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.

Thanks! We definitely will be getting as much info as we can if we go ahead. He’s older than me but actually doesn’t have any long term pre-existing conditions (unlike me lol). I guess even if we can insurance a percentage of his income if would be better then none at all.

I would definitely go for it.

Ok, it’s a bit steep now, but time passes so quickly and before you know it, you will be able to switch.

You will not regret it, and be so pleased in the long term.

The only people I I know that have really regretted housing, is when they’ve (stupidly) sold properties and gone into renting.

I wouldnt keep the gym, you can exercise without a gym and keep your healthy lifestyle

I woldnt bother with income protection personally, its another bill, I think they wriggle out of paying and if you have pre existing conditions OP it might be expensive or disregarded for those conditions anyway, look into it and see the cost though

You should set out your mobile bill as £120 then if your daughter pays £80 of it, otherwise your numbers are all over the shop

You're effectively paying for someone else to own their house so I say go for it. It seems manageable.

I should have but just pasted the figures from a spreadsheet downloaded from the bills account.

I know when people make this posts. They get grilled for all their outgoings so thought I’d just post them all upfront.

I'd personally be tempted to find a cheaper house to buy, wait for your credit issues to pass and then move to a final home. Mortgage wise, are you looking to pay it off before your partner retires? Seems a lot compared to ours but then I guess we have 30 more years to spread it out over.

The £100 on gym, the variety of subscription payments all adding up and the £40 a month on lottery is where I'd be looking to make a big monthly saving. The phone deals sound pretty steep too.

Well done for saving so much!

What's your just in case plan? Do you have serious illness cover? In my 20s two friends bought homes at the same time with their boyfriends. Both relationships still on two decades later. One though bought a cheaper place and they've been able to travel, do it up. The other bought at the top of what they could afford, her husband had health issues and no longer can work at the same salary level as he used to so they've had years of stress and her working a job she's miserable in because the money's good and they don't have holidays and she's always saying no meals out and gatherings because she's broke even though she earns more than my husband and I combined, it just all goes into their house bills. Sorry - really long example to illustrate why giving yourselves some grace and some wiggle room and a plan B and insurance will be sensible.

I think a 15 year mortgage would be better so paid off by time DH retires though you may need 20 year just now and change to 15 (13) years in 2 years time,

you really need an emergency fund as house ownership comes with maintenance costs
most folks reckon rent/ mortgage including insurance should be no more than 33% of take home pay
also as you say you also need to top up savings for retirement especially if DH pension poor probably should be saving 10 % of take home in long term savings as well
you don't want to be taking on any extra debt like car payments so you should probably set aside money aside for a new to you car as well

so look again 33% on mortgage 10% for retirement 7% for car and house maintenance; can you actually live on 50% of take home?including all utilities food bills transport clothes presents holidays gym etc or is it too tight you really don't want to be living pay day to payday

you do have margin to trim expenses considerably without having to live on beans so you will probably be okay but for 2 years I would be as frugal as possible and save as much as possible so when you can change mortgage you have a solid bank of savings and can reduce term and hopefully LTV rate too

This is pretty much the plan. Also it’s a new build so hoping we shouldn’t have any major maintenance costs for at least 2 years.

I also receive up to 10% bonus per year which isn’t factored into any of the budgets.

Why is DD only paying £200? Can you not up that amount?

My advice is to go for it, you have plenty of leeway if you need it. Some people are exceptionally risk averse but there is no need to worry about taking out a mortgage aged 51.

I would go for it. Especially since it's only a short term higher rate.

Cancel gym and lottery. Reconsider all the entertainment packages.

If you had also saved the lottery money and changed your phones to sim only at £10
each and also cut out some of the other wasted money the you’d have saved thousands more too

We have income protection. It isn't too bad. We just got enough to cover mortgage and don't think it kicks in for 3 months

If you do decide to go for it OP cut out everything that isn't a must & go down to one streaming service (jiggle them about ,but only one at a time), you can always add bits back later! Very good luck with your new home, I think it's the right thing to do

We could, but wouldn’t want to base a mortgage on it, what happens if she does decide to move out? That said, should DH suddenly be off ill from work, I have no doubt they would step up and help with food costs etc.

You're not "basing a mortgage" on it - affordability checks are as much for yourself to stress test what you might need if costs go up to service that mortgage.

Other people have been a bit robust perhaps, but the prevailing message is fairly clear - you spend a lot of money (as in hundreds) per month on things which could easily be cut back, dropped or deferred to be picked up again as income increases.

If you're willing to listen to that, then awesome - you'll find any increase in monthly property costs will be easy to absorb.

If however you think all of your expenditure is justified and immovable, and should be kept as is without any refinement, then ... with all respect, not sure what the point of this post is

Good luck with your future home etc.

£150 on phones
£100+ on gym membership
£42 on lottery (!!!)
£100 on premium bonds
£100+ pet insurance
£160+ pocket money

That's £650+ you could save straight away. Before you even think about subscriptions, budgeting for food etc.

It's a helluva mortgage and there are significant considerations if one of you was unable to work, but your income is nearly 3 times mine and my mortgage at times was a similar %age of my total income (with similarly smaller sum to pay the bills)

You won't be skint op but you will feel the budget cuts, especially if one of you can't work.

Lottery - yes agreed
Premium bonds - is basically savings
Pet insurance - has been used quote a bit and will end in a few weeks
pocket money is per month (£10 per week)

If your rent is now 950 I think you said and the new mortgage for 2 years before you can move, is around 1900, you need to find 1k a month

That’s do-able. I am buying after years renting this summer and I am single adult (kids grown up) and am 50 this year. They will lend into retirement if can show a good pension or just say you won’t be retiring until 70 plus. Your bad credit drops after 6yrs but I wouldn’t wait personally and would just pay higher levels for 2yrs. It is a risk if you get sick etc, but at least there are 2 of you.

I'd go for it. Reduce spending where you can. In 2 years remortgage and you'll get a better deal. It's now or never really. Your landlord could increase your rent next year, who knows? Costs may rise so you may as well take the chance and own rather than rent. Good luck.

It would have been nearer 30k without the lottery.

At lease move that to Premium bonds so you keep the investment and have th me thrill you might win a million

Well no. Need more. Mortgage payments do not cover ongoing repairs amd maintenance. Boiler servicing etc . Which rent covers .

National friendly