Active discussions

Meet the Other Phone. Child-safe in minutes.

Meet the Other Phone.
Child-safe in minutes.

Buy now

Please or to access all these features

Talk
Money matters

Find financial and money-saving discussions including debt and pension chat on our Money forum. If you're looking for ways to make your money to go further, sign up to our Moneysaver emails here.

Original poster

To think this mortgage is far to much for us

60 replies

Pine99 · 16/10/2018 17:51

I'm trying to work out if this mortgage would be too much of a stretch for us.
DH and I both 28 work full time and may want to try for a baby in next 2-3 years. His salary is 100k with a performance related bonus usually another 27k give or take and I bring in 88k gross. We currently own and live in a flat with approx 90k equity and 220k remaining on mortgage....we've had it for 3 years and would like to move into a house close to family and work etc. DH thinks we can stretch for about 750k purchase price. We would be making the recommended 20% deposit from savings and rolling the equity in from the flat to be sold. This would give us a mortgage of 650k and im wondering if this would just put too much stress on our monthly cash flow. We try to save a good bit into pensions and rainy day funds which, especially after taxes etc...doesn't leave a lot of breathing room with a loan as big as this. Online calculators and banks all say its "affordable" but i worry about having to reduce lifestyle spending or savings.

AIBU to think we should have a smaller house budget...?

OP posts:
mrsplum2015 · 17/10/2018 15:39

I would go for it. Knowing what house prices are you really need to spend that money to have a decent family home and save upgrading in 3 years once you've got 2 kids. We bought years ago (fortunately) and our house is worth 650k easy commute to London and is nothing flash. But it's kind of what we need for 3 dc (the third is a stretch). And investment in property is pretty safe so you can always chuck in your extra 160k to lower the mortgage if you're struggling. Also why is the mortgage 650 when you have a 20 percent deposit (150)?

Original poster
Pine99 · 17/10/2018 16:00

yeah sorry my maths was a bit off. We would have a 600k balance... already getting better haha

OP posts:
ShalomJackie · 17/10/2018 16:14

Everytime I moved I always worried I would not afford the new mortgage, council tax etc but I always did.

As a couple you sound like us when we were younger. By the time our children were older we could afford private education too.

Look at offset mortgages so your savings can offset interest and make either payments lower or the term shorter.

At your age you could probably get a longer term mortgage than 25 years and tgus have lower monthly payments. It is worth talking to a mortgage broker. It would be a good time to fix while rates are low say for 5 years.

I say go for it.

Shinesweetfreedom · 17/10/2018 16:39

Would now be the best time to buy?
With prices dropping it might be better to wait.
Depends where in the country you are.

ShalomJackie · 17/10/2018 17:09

Prices aren't dropping here but I know we live in a bit of a micro bubble. They are taking longer to sell because of uncertainty. However rates are so low and if OP is going to be there any length of time she will no doubt see out a drop and the inevitable rise but be paying at a lower rate and increasing her equity whilst livibg where she wants

myron · 18/10/2018 09:29

I wouldn’t and didn’t and still won’t. Having gone through redundancies through past economy downturns, we have chosen never to stretch ourselves regarding mortgage multiples especially with a high household income. It only takes one job loss/reduced income to have a massive impact.

MarshaBradyo · 18/10/2018 09:33

Plus the moving fees at about £50k - £60k

When you try it out also consider the potential cc fees too. And if you can continue all jobs (although your salary may be more by then)

We have a lot of air around the mortgage now and atm with 1 person working - it does take out a lot of stress

But if you’re both advancing quickly it could work our well

AdventuringThroughLife · 18/10/2018 09:39

Wow those are incredible salaries. Can I be cheeky and ask what jobs you do... may be better to advise my children than teaching!!!

Moreisnnogedag · 18/10/2018 09:58

What do you want out of a house that size and could you get it for less? Do you actually want a big house with the cleaning, upkeep, utilities that that entails? Sometimes I think that because we get offered a big mortgage we only look at properties in that bracket and so get sidetracked. start out with a list of requirements: in this postcode, near this school, x bedrooms etc and work from there. See what comes up and then look at the postcode next to it to see if that has the same for less and you are only paying for the address.

I was offered a ridiculous mortgage as the sole earner (admittedly high earner but still). I initially looked at all these places at the upper end of my mortgage offer but then did the above and now live in a beautiful comfortable house with mortgage repayments that don’t scare me (too much).

I’d also very much recommend putting aside that theoretical mortgage payment into a separate account and seeing how you go - a friend did this and had a splurge fund for decorating the house when she did move which was genius!

Batteriesallgone · 18/10/2018 10:38

The other glaring advantage of the separate account for practising mortgage payments is it might make a dent in the stamp duty and other moving costs.

hendricksy · 18/10/2018 10:41

My dh earns quite a bit more than that and we have a very nearly paid off £200 k mortgage . If you give up work you I'll really struggle on my opinion . A bigger house comes with much bigger bills etc .

yoyo1234 · 18/10/2018 14:22

Concentrate on what you want in the house. We chose closeness to a chosen school. This is so important because in some areas where waiting lists and closeness to schools are paramount it may cost a job with the time to do a school run ( it is that bad). You are both doing really well and on those salaries that mortgage appears very do able ( it depends on eating out habits etc and esp childcare and 2 incomes). I second the idea of practicing paying the mortgage! Certainly a well placed home can be great for family life .

myron · 18/10/2018 14:48

Imo, we're facing a downturn in the economy and the job losses in the retail/car industries are only the start. I doubt whether the fashion industry will escape.

