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Original poster

To contemplate a £250 000 mortgage

66 replies

spoonbill · 21/06/2010 13:30

My DH and I have a joint income of £75000.
I remember the 80's when interest rate shot up and lots of people lost their homes so have never wanted to have a big mortgage. But we find ourselves needing to move out of our 2 bed flat and to stay in the area and in good school catchment we would have to increase our mortgage to at least £200 000> I think this is madness.But most people I ask have £200 000 mortgages and think I'm strangely risk averse. I'm astonished. Rates have got to go up haven't they? Am I mad or is everyone else mad? And how are people surviving with such big motgages ?

OP posts:
stripeyknickersspottysocks · 21/06/2010 14:57

Back before house prices went silly and when mortage lending was really strict there used to be a rule of borrowing 3x your salary, or it may have been 3.5x salary. So if you're earning 75k then that sounds ok.

Have you got kids yet, if not will you continue to work when you have them?

AppleAndBlackberry · 21/06/2010 15:15

We have one (240K) and our joint income is now less than yours since having a baby and going part time. If you have equity and can get a good mortgage deal then it's doable I would say.

acebaby · 21/06/2010 15:58

minibmw2010 - we wanted only to be committed to paying the minimum in such uncertain times. The overpayments we make eat into the capital and with the deal we have, we can borrow them back at any time with no questions asked. Essentially we are offsetting savings against our mortgage

If you drop down to interest only having started with a repayment mortgage, it can cost extra in administration fees. You also may not be able to draw down the capital repayments you have already made if you have not got much equity or have suffered a drop in income

emsyj · 21/06/2010 16:27

Our mortgage is exactly £200k and our monthly repayment is £1150. I am at the earlier post on here saying a mortgage of 'just over' £200k is £1700pcm in repayments!!! Our mortgage is a very 'vanilla' 25 year repayment mortgage and our monthly payment is nowhere near that figure!!!

Heifer · 21/06/2010 16:31

Personally I would now only consider having a mortgage that 1 salary could afford.

I have been lucky enough to be able to take 5 years off to look after DD and with a large mortgage that option wouldn't have been open to me.

Also the current climate makes DH jobs less secure so for us we would not even consider uping our mortgage right now. In fact we will be trying to overpay as much as possible.

Gay40 · 21/06/2010 16:37

If it causes you stress, then no.
I'm a bit risk averse like some on here. I like a mortgage and a house and a lifestyle we could run happily on one salary (not that we earn much but enough) and if the interest rate went mental we would still be OK.
We probably could afford a massive house but we simply aren't prepared to risk it. I get in a tizzy if I owe someone a tenner.

Gay40 · 21/06/2010 16:39

I forget to add, you have all the costs of a bigger house to take into account every month as well. Which puts us off for the same reasons.

minibmw2010 · 21/06/2010 16:41

Yep, just double-checked our bank emsyj and its £1708 per month, on a full repayment mortgage of 0.89% above Bank of England base rate tracker. Our mortage is down to 16 years so that may be why its higher than you'd expect, as we're paying off more capital now than interest.

Last year we started paying an extra £300 per month in overpayments, this has already cut 2 extra years off our mortgage term.

MrsC2010 · 21/06/2010 16:44

We opted for a mortgage we could pay on one salary. Ours is around £125k, but we do have hefty equity otherwise we couldn't afford to live in the town (hell, in the whole County) we live in. We will probably need to 'upsize' in 5 yrs odd, but will be earning more then and will cross that bridge when we get to it. I certainly wouldn't feel comfortable with a whopper of a mortgage, and I would see it as unnecessary even in the hellishly expensive place we live in. But then I'm not fussed by huge houses and would rather have a little more freedom and time to be honest.

withorwithoutyou · 21/06/2010 16:45

Ours is 210k and has been maneagable even since I dropped two days at work and started paying for childcare.

If I get made redundant, however (am civil servant) then things will be veeeeeery tight indeed. But I don't think we'd lose the house.

We're on a 5 yr fixed rate, 30 yrs and its 1260 per month.

withorwithoutyou · 21/06/2010 16:46

We by no means live in a massive house btw! 3 bed in SE England but we only bought 4 years ago and that's how much houses cost then.

narmada · 21/06/2010 16:53

If you are very risk averse (I am) then you could opt for a 10 year fix. I think it's beyond doubt that interest rates will go up significantly in the medium term. Not many banks offer 10 year fixes, but a few do. That's what we'll be going for when we get our mortgage shortly (hopefully). And our mortgage will be in the region of £240000 I think, on a lower combined salary than yours . We are in SE though, and our mortgage at that level will be far more modest than that of many of our friends. It's a scary business.

