Would you take on the mortgage?

[CheckofSense]

We’ve found a house we love, currently renting. We’ve been declined for a high street mortgage due to some 5/6 year old credit issues. Everything done well for 4 years.

We can get a subprime mortgage fixed for 2 years when we can switch to high street lenders.

Due to DHs age, if we don’t do it now, we will struggle as he is 51.

High street would have been £1690, but sub prime is £1930 pm.

My income is £3400 pm, DH is £2300, £100 Child Benefit, Board from DD £200pm (not keen to budget this but unlikely to change in the next two years).

Bills account:

Category
Bill Type
Amount
Housing
Mortgage
1,930.00
Utilities
Gas & Electric
214.00
Utilities
Water
54.00
Council
Council Tax
182.00
Media
TV Licence
14.95
Communications
Mobile phone
42.08
Communications
Mobile phone
176.82 (DD pays £80 of this)
Fitness
Gym membership
53.28
Fitness
Gym membership
53.28
Subscriptions
Amazon Prime
8.99
Subscriptions
Amazon Music
10.99
Subscriptions
Netflix
12.99
Subscriptions
Disney+
8.99
Entertainment
National Lottery
42.00
Insurance
Pet insurance
103.63
Savings
Premium Bonds
100.00
Finance
Home insurance
15.77
Health
NHS prescriptions
11.45
Health
Opticians
18.00
Family
Account fee
15.00
Savings
School lunches / bus fare
90.00
Finance
Retail finance (DFS)
30.00
Weekly (avg monthly)
Child pocket money
43.33

Total: £3275.00

Unfortunately our pet is likely to pass soon, so insurance will stop and we can cancel the lottery payments if needed. Gas & Electric likely to go down now we’ve cleared a significant debit balance and new house would be more economical.

This leaves all of DHs wage for food, petrol, savings and discretionary spends.

Sounds do able but as you say it’s now or never
and there’s a safety net of there a few of your outgoings you could cancel

Agree it’s now or never

Rent is currently £950, since my last pay rise I’ve been saving £1000 a month (was £600 before this).

DHs biggest worry is he gets ill or injured and can’t work for a while, I think income protection will be too expensive due to his age, but I can pay all the bills (I have good sick pay and benefits), we would just have to cut all discretionary spending and use his SSP for food.

There are a lot of things on that list you could easily do without if things get tight.

Honestly, I think that seems a very high amount of your income on mortgage. I'm not sure if be comfortable with it.

yeah - you could also scrap gym memberships, subscriptions, lottery, premium bonds etc.

I think you should probably go for it but just to say, you can get a mortgage when your DP is older but the term may be shorter which pushes the payments up a bit. It means it's more expensive in terms of payments but actually you pay less interest over the term of the mortgage so it's not actually more expensive IYSWIM.

You really need to strike out at least half a dozen items from your expenditure list if you want to do this seriously. Are you prepared to do that, @CheckofSense ??

Also there's a Money Matters board on here, with some good people who post. Plenty of 'traffic' as well if that's what you want.

Have you spoken to the high street bank, actually been in and spoken to them and put your case forward?

On paper, when we moved 10 years ago, we should not have been given a mortgage. Even more complicated, the place we bought had no bathroom or kitchen, but we agreed to certain time scales and debt payback. This was with a big high street bank, and the mortgage advisor there put our case forward to the actual broker at the bank, and they could see our plan.

Absolutely not

Get rid of the lottery payment today. That’s madness to keep paying £42 a month on that.

Yeah, I think if we do this, once we can get better rates in two years we should be able to reduce the term again.

Agree, not until they've got the spending under control at least. Some of the stuff on that list is crazy. Over £500 a year on lottery tickets?

Our broker is appealing the decision but don’t expect it to change.
We’re going back to the drawing board to see if we can find something else inbetween the two rates as well. This is worst case scenario.

Just a bit of fun while we’ve had spare cash.

In all honesty I think you need to get your spending under control before you think about taking on more debt.

I say go for it, it is for a couple of years while your credit improves and you have savings, income and can pare things right back to the bone to be safe. It is not that much more than the mortgage would be from a high st lender, and in 2 years you will be closer to owning your own home outright.

Buying a house was the best decision we made many years ago, we have struggled many times over the years to pay the mortgage when things have impacted our income but now it is nearly paid off and we are looking at retirement I am so glad we made the sacrifice.

In what respect other than the lottery? We’ve saved a £25k deposit in the last 3/4 years.

It seems doable on your current situation- and if you are going to do it, now would be a good time.
My only concern would be how long term the mortgage is for.

As your DH is 51, a twenty year mortgage term would be worrying - will you be able to afford it past retirement? A ten year term would not be so much of a worry.

There is also the worry of illness/unemployment. I know we all have these risks, but as you get older, the risk increases. If you can't afford insurance against this, then you would need to make sure you can manage on one salary, at least for a while.

However, over all, I would probably take the risk and go for it.

Get rid of the lottery and some of the streaming services, what is a family account fee?

Why is your child’s phone plan so expensive plus your own could be cheaper. I pay £9 a month but do own my phone outright, same with DH.

I can think of way more fun ways of spending 40quid than doing the lotto…it gives very little back! What will you be saving after you get the mortgage? What are pensions like etc?

I would do it. It's amazing how fast 2 years goes and you can start looking for a new rate after 18 months. You may then be able to go with one of the high street banks that lets you go to 75 or 80 as a retirement age to keep your payments low and then do overpayments later.

Absolutely go for it. Your mortgage payment will be equivalent to your rent plus savings, and will hopefully drop in two years when you can switch bank.

Between the lotto, subscriptions, phones and gym (which I would drop and go for walks instead personally!) you spend nearly 350quid!!