Mortgage advice

[MsAR]

Hi, I'm looking for any advice / experiences people have had with mortgages. I'm tying myself up in knots over the amount we can borrow for a mortgage.

I have a cautious attitude towards money but would really appreciate some advice on what do with our next house purchase.

We are selling our 2 bed flat in SE London (will collect approx £200k equity) and want to buy a bigger place as we have a baby on the way. Our combined income is 100k and we have savings to see us through maternity leave for 10 months.

Our dream house costs £600k in the same area we live in now and based on our salaries we can borrow the amount we need easily enough. However, I am so worried that this is such a massive amount of money and the mortgage broker hasn't factored in child care costs as obviously we don't have a child yet. Does it sound affordable to anyone who has gone through a similar experience. I know child care will cost a lot but know this won't last forever.

Part of me just thinks We should move further out but then that will affect the time we spend commuting etc. I really like the area I live in now but don't want to financially cripple ourselves.

On the other hand, should we just be brave and go for it? The house is beautiful and interest rates are so low. Does it sound like we're over stretching ourselves massively if we do go for this bigger loan?

I'd really appreciate people's thougts on this as I'm feeling so unsure about everything.

How much would mortgage repayment be on a £400k mortgage? How will you cope when interest rates rise?

Do a budget and factor in realistic childcare costs and interest at 5% more than the current rate and see what wild be affordable to repay each month.
My first thought is that you might be ble to afford it at a squeeze and it is worth squeezing in order to get a forever home as moving house is an expensive process but the childcare costs might be the difference between what is affordable and what is not.

Thank you both. I really appreciate the advice. So far it's only been the 2 of us to consider in a flat which has given us a big disposable income. I'm not naturally a saver but think if I was forced to pay offs bigger mortgage I wouldn't have the chance to spend money on wasteful things!

At current rates your mortgage repayments (over 30 years assuming you can take it out that long) would be £1500 ish, factor in another £1500 per month for childcare (it could be less than this but best to be on the safe side). Alongside your other expenditure, how much wriggle room does that leave you? If it leaves you enough wriggle room to set aside overpayments while interest rates are low I would consider it, but with an amount that side I'd want to make a dent in my debt before interest rates rise (which they will).

Does your mortgage advisor know you are pregnant?

A mortgage offer based on your 2 salaries will be very different to an offer based on you being on maternity leave with a dependant (and failure to disclose the fact you are pregnant would be mortgage fraud)

What proportion of the £100k do you earn? Again- if it's the lions share the result will be very different to if its only a small proportion.

Lenders no longer lend if they think you can't afford it- regardless of what you think you can afford- so it's quite likely your biggest hurdle will be seeing if you can physically borrow the amount you require- if you can- then is the time to decide if you want to.

When I spoke to the mortgage broker they asked if I had any dependents. I asked if I'm required to let them know if I get pregnant and they gave me a firm no

Only once the baby is here would they take it into account and would reduce the amount we'd be offered so it's why Part of me thinks we should take the plunge. If mortgage + childcare was approx 3000, that would leave us with 2,800 left over each month. We don't run a car or have any debts so I'm thinking that it sounds manageable.

I earn slightly more than my partner but it's practically 50/50 in terms of what our take home pay is.

We'd need to borrow 400k and the mortgage broker did say we could borrow up to 500k but I just don't know. Your thougts / questions are all really useful so thank you for your replies. It's helping me to get things clearer.

We manage on a lot less than £2800 after mortgage and we have 2 kids and two cars but everyone has different lifestyles. £2800 after the mortgage would seem a fortune to us.
Do you plan to have more than one child as that would increase your childcare bill significantly.

The only thing I would add is to look carefully at schools if you are pregnant. You will need to apply probably when your child is 3-4 and the time will fly. Also, bear in mind that £1500 is quite a conservative figure for full time childcare in London, and of course factor in that you may want another child in the future. Utilities and life insurance will of course increase quite significantly presumably. Also, think about whether you will genuinely want to be full time once you have children.

Super, thanks for sharing that info. The more I think about it, the more doable it seems. I can't imagine not working full time and as a teacher I will at least have holiday care sorted. I know my feelings will change when baby is here but at least We can save for my maternity leave so I will get time off. Thanks Mandy for your thoughts too. I will definitely be bearing schools in mind! ??

Not many private nurseries (if that is the route you are going) offer term time only places so lots to think about. Good luck