I do come a little unstuck at your overpaying 10% logic.

If you think you can get a better return on your £90k than you're paying in mortgage interest (which I assume is the reason for keeping that much back in addition to your S&S), then why not save the 10% as well.
I would only overpay the mortgage if the return on savings / investment is less than the rate you're paying on the mortgage. You can overpay at the end of the term if it makes sense to do so then.

Wow! 150k in savings and ISAs! I cannot understand why you are asking if you can manage. This feels like a bait message - surely with that sort of life changing savings you don't need anyone on mumsnet to tell you that you can manage?

I don't think anyone can tell you this without knowing what you spend. Mortgage seems very high compared to your household income.

You would need to comprehensively break down/categorise all spending over the last 12 months, decide what is critical spending, and what you could go without and then decide whether you can meet your mortgage obligations.

You would then need to consider what you would do in the case of family death/illness/redundancy, and whether you could meet your obligations on one salary/save enough that 4% of your pension pot at retirement age would supply enough retirement income for you (assuming you work in the private sector).

I am worried what will happen if one of us loses their job

This was my main consideration when we got our mortgage: to be able to repay on 1 salary if need be.

That said we put all our savings into the deposit. I wouldn't worry that much as long as you keep a good amount of it readily available.

we’ve just got 3.4% but have about 60% down and 40% mortgage

You shouldn’t not get it incase one of you loses their jobs. Or no one would ever get a mortgage again!

When adding bills how much will you have left? You are likely to be drawing from your savings just for you le cash flow. Calculate when that will run out to see if it’s doable!

We can get 4.25% in our ISA which will be better than making overpayments.

You’ve clearly decided, OP. Best of luck.

I'm a single parent, two children and my take home pay is about the same - £3500. When I first bought my house 3 years ago my mortgage was £800 a month, then a year ago I had to remortgage as my fixed term had ended and iy went up to £1500. Honestly, it's fine! I have to be careful (I don't have many savings) but we still manage a holiday every year and both my kids have expensive hobbies!

Income of £6k a month is not enough for that mortgage and two kids imo. I think you will end up chipping away at your savings for day to day bigger costs that you can't afford.

That’s far too much of your take home imo, I absolutely would have put more money in.

@JifNtGif their income is 3.5k not 6k. I’m surprised your mortgage has been approved @Whistlere . The figures are too tight x

I misread. In that case this is definitely unaffordable if I compare things to my situation or others I know.

Agree, it seems very tight to me. Still don’t understand why you don’t put the 90k towards the deposit.

You have a great buffer.

It's not how I would structure my savings (I would be putting that lump sum into my pension and getting the tax benefits) and then having the extra regular income, but I trust you know your own finances and circumstances better.

The way it is structured now is you can survive, but do your budgets. Don't live miserably!

Which lender, please? We have similar LTV but best were being offered is 4.1.

OP - which lender are you going with?

Our take home pay is a bit higher than yours and our mortgage is only £800 per month. We have 2 kids and a car to run plus train commute. Some months we’re fine, others it’s extremely tight.
We don’t really have much in savings, we put around £100 a month away and hope nothing goes tits up and we have to dip in.
You obviously have a great buffer so that would make me less worried in your position.

Sounds ok, your income seems like it has room to increase over time as its quite low for two people.
1500 a month, you wouldn't get much jf toubwere renting for that. You might as well go for it. You have savings to use if one of you loses your jobs you can use it to tide you over for a few years.

Way too tight. I have similar mortgage payments but a take home of more like £7k.

I presume, however, that you're used to living frugally having built up decent savings on such a low income?

What’s your gross pay?

Surely your bills/food/toiletries/clothing/haircuts/hobbies/transport/socialising/christmas and birthdays etc will be more than £1900 a month? In which case I’d say it’s fine as long as you’re prepared to use your savings to supplement your income?

Pure nosiness but how do you get those level of savings on a fairly low income?

I always wonder that on threads such as these🤣.

You have to pay tax on the money you earn on interest on savings though.

This makes no sense to me, have you done the figures yourself?

Is the whole 90k going into ISAs or only some of it? And will you pay tax on any of the interest? The difference between the 3.86% mortgage and the interest on the ISA(s) doesn’t seem huge to me. Plus even if the figures work on paper over a longer period do you really want to be scrabbling around at the end of the month? I assume you’d be happy to dip into savings at that point (or do you think that your DH will get pissy about it), but then the interest you get on the ISA will reduce won’t it?

My advice would be to make sure financial decisions are taken jointly with the whole family in mind going forward. Don’t leave it to your DH, make sure you understand it.