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.

It looks comfortable to be honest. There’s also things you can cut back on if you need to. It’s a no brainer for me.
I think ur DH isn’t seeing the bigger picture. It’s unlikely isn’t it and most of Britain would struggle if someone in the household became ill.

I’d say go for it. Save most of dh’s salary for a few months and use it to build up an emergency fund. But it seems reasonable, you can clearly afford it as you’ve been spending the equivalent on rent/savings, you have plenty of wiggle room if you need to make cutbacks and the repayments will go down in a couple of years.

They’ve been saving that amount each month…

Can you find a cheaper house?

Jobs a good un then really

I said in earlier posts I think they should go for it.

By the time they retire, they'll be mortgage free more or less.

A lot of your post indicates you are not great at money management - previous arrears, lotto, multiple entertainment packages, higher than typical mobile and DFS credit. You also mention inheritance which is never guaranteed.

You are also assuming easy switch to high street bank in 2 years - again not guaranteed, what is property value falls, credit maket dries up, one of you losses job, unexpected expenses.

Do you have an understanding of your pensions and any work benefits like critical illness, death in service?

Do you know exactly what's paid to you in event of death or serious illness?

If not, get quotes for critical illness, death and mortgage protection etc.

See if you can factor this in (cancelling lotto, reducing entertainment packages, etc).

Consider cheaper if you cannot get comfortable with all of the above.

I have a good understanding of my my company benefits. DH unfortunately doesn’t have any.

We’ve had some quotes this afternoon for income protection and was surprisingly more affordable than I was expecting.

There are loads of tv subscriptions. Do you need them all? Do you spend £100 on Premium Bonds every month? I'd stop that. Could dc have packed lunches? What do you do with dd's £200 contribution? Just wondering if you use that or do you save it up for her?

TV subscriptions definitely need a review.

Premium bonds is just savings. We don’t lose that money.

Have been saving DDs contribution and / or using it towards something for them.

Yes I would go for it, because two years isn't that long and it will make your lives better long term.

do it - once your on the ladder its much "easier" to get another deal

good luck!!

I would! We pushed ourselves with a weird mortgage from bank of Ireland and it got us a fab house. With Halifax now

Go for it OP
Congratulations

Surprised at people going on about the PBs , its savings.

It's not earning interest though, it's just sitting there. Compound interest is a guaranteed return vs no guaranteed return on PBs.

No interest as such, my mum seems to win regularly but I doubt thats common

The point is its not the same as money going on the lottery or unnecessary phones or gym membership. Its not lost she has something tangible for it.

Agree. Total madness.

There's no food spend on your list. There are at least 4 people in your household. It won't be cheap.
You also spend a fair amount on stuff that's not strictly necessary. We earn more and do not have gym membership, phone bill for adults £10/month, no national lottery. I think if you are this spendy doubling your costs for housing will be tricky.

If you read the first post. It did say that it would leave my DHs salary to cover food, petrol and any other discretionary spends. Which is exactly what we do now.

On top of those bills I have put putting away £1000 into savings each month on pay day (since my last wage rise, was £600 before that).

He can get something called short term income protection for a payment of 12/24/60 months per illness or injury which can be claimed on multiple times which will make it more affordable but his eligibility will depend on his health history and family health history (parents / siblings before 65).

I clearly didn't read the post well enough as I didnt see that bit. GL. Still think it will be tricky as everything adds up and unless your current spending is significantly lowered things will get tight, quickly. I felt very poor for the first 2-3 yrs after buying our first house. Saving pot reduced and was not able to save like I wanted to for a long time due gap between rent and mortgage. £400 extra/ month for mortgage payments. Plus house maintenance costs.

If you own the phones then go on sim only.
Lebara have massively cheap deals...you can get them for anything from 1.50 a month upwards then they increase after 6 months.

Yes it will be tight, that’s why I am questioning it but ultimately I don’t think it’s going to get any less tight. We might get a better rate in two years when the credit file is totally clear, but we will then have another two years less on the term (and no idea what rates will do in the mean time, so at least we will be used to a higher rate). Most people who buys for the first time have a tight few years.

We don’t yet, hence why they are high. All three mobiles died over a 12 month period. They do all finish over the next 12 months though and we can go to sim only again then.

There’s nothing in the budget for food?