How much mortgage

[HouseWoes]

Firstly, I KNOW that a reliable answer to this question requires a detailed investigation of all our outgoings, but I'm going to ask in any case for people's gut feelings/ballpark estimates.

If our combined income is around £5,000 per month after tax, how much mortgage would you think would be affordable? We have the usual bills - nothing out of the ordinary except a toddler in nursery part time and £200 loan repayment. Everything else is just usual bills, groceries etc.

Currently, we (DH) fritter a lot. I save a little each month, but we mostly spend up to the limits of our income - we don't need to do this, but I am struggling to work out how stretched particular houses we are looking at would leave us. We could definitely bring our outgoings down, but I am struggling to work out what our real essentials are, what are luxuries I would prefer to keep, and what is money that could easily be saved by being a bit more sensible. So I'm interested in people's best guesses, just to see if some of the houses DH has his eye on are 'probably affordable for that income' or 'waaaay too expensive' - or where on that spectrum they might lie.

I fully understand that this will just be people's opinions, but it would be very helpful for me right now to see what people's opinions are - or even if they are wildly different, so I can see how subjective/specific the true answer might be. The two 'rules' I've attempted to apply are 'don't borrow more than four times your combined salary' and 'you shouldn't spend more than 28% of your income on a mortgage'. The first measure puts DH's dream house v slightly out of reach, the second has it easily in reach.

Apologies if this is a bit garbled. Purchase of easily affordable house fell through, looking at moving in with family to save the sale of our house, trying to work out how wide to cast our searching net as we start again, DH wonderful, warm kind but a dreamer and v impractical. I would welcome people's opinions just to steady myself right now. Sorry if I sound a bit manic!

Our income is similar to yours. Just worked it out, our mortgage is 28.5% of take home pay. Over 4 X income. We had to stretch it to a 30yr mortgage to allow them to lend us enough.

We are in our forever house now and doubled our mortgage payments to buy it which was a big leap and felt quite a big risk. But it's fine, we try and overpay a few thousand a year but with 3 kids, eldest about to start secondary school, they are only getting more expensive!

Food, clothes, technology, transport to school and after-school activities for 3 all add up, if they all decide to go down the university route, I don't think we'll be able to subsidise them as much as our income says we should, due to the big mortgage payments though.

Our income after tax is similar to yours OP. We are paying £900pm on the mortgage which allows us to still save a small amount, have a main holiday plus a couple of long weekends camping, eat out a couple of times a month, and keep steadily doing work to the house. We also have 2 young DCs, so are paying out a lot in childcare. Without the childcare costs we could comfortably pay £1400pm mortgage although perhaps not as we would be going out more if we didn't have DCs! . We currently owe 2.5 times our annual salary.

Do you have DCs OP? Are you planning on them? If so I'd think hard about calculating what's affordable for you around this. We didn't over-stretch ourselves when we bought our house and I'm so glad. Since buying (8yrs ago) DH's income has massively increased, but mine is much lower. Our joint gross pay is a bit higher than it was at purchase, but net is less as a larger chuck is now subject to higher taxes (we don't use all of my personal allowance and DH is now subject to higher rate tax). DH's salary also means we aren't entitled to any benefits, whereas we would have when our individual incomes were more equitable. We have 2 sets of friends who stretched themselves to the limit and are now trying to balance that with sky high childcare costs. I couldn't deal with that level of stress!

On a similar income, we’ve just been offered a mortgage for £312,000 that we could add £70,000 deposit to. That’s with HSBC.

On your income I'd try to keep,it at under £1k. If you have children or want them consider childcare costs. Interest rates are probably about to go up.

After tax we take home around 3300. From this

1250 mortgage
1000 bills, money for car repairs etc and
savings.
500 food
300 petrol

The bit left over just gets spent on day to day bits, clubs for kids etc.

So our mortgage is around a third of our income which I thibk is quite high but when we took it out I was working ft befor we had kids and just always kept paying when I went part time. We now only have a few years left after clearing a huge amount payinh off the odd lump sum as we got them and it's a great feeling to know we've hammered it down quickly.

To me essentials are living costs like bills, getting to work, School uniforms, food etc.

Luxury items would be new adult clothes (unless replacing worn out) holidays, new cars, excessive beauty and make up etc. I just replace wheat I need as I need it. I don't go shopping for fun and look after the clothes I have really well. Beauty stuff can be shopped around for I have expensive shampoo and make up but buy online or when I see it discounted in places like tk maxx or b and m and it lasts ages to be fair. I don't have gym membership I do weights at home and run a lot.

Best of luck.

I reckon a third of income is pretty reasonable. If you can manage that whilst forking out for nursery it will only get easier!

Interesting. That all leaves me still uncertain, but I think my uncertainty is justified. Dream house mortgage would be £1500 a month, which seems like it should be doable out of £5000, but would require us to reign in some silliness and (frankly) laziness when it comes to money management. I'm already part time, and my income isn't likely to change in either direction. DH's will steadily increase every year - I feel like that protects us from interest rate rises, but obviously those rises mean a "stretch" of a mortgage isn't going to start to feel easier down the line, it'll just stay manageable.

The new house is bigger, so would also cost more to heat/run etc. The complicating factor is that we do intend to have more kids, so childcare will continue to be a cost for many years, and there's a maternity leave or two to factor in.

We're fortunate at the moment to not really have to think about money. We definitely should start being a bit more savvy, but I don't want to get into a position of having to watch every penny. We pay £1000 at the moment so £1500 would be a big leap. A few hundred a month more would be fine, as DH just paid his student loan off, and we can easily save a little bit more on top of that with minimal effort.

It's just hard to tell how much effort would be required to find another £1-200 on top of what I'm confident we can afford.

If your DH has his eye on an expensive house, he must get his spending under control as they will look as this as part of the affordibility checks. It really could make the difference between affording the type of house he wants and not.

Some good advice here

He knows this and is making lots of promises. The bank will lend us enough. My fear is going into something on a promise and not having a clear enough idea whether the changes required are too big of an ask for all of us as a family.

One thing I wish I'd done when I was married was to keep the wages in separate accounts (joint names on each) and to have all bills coming out of one account and using the other for saving and treats. That might work well with your part-time income.

How much are your nursery bills? If your mortgage will be £1500 and loan payments are £200, that’s £1700 already. Can you live on £2.5k - £3k comfortably which also needs to cover pension contributions, savings, holidays as well as general living expenses? Only you will know with the aid of a spreadsheet. Personally, I think that if you spend what you earn atm, there is room to economise but this obviously needs a lifestyle adjustment.

Good idea Hollow although I'd go even further and separate out:

Routine monthly bills

Savings for irregular/unpredictable household expenses (holidays, insurance, Christmas, broken cars, pets, washing machines etc). This is likely to be a few hundred pounds a month and where a lot of people come unstuck by not allowing for these things until they happen.

Regular family spending such as food, travel, child expenses.

Split what is left after accounting for all is above between the OP and her DH and this and only this is the money that the DH can fritter without thinking about it, on a 'when it is gone it is gone' basis. Ideally you need to look at your spending now to work out how much you are spending now and how much you will be able to spend if/when you get the new, bigger mortgage.

I think it looks doable but I like cutting back, look at spending every day etc etc. Most people are not like I am (and I've always worked full time even with babies so that helped finances too as I earned more than my children's father by a long way - he also worked full time).