BrandyAlexander · 21/06/2010 16:54

We took out a mortgage for 3 times our salary. I am in the school of "what would the repayments be if interest rates were the same level as they they were in 1991" - anything else just feels reckless. In addition, we are on a variable deal which means that our repayments are significantly lower than what they were a couple of years ago. We have just carried on putting the same of money aside (as if the rates had never gone down) and have been making lump sum payments to pay off some of the capital. I sleep better at night knowing we're doing this!

archstanton · 21/06/2010 18:30

We must be reckless then with a 350k.
We put in a lot of equity I guess as the house is worth about 750k but it's still a hefty amount each month. We currently have a combined salary of more than 100k but who knows how safe anyone's job is.

We are fixed for the next 4years so at least I don't lose sleep thinking about 15% interest rates which I think we worked out would make our mortgage about 7k a month

I guess it's a risk but I just think that even in a bad market I could sell the house for much more than the mortgage so we'd be ok-I hope.

BrandyAlexander · 21/06/2010 18:44

Archstanton - you have a combined income of more than £100k and your mortgage is for £350k. I don't see that as being reckless given that it falls within the 3.5 times combined salary guide that lenders used to sensibly apply. I don't think the size of the mortgage matters, the affordability of the mortgage is the more important factor for me. If someone can't afford the mortgage (usually because it is more than 3.5 times their salaries) then yes I do belive that they were being reckless in the first place.

Northernlurker · 21/06/2010 18:56

I think a fixed rate is the key to sleeping well at night. We took out our currrent mortgage 2 years ago and fixed for 5 years. That makes our mortgage more expensive than it would be atm on a variable rate - but we didn't take it out to save money. We took out so we could be sure what we were paying for the next few years till dd3 goes to school. When she is at school we will be able to face even 15% interest rates ok. If that happened now whilst she is still in full time nursery things would be much tougher.

Reallytired · 21/06/2010 19:14

If you have a big mortgage then you need some saving set aside to help if mortgage rates go silly up. For example if interests rates were 10% as then you would need to find 20K per year.

A lot depends on the mortgage deal you get.

In many ways it is a good time to buy. Inflation is above interest rates at the moment and mortgages are being reduced in size by inflation. House prices are also quite low as at the moment so the risk of getting into negative equity is less.

OrmRenewed · 21/06/2010 19:18

spoonbill - I also remember the 24hrs that base rates shot up to 15% and that is the main reason DH and I have been nervous of getting a bigger mortgage (not as much as 250k though). But we've just sold our house and are in the process of buying a bigger one. We need the space. It does freak me out a bit but currently we can afford it and currently we need the space. I can't carry on being scared of taking risks. We need the bigger house now whilst we have 3 DC at home. If and when they move out we can sell and downsize.

zerominuszero · 21/06/2010 19:24

250k with a joint income of 75k sounds about right to me, not TOO excessive. Our joint is 52k and our mortgage is 110k though it will rise to 150k in a month or so. I don't think worrying about interest rates will get you anywhere, just get a fixed deal for as long as you can. You'll probably be fine.

GeorginaWorsley · 21/06/2010 19:36

TBH i wouldn't,not now.
Our income is double yours,our mortgage is about £150,000.
We have been tempted in the past to move almost because we can,then reality kicked in.

kansasmum · 21/06/2010 19:40

I felt like you when we bought our house but we did put down £150k but still have 230K mortgage. I am SAHM and dh's job is as secure as anyones I guess these days!
We do easily manage the mortgage payments and live in a fab house in the most beautiful part of the country. We were very limited with mortgages when we bought the house having lived overseas for 5 years and only been back in the UK 12 months! Hence we haven't got the best rate but its fixed for another 2 years so if interest rates change we will be ok!

Some of my friends think we are mad to have such a big mortgage but we can afford it and when I go back to work in 18 months things will be even better.

Its all about living within your means isn't it- a 350K mortgage on 40K a year would be suicide! And not too long ago you could probably have got that!!!

Maybee · 21/06/2010 19:46

That sounds reasonable to me. We're on £56,000 with a mortgage of £156,000 which is about £1090 per month. We took out equity to do improvements otherwise it would be lower by now. The low interest rate has made life easier but we struggle with childcare bills etc. So are interest rates going to soar again then?

mintyfresh · 21/06/2010 20:37

It is scary but what is the alternative??? Live in a place that is too small or rent at the mercy of your landlord kicking you out whenever they feel the urge to sell up??

If it is a forever house or even if you plan to stay a good 10 years it should be worth doing. I read somewhere that IR should stay low for quite some time to come - I stand to be corrected though and am cr**ping myself because we taking out a 140k mortgage very soon

Original poster
spoonbill · 21/06/2010 20:46

This is the first time I have used Mumsnet
driven by my sense of vertigo at facing big mortgage. I am really pleased with all your responses, kind, considered and thoughtful. You have helped. Thankyou

OP posts:
ImSoNotTelling · 21/06/2010 21:00

Good luck with it all spoonbill

oh, and

you'll be back....