Disagreement re. DP with finances/budget - what do you think?

[Raceacrossworld]

DP and I are looking to move house, however we have had a disagreement over budget and what would be affordable.

If we were to get the Mortgage I think would be manageable, our outgoings would look similar to the below. I think it would be fine but DP doesn’t believe we have sufficient left over funds.

We have an emergency fund saved already.

Can I ask for your thoughts?

Monthly:

Combined income post tax/NI/pension contributions is £4000 + £100 child benefit = £4100 total

-Mortgage/house bills - £1900
-Nursery (we have one DC) - £100
-Petrol - £150
-Other (eyecare, phone contract etc) - £50
£2200 total

Food at an estimate c.£450 a month

Bills + Food = £2650
£4100 - £2650 leaves £1450 for social, savings etc.

I think £1450 left over is plenty, we aren’t particularly extravagant people. We enjoy the odd meal out, DP goes to watch football maybe twice a month.

This would be a move to a house which in theory would last us for the foreseeable, so the need to save heavily would be removed somewhat. We would still want an abroad holiday a year and luckily have 2/3 years until DC starts school so can go away out of school holidays etc.

Any thoughts welcome!

Same principle applies. Take a mortgage for a longer term at a level he is comfortable and confident at, try to overpay by setting the mortgage payment to what would be required to pay it off in 25 years. Then you have the safety net if you need it of being able to reduce the payments.

You need to work out how much of the £80k you spend every year on insurance, holidays,etc. As this is more of a savings pot than true savings. Divide that amount by 12 and take that off your monthly "spare" income for a start.

Then work out how much essential spending you are cash flowing from your "spare" budgeting every month, clothes, haircuts, etc.

You haven't done a proper budget until you know those figures precisely.

@SaveMeFromMyBoobs agree (I said similar above but you put it much more eloquently).

I’m doing a mini version of this just now. Fixed rate expired last year with 10.5 years to go (coming off an amazing 1.41 % rate 🙁) New lender wouldn’t give us a 10.5 year term it had to be 10 or 11 years. With the rate increase even shortening the term by 6months was a big jump in payments. So I went for 11 and I have fixed the payments at what they would have been at 10.5 years to overpay by about £300 a month.

Using savings to pay these things isn’t great - your budget needs to include ALL spending, get yourself a proper budget / spending calculator and work it out to the penny.
I did notice you only spend £100 a month on childcare - when your DC starts school if you need wraparound care that can be expensive.

Your DP is the main breadwinner in your household, and he is telling you that he doesn't want to be under that much financial pressure. The burden of having to pay a bigger mortgage will rest primarily with him, and he clearly isn't comfortable with taking it on. I think you should respect that, personally - it isn't fair to push.

I also think that your approach to annual costs such as insurance etc coming out of savings as if that means they don't count suggests a level of incompetence with regard to managing your finances that may also be motivating your DP to be more cautious.

I think you are underestimating most of your outgoings. £1400 mortgage on income of 4100 is too much imho.

450 a month for food is really low, is that covering things like loo roll & cleaning stuff, shampoo & soap and toothpaste??

As children get older the costs rise - clubs/activities, clothes and shoes suddenly cost far more. If your nursery costs are low due to government funding, you will have a massive shock when you have to pay asc & breakfast club.

@Raceacrossworld what your doing is putting aside money each month for your slush funds like holidays, Christmas, big purchases etc. Could be argued it’s all semantics but as some PPs are pointing out that isn’t true savings as you are spending that money as part of your lifestyle. Also semantics… but an emergency fund is for emergencies, upsizing your home is rarely an emergency (unless you find yourself unexpectedly pregnant with triplets or something), so if you are spending lots of your emergency fund to move it’s not really an emergency fund it’s a moving house fund and you’ll want to build back your emergency fund will will be hard if you are over stretched with your mortgage.

It may not be up to either of you anyway and decision may be taken out of your hands - has your lender approved you for £1,400 after affordability checks?

Totally agree with this. It’s all very well saying XYZ comes out of savings but what happens when those savings are decimated because the car needs replacing and you need to repair the boiler and washing machine all within six months.

All of a sudden that £1450 you have left over isn’t going far at all.

Your numbers are all mixed up. Saying mortgage is 1900 then saying no it includes sku, water etc is v odd,

I'm not surprised DH is uncomfortable. You seem to have an odd grasp of budgeting with things discounted because they come from savings, or vastly under estimated, and no matter how equal your relationship is in other ways, the burden for paying this mortgage will fall to him.

If over committing yourself was the only way to get on the housing ladder, maybe it would be worth the risk, but not in your circumstances.

