£210k mortgage?!

[LOUNIC]

Hi everyone!

New to this forum and just looking for a bit of advice.

I know we should know the answer to this question, I would just like other opinions on it as it's a big move we are thinking about making!

I earn £37k per year, husband earns £29k so combigned £66k. We have 2 kids...1 & 3. We staying in a flat at the moment paying £450 per month on mortgage which we can very comfortably afford. I have yearly increments and salary will go up to £38.5k at the end of May and there after if I get promoted I would be on more (just thinking about the term of the loan..payments should get easier as we earn more!)

We have a loan for £198 per month and a credit card which has 4.5k on it (plan to clear this with the sale of the house/savings) also car payment is £168 but only have until sept 2015 and it is then paid off.

With the sale of the house and savings we should have around £22k hopefully. Which will probably mean a 95% mortgage as we would need money for fees etc!

We have approached the bank and they have gave us a mortgage 'promise' based on our income/debt and it has actually came out quite a bit more than £210k that we could afford. But I am very cautious and don't want to over stretch ourselves.

I just wondered if anyone else is in similar circumstances?

What are your thoughts?

Thanks for any responses! Lou ??

Good luck

You have some debt which you have to take into consideraton. Also have you thought what happens if mortgage rates go up because on a larger mortgage even a relatively small rate rise will make quite a difference to the monthly repayments. There has to be a balance between getting as good a house as you can afford without going in over your heads.

Lou, we fixed for 3 years when we bought 6 months ago, so our mortgage would be fixed when we needed our costs to be stable ie when paying childcare for 2 pre-schoolers.

Yeah that's exactly why we are thinking of a fixed rate and it is 5.19 % initially which is quite high as it is a 95% mortgage.

I have considered rates going up but they are saying average mortgages just now are 4-4.5 % and they expect them to rise to 5 % so if I will be 5.19% initially anyway surely they wouldn't rise much above that?

Something you don't seem to be taking into account is that when moving from a flat to a house, it's not just the mortgage that will increase. Council tax, water rates (unless it's metered), insurance, heating and general maintenance will all cost more, sometimes much more.

Factor that in to your calculations. Work out how much you'll be paying out each month in total and start putting that aside every month now, and see how it goes. Will you be able to afford school uniforms and shoes when the time comes? etc.

Yes I am well aware of all the extra costs that will be involved and have the cost of council tax etc noted. I am not thinking about this with blinkers on, I am wary and considering if it will be doable or not.

Obviously the main outgoing would be the mortgage which is why I am just specifically asking about this just now.

I will be noting down all expenses and considering everything before we decide, I do not want to struggle.

I'm a single parent on a low income. I have a £200k mortgage, paying interest only at about £700 a month. It was around £1200, which was a struggle, but at the new lower rate it's about half the cost of renting a similar house round here.

I know I'll be in the shit if rates go up, but I don't have many other options at the moment so I'm staying put.

It doesn't seem ridiculous to me, given your joint income, but it makes sense to use the opportunity for a review of your finances and to make sure you have the best rates on anything you're not paying off. I move my credit card debts around to keep it at 0%

Go for it

And that's coming from someone with a £370k mortgage who doesn't earn anywhere near your joint incomes, was a big gamble the house we are in but I would do it again even knowing things are tight sometimes

Interest rates are not going up above 1.5% any time in the next 5-10 years
I've always done trackers
5% is 10 times base
is there really nothing cheaper out there?
because trackers are running at around 2-3%

so rates would need to hike LOTS to hit 5% on the tracker - and its not going to happen in a hurry

PS the flip side of that is that house prices are likely to stagnate for at least 10 years too

Yeah we'll the rate is particularly high as it's a 95% mortgage we are looking at. That's with our current Lender, Halifax. I have done a mortgage promise thing with them and they seem to be saying we would likely get the mortgage. They don't have a higher lending charge which is like an insurance some places make you take out and the fee has been halved recently to £450 which is good.

Not really looked elsewhere tbh!

Cheerup can I be really impertinent and ask as to how much of that mortgage you still owe? We have a similar mortgage on interest only and it keeps me awake at night!

Cheerup....really! How do you manage? And how did you get that amount?! X

Well after all that, the house is not for us! Went to view today and although it is very spacious and in a great street there is too much needing done. It's not liveable and from what I could see there was plenty of work we would need to do
straight away.

Another property came on the market today, again in the area we like, slightly smaller and on a main road however it's a great price...offers over £159995 with nothing needing done to it. So we are going to see this one next week!

That would be a bit more manageable! ??

I would go for it. We have been offered the same amount and we earn quite a lot less than you

Sounds a wise decision, houses can be real money pits if need lots of work.

Good luck with the other one.

Hi, just wondered whether you need to stay with Halifax for your mortgage? We're just in the process of moving to a bigger house, taking on a £250k mortgage with a 10% deposit and have got a rate of 3.9%.
We used a financial advisor / mortgage broker who we had to pay but it was well worth it to get the better rate.