Is borrowing 300k too much?

[baileysyumm]

Looking to move to a bigger house soon once both kids are at school. Would have about 100k to use as a deposit and looking at houses worth around 400k.

Our monthly income will be about 3.9k and the mortgage over 29 years. Repayment calculator is suggesting interest rates at 3% would cost about £1300, which I think is doable for us.

However, borrowing 300k is coming up to 5 x our annual income! Do banks even lend this high a multiple?!

For our first home we could only borrow 3.5 times income although we did have slight childcare costs then.

Has anyone else been in a similar position? Thanks.?

I have the same take home as you, single parent, 2 doc and childcare costs of only £200/month and mortgage of less than £800/month and I struggle to have a nice life and pay the bills and save. I've been thinking about moving but would not be prepared to increase my mortgage to do so.

using a mortgage calculator and assuming interest rates of 3% the monthly payment for repayment would be £1422 and the total payable over 25 years would be £426,718 (so circa £126k is interest)
this is a huge commitment if one of you lost your job or became ill and relies on interest rates not getting back to around 5% over the next 25 years.
I assume you have at least 25 years of working age as you have young children but if you can overpay NOW while you have security you will have a buffer for any 'lean years'
Don't forget stamp duty and moving costs - moving becomes more expensive the higher up the ladder you are moving.

I wouldn't borrow that much. Even if they will lend it to you, what happens if one of you loses their job? Can you afford increase rate rises? Will you still be able to save some money towards holidays, new cars, household repairs?

I think it would be a struggle, any increase in interest will have a massive impact on a loan that large. If you do do it, fix your interest for 5 years at the very least. Overpay as much as possible

Our repayments are 1100. My income is variable but we scrap by on roughly the same income as you.

It has been a misery paying our mortgage at times but we are glad we jumped when we did as we could not afford to buy our place now. It is a gamble, without a crystal ball no one can tell you what to do.

My mortgage is £1300. I've got 10 more years of that and am hoping to pay it off a year or two early. 29 is an awfully long time for that level of financial commitment is all I'd say.

Thanks for all the replies, it's given me lots to think about.

I guess both our jobs are fairly secure especially mine and I'm fortunate that I'm in a pay band which increases every year and I get a "cost of living" pay rise every year too. DH not so fortunate though.

We would use savings to pay for all the moving costs but would probably leave our savings pot pretty much empty after that!

I know it should never be taken as a given or assumed but chances are I will inherit a fair sum in the future and more than likely before the end of the mortgage term. So that probably does make me feel slightly less worried about it being so long and so much.

To me I think you're nuts to consider borrowing that amount. But then I also like to sleep at night our income is similar and we have looked at moving in the past but we have a lovely house in a lovely area only 4 of us and 3 bedrooms. Our mortgage is £530 a month. And I'd prefer to save and have a holiday or two than an extra bedroom or detched.

1/3 of your income is a massive commitment.

Our commitment every month is 1400 out of 3600. So yes it's a high amount, but we've worked out we can overpay easily 200 a month and save another 200. Hoping to build up enough so that if anything happens we've got a few months worth of payment holidays and savings if needed.
In our area, the SE, we really can't afford what we want without doing this. I've worked out our bills and we're left with a good buffer. Also you might find later bills go down, ours will, childcare etc, plus were both in stable jobs.
It's how much risk you're happy with, our amount does make me nervous as we're currently saving a good amount each month and that will go down, but our quality of life will improve immensely once we've moved.
And if it does get too much well we will just sell and downsize. We want this house to be forever, or at least until we're retired, but if it's not, so be it. There are always options! We're on a fixed rate but fingers crossed if we over pay enough we will be on a good ltv in a couple of years and can shop around for a better deal.
Good luck op, whatever you decide!

I'd say a third of your income on a mortgage is pretty reasonable tbh.

I just worked out ours and we're currently paying 22% of combined income towards our mortgage...but we're planning on moving and that will probably go up to 30-35% when we do and is still more than doable.

In London most people pay at least 1/3 on mortgage or rent, even 1/2 isn't unusual. It depends so much on other outgoings - if you are content with say one £1500 holiday a year plus a couple cheap weekends, then spending £1400 on mortgage out of £3600 is fine. If you feel deprived without two holidays costing £4k each, or have expensive hobbies or cars, then you might want to reconsider.

Oops sorry! It's just over 1/4...4,600 a month income...sleep deprived...can't type!

But yes, very little in terms of spending, don't buy flash clothes or loads of fancy food...shop at aldi etc..camping holidays with one trip on a shoestring every few years somewhere exotic...planning Japan next year.

Hi,
Or combined income is about the same as yours (sometimes a few hundred more). I have just gone back to working full time though as I had to work part time for 12 years (2 children, no family help).
I would be very, very reluctant to take on a mortgage of £300K as you need to have fun in your life. I always work our finances so that we can survive on one salary if one of us lost our job. We wary of interest rates too as they will go up!
I only went full time to go back to my old job, I didn't need to work full time. Now that I am earning more I am tripling my payments and hope to be mortgage free next year.