Also, remember the difference between 2% and 4% mortgage rates is actually double. You need to factor in the possibility of a big increase in costs, even though it sounds small.

I agree with everyone else saying you don't seem to have a grasp on your budget. I think you're quite comfortable now, and that's giving you a false sense of security.

Once again, I suggest you calculate the difference in savings between 1/9/24 and 1/9/25. Subtract from that sum any bonuses, gifts or windfalls you've received in that year (as they cannot be relied upon every year), then subtract £6000 for the extra money you want to pay on the mortgage. Divide by 12.

The sum that is left is actually the spare money you would have each month if you spend the amount you want on a mortgage.

Then think about the extra costs you will have as your child grows up. Wrap around and holiday care. Swimming lessons. Tutors. Music lessons. Sports subs. School clothes, shoes and lunches. Pocket money. Phone. Driving lessons. Paying for Uni. (OK, some of those are way in the future, but children get much more expensive as they grow up!) And what if you want another child?

Honestly, I think you seem like you're in a great position now, but you want to stretch yourself beyond what you can realistically afford.

I don't think you understand budgeting if you're discounting things that are paid annually from savings

This.

I know you say you have £1000 per month to save, but you need to work out how much of that is actual savings, and how much is just being put aside to cover costs.

Simplest way to see how much you are spending/saving is to look at your savings account and compare it to how much was in there this time last year. That will give you the answer as to how much you've actually saved, and therefore how much leeway you have with regard to increasing your mortgage.

You'll also have to take into account possible increased utilities/council tax/travel expenses etc if you are moving to a larger house/different area.

Then think about the extra costs you will have as your child grows up

This is a very good point - if your child is in nursery at the moment (with low associated costs), then you might be in for a bit of a shock as your child gets older. They're fairly cheap when young, but once they become secondary age, they can be very expensive - food costs alone can be crazy! Of course, you can cut your cloth to a degree - kids don't all need to go on expensive school trips, or they can pay for their own driving lesson etc. But some costs are unavoidable (food, phones, shoes, clothes, clubs, uni if they go). And what about if you decide to have another child, that also needs to be factored in.

I'm not saying don't move, I'm just saying be very careful to consider all costs when trying to decide if you can afford it.

I know you have your heart set on moving and will do anything to make it happen, and will succeed if you really want to, but your childcare costs are what would worry me.

if anything happens your family situation or you need to change jobs/working hours you are screwed as childcare costs 10 times that amount for other people.

Just to add, you are calling him your partner, so assuming you aren't married. Yet you are working part time and it sounds like greatly reduced hours, so are vulnerable. Are you also making additional contributions to a pension and are savings in your name? How about the property ownership split?

I think it’s definitely doable! Frustrating that your husband is being extra cautious.

100 for childcare seems very cheap

It seems incredible and one tenth what I would expect it to be. You are lucky with your current childcare bill.

That £1450 is doing a lot of heavy lifting. If the mortgage would be £1400 that leaves £500 for all the other bills. Utilities, council tax, water rates, insurances, internet, phones, any gym membership or subscriptions. Plus transport costs either car or public transport. That’s all coming to much more than £500, so the balance comes off the £1450. Your food costs are quite low and will increase, £50 per month won’t cover hair cuts, shoes, clothes, house or car repairs, so that comes off the &1450. Then add in the annual costs of Christmas, birthdays, holidays and that comes off the £1450 too.

If you’re saving £1000 a month just now, you’re already not living to your budget because according to your budget you should have £1450 to play with after monthly costs. You don’t have that just now. You really need to do an actual on paper budget with accurate costs monthly and across the year.

This, I can see why your partner is uncomfortable especially as you’re now saying he has to pay for it in the main, and a lot of your costs seem to come from savings, savings shouldn’t be to cover living costs, and you don’t have a handle on total costs at all, which makes me wonder if he’s the one who deals with the money, and you don’t really understand it.

unless you demonstrate a full understanding of living costs, as well as factor in if mortgage rates increase, and then other col increases ie council tax, food, utilities, transport, water etc, and even a potential risk to nursery costs or a desire for a second child, I would assume he’s the one who has the numbers here under control, your numbers appear high level back of fag packet, as you want a bigger house.

I think it sounds ok but if your DH isn’t happy it isn’t fair to move a more expensive property as the extra responsibility of being the bigger earner is going to stress him.

I think this. The remaining £30k will dwindle pretty quickly otherwise. Will you go back to full time once DC at school?

I think you could probably just about do it if you were both n board, but I personally wouldn't. I also think you are a bit blase about your outgoings? Which I think hink happens when you are used to being able to afford them very easily. I think it could be a very, very frugal existence.