Not to be totally doom & gloom but if you're preparing to be on maternity leave in the near future, why would you choose to take on a £600K+ mortgage when your household income will potentially reduce to a sole salary of £100K basic. (Bonuses are the first to go in a recession!)

If you're in the SE, selling up and renting for the next 12 mths while the market continues on its downward trend would be a smart thing to do especially with no dependants at the moment. I would be tempted to do that if I was in your shoes.

Original poster
Pine99 · 18/10/2018 16:32

Lots of mixed opinions....All appreciated! for those thinking its too much, what would be your target price in our situation?

for reference, I am a materials engineer working in construction industry and DH is a financial planner and investment consultant. On the side i also waitress at local restaurant and teach gymnastics. DH is a retained firefighter nights and weekends.

OP posts:
hendricksy · 18/10/2018 17:21

Why are you doing those other jobs ? Do you need the money or is it for fun? As I said dh earns about the same as you both and our mortgage is nearly done . I wouldn't want to take on that amount of debt but we are not big risk takers . With brexit etc the house may dip in value next year and you will have negative equity . I'd go for A max if £400k in your situation.

Ginmakesitallok · 18/10/2018 17:29

Your dp is a financial adviser and you've come to mn for advice???? :)

serbska · 18/10/2018 18:10

A bigger house comes with much bigger bills etc

Is the OP in London? If so a 750k house is not exactly 'a bigger house' where you have to worry about heating your west wing! Its more than that for a 3 bed terrace most places Grin

Original poster
Pine99 · 18/10/2018 18:10

His focus is mostly on institutional and non profit financial consulting. Either way, his risk level is different to mine so that's why I came to MN haha. We do the other jobs for fun not because we have to....the don't pay much.

OP posts:
1Wanda1 · 18/10/2018 18:48

Interest rates are going up, so make sure you consider not just can you afford it now, but to factor in the effect of rates rising, and how you would afford the mortgage while on mat leave.

Allow for about £1500 a month in full time childcare costs (nursery, south east) if you go back to work after mat leave.

If you can afford it after those considerations, why not? Housing market seems a bit shaky with Brexit fear but everyone has to live somewhere...

Cazz81 · 18/10/2018 19:09

As other suggest go for it. You both obviously earn good salary. It’s worth paying bit more for the right location and in the catchment area for an outstanding school (esp as you want to put the kids in state school). We have a hefty mortgage which takes a good chunk of our salary and every year we over pay with bonuses. We don’t have a luxury life and apart from childcare & mortgage don’t have any other big expenditure. I know some ppl think we are crazy with the sacrifice we made but we really don’t care about having the ‘big’ house, ‘it’ car and blings.

ballseditupforever · 18/10/2018 20:56

I think you should go a bit higher to be honest. You are young. Transaction costs are so high at this level that it's better to buy as expensive and big as you can particularly if you both think you have potential to grow your salaries. What's the monthly payment?

Are you planning on going back to work after kids? If you have a demanding job you will prob need a nanny as nurseries finish at 6 and kids need to go to bed. A full time nanny is around £2.5k a month cost to you minimum (out of taxed income) but you might be able to get a share. Have you got a good maternity package? Your income doesn't have to go down after having kids (I have 4 and my income has gone up by 15% or so over the last decade) but your outgoings will increase significantly and you need to factor in the fact that you might not want to work as hard. I always did but some of my colleagues decided to get out altogether.

What's your combined net take home? Gross figures are meaningless as some people make massive pension contributions etc.

I take home around £4K a month and my husband a similar amount. A bit less than you combined I expect. Our mortgage is around £1.5k and other bills (council tax, water, energy etc, tv etc insurance) is probably the same again.

We don't have any childcare costs currently but are carrying a fair bit of debt (60k plus) from home improvements so are paying that off at around £2k a month (so equivalent to a mortgage of £3.5k). Cars are probably another grand a month - it doesn't feel like very much left over if I'm honest but we stretched ourselves massively when we bought and we now have about 60% of the equity in our house. A big mortgage also means you are paying a lot of capital off every month.

AdventuringThroughLife · 18/10/2018 21:04

Thanks Pine99. My daughter is 10 and asking about different types of "Engineering " and I dont have friends/contacts etc. Our knowledge is entirely from cbeebies and books!! Shes got a v analytical mind and loves lego/construction/provlem solving/maths. Will tell her to stick at it!!

INeedNewShoes · 18/10/2018 21:17

I think with both of you having more than one job you need to allow for the (in my view, fairly likely) possibility that one or both of you will reach the point where having a bit more spare time moves up your priority list so any calculations need to be done on your main job only to be safe.

In my experience, the first year of having a baby is actually quite low-cost as you don't tend to go out for expensive days/evenings/meals in quite the same way and babies don't cost that much to run. Its childcare costs and the cost of after school music lessons/horse riding/dance that start to make things really add up.

On a side note it really pisses me off that people cannot post questions about finances without someone coming along to tell them how lucky they are because they exist on less. Whatever amount someone is earning, if they are being cautious about spending and asking these questions here, surely that's a good thing. (I'm a single parent earning sub £20k at the moment.)

SaturdaySauv · 18/10/2018 21:25

We probably have a similar income and felt comfortable with a 450k (ish) mortgage given we have high childcare and commuting costs currently.

GreyGardens88 · 18/10/2018 21:29

Mad to be getting that high a mortgage when you work in finance at brexit time

Swipe left for the next trending thread