To think we CAN live on the mortgage

[JaneEyre40]

Advice please -

Couple - Earn £10,500 a month
Mortgage - 3,700 a month
Nursery - 1,000 a month

Considering all other possible outgoings, do you think we can afford this and not feel pressured each month. What am I not considering? We've done the spreadsheet but I'm still unsure.

We will have about £65,000 in savings at the beginning of this venture.

Thanks in advance. House of a lifetime.

If you are absolutely positive you will overpay, I wouldn't lower the term, it will essentially lower itself as you make over payments. If you think it would be easy to slip into "ah, we won't make the overpayment this month because the car need a service" or whatever, then I would lower the term, because it will force you to make the payments.

Really glad you are looking into the insurance policies, your mortgage broker will likely be on that, surprised they hadn't mentioned them before. I wouldn't scrimp on that at all.

We can afford the shorter term...I think my OH feels like we should start on this and then once the 5 year fix ends we shorten the term (nursery fees will be done at that point).

I never posted that you should be more thankful.

But lighthearted banter that is used throughout the site is absolutely acceptable. It may be irrelevant to you but its a public forum and you don't get to control opinions.

Personally I'd prefer it to straight shooting comments about being tone deaf/ridiculous/whatever.

No no, we are on that, and we are definitely people who will over pay, I'm so conscious of not struggling financially in older age.

You are entitled to your opinion and quite frankly I'm not going to waste my day trying to explain further.

However, just as a final comment, I don't think I used the word 'apologise'
You will of course correct me if I'm wrong, I'm sure.

The point was she should try to show some sensitivity.
If you can't grasp that, there's nothing anyone can do to help.

But I don't need to be sensitive on a matter that is literally about me.

That pretty much qualifies the point.

When in a hole...you know the rest.

Just curious, do you think people should only ask advice on matters where they know they’re at the bottom of the pile?

Exactly 🙄🤷🏼‍♀️

Nope, no clue.

What is the total of your other outgoings, on top of mortgage and nursery?
Difficult to judge whether you can afford the higher mortgage without knowing all outgoings.

The increased council tax is more than covered by the better mortgage rate anyway.

Hope that you do decide to go ahead, once you've sorted out some sort of insurance based back up. We found that downsizing around retirement was a good way to go, and probably downsizing again at a later stage.

I'd say don't be tempted to use a pension lump sum for your mortgage, you're right about overpaying instead. By the time you're of pensionable age you'll want every pound in your pension fund, assuming that the current government do find some way of interfering with pension contributions as it is rumourned that they will.
I'm not sure if you use an independent financial advisor, we have found ours to be invaluable - particularly in advising of the ever changing pension environment and rules on IHT.

Hi @JaneEyre40

I have commented a few times. We earn a similar household income to you. Our mortgage is 23% of our take home.

Unfortunately, I don't think you can afford this house. With the council tax band plus the extra expenses of owning a house plus the interest that could fluctuate........ I just think there are too many moving parts that could fuck up.

We work in risky sectors though - we've both been made redundant and been out of work for multiple months

I personally wouldn’t, because overpaying gives you flexibility to not overpay if one of you loses your job etc. If you just have a 25 year term, you are stuck paying £600 more each month (or whatever it works out at) whether you can afford it or not.

If this is your forever home (or at least your “until retirement home”) the repayments will go down with wage inflation over the next decade, and you’ll be able to overpay more. Or reduce the term next time you remortgage. With the size of your mortgage, you can overpay £70-80k per year if you want to, which should give you plenty of headroom.

I’d be uncomfortable committing to paying £4500 on my mortgage even with your income, personally (our household income and ages are similar, our mortgage is £3800 over 22 years). With bills, that would be half your household income, which is more than I would want to be locked into.

Thank you for this. I agree re overpaying and downsizing.

I would say that’s it’s not always worth overpaying your mortgage. You might be better off investing that overpayment, with a view to creating a larger lump sum.

Also make sure you’ve asked the broker for the FULL LIST of mortgages available to you, not just their recommendations. Many many make recommendations based on the fee they’ll recover from the lender.

I'm rubbish at investing, any tips?

I’ve also just spotted that you said you can overpay up to £10K every month, so £120k per year - I would double-check that too, as it is usually 10% of the outstanding balance of the mortgage per year, and it doesn’t sound from your figures like you have a £1.2m mortgage (the house value may be that much, the mortgage sounds like it is around £800k, so able to repay £6600 every month in the first year, and reducing amounts each year after that).

You’d need a very high rate of return on investments to be better off saving than overpaying, especially on a 35 year term.

Using this tool, I personally would need a return on investment of over 8% every year for 25 years to be better off investing. Some investors might make that back, but I doubt many do.

www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

FFS what a goady post

I must admit to only following this thread out of amusement that people are so triggered by others success. But, OP, just to say - buy the house.

My household is on roughly 70% of what you earn, and our mortgage is about 30% of our total income. Our house also requires a lot of ongoing work. Some months we don't have any discretionary spending as everything is accounted for. (I know, tiny violin.) But the peace we get from having our dream home to raise our family in - unparalleled.

We take the view we can always sell it if we ever can't afford it.

OP, use Excel and do your own sums. If I got the mortgage value right, you'll be allowed to pay off 120k in the first year, but not the following years.

I think the total mortgage is £3700 × 12 months × 30 years = £1,332,000. So 10% of the remaining balance means OP can pay off:
Year 1: £133,200
Y2 £119,880
Y3 £107,892
Y4 £97,102.80
Y5 £87,392.52

Leaving £786,532.68 (or +£13,200 = £799,732.68 if they only paid £120k in Y1) at the end of the 5 year fix, when normally they can pay off as much as they like.

@Anoncomment

I'm not triggered one bit. I only commented because I thought it was funny OP mentioned what they ate everyday.

Hooray for you and how lucky you were to have a council who fully took on board your complaints. I live in an area where the council is technically bankrupt hence the filthy streets and high council tax. There is no money for street cleaning, they are closing libraries and community centres. There have been pay cuts and redunancies in all council departments and yet we still have one the highest levels of council tax in the country. I have given up reporting fly tips and our streets get cleaned twice a year. It is grim

As for my job, I am retired now but when I did work I was proud of what I did but as a single mum who got no child support and who had no family help I had to make very many compromises about my working life. Some of my work has been very fulfiing and I like to think I have made a postive diffrence in a few people's lives. I am not well off and I see accounts of some astronomical salaries and incredible life styles on here so I respond with my life experience

😴