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Original poster

Are we mad to think we can afford....................................???????????????

25 replies

belle74 · 31/01/2008 21:04

A £200,00 mortgage, which would be about £950 per month.

Our joint take home is about 3,300, we pay £600pm childcare, loan is £250pm, food £400pm, other bills for household about £250, insurance £60. Both car expenses about £200pm.

Haven't budgeted for clothes, going out (lol) holidays (lol again) etc.

Probably seems a bit daft to ask people what they think but really just want to find out if this seems reasonable/ is do-able, in other peoples experiences. I am not that great with money matters and don't want to lose perspective due to being so desperate to move!!

Any thoughts much appreciated!

OP posts:

ConnorTraceptive · 31/01/2008 21:07

Our mortgage is £1300 per month and our income is around £4000.

Our monthly bills are £1200 with a further £400/£500 for food and petrol.

We have to be carefull each month and haven't had a foreign holiday for about 4 years. We may have one this year if we can save enough.

ConnorTraceptive · 31/01/2008 21:10

Sorry our monthly bills are £700 a month not £1200.

Smaug · 31/01/2008 21:11

Bear in mind that the economy is a bit unstable at the moment. I know interest rates are coming down a bit now, but they may well go up again. I wouldn't buy/move now tbh.

allgonebellyup · 31/01/2008 21:13

my mortgage is £160k, i am a single mum and i only work part time, and my ex helps to pay half the mortgage, which has now gone up to £840 a month. We manage, sort of!

So i think you would be fine.

B1977 · 31/01/2008 21:13

I am going through similar thought process at the moment.

I know lots of people in London who live on similar income and pay this in rent for a small flat so it is possible.

Some questions:

Would you get rid of the loan in taking out the mortgage?
Can you live without holidays or going out much?
Do you have fancy taste in clothes or when you do go out?
Are either of you likely to get promoted soon? Are you likely to have another maternity leave?
could you take in a student or lodger for a while if things got tight?
Will your childcare costs go down soon?
can you always take lunch to work?
if property prices went down and you had to stay in the new home for at least 5 years would this be OK?

Hope this long post is helpful (boring as it is)

Smaug · 31/01/2008 21:13

Blimey, CT, you've got £2.5k left per month after all the bills, food and petrol have gone out?! I'd be having some great holidays!

Sorry, none of my business, but those figures made me want to weep!

iamdingdong · 31/01/2008 21:14

wouldn't a 200k mortgage be more than that? we pay 1275 mortgage, £750 childcare usual regular outgoings and income of 4800 and have to have strict budget for everything

donbean · 31/01/2008 21:14

have a look on the money expert web site, Marting Lewis, he is absolutely fab and he has some budgeting spread sheets.
I have studied it and aim to cut my food spend down from £450pm to £120.
Also does comparrisons for fuel, gas and lecky.
One big thing, check out your council tax band on the property you are thinking about, it may be much higher than what you pay now. Include that.

ConnorTraceptive · 31/01/2008 21:16

People have being saying the market is going to crash for ages now. As long as you can afford the repayments then it doesn't matter short term if the valu of you house goes down. YOu only lose if you sell.

If you think you will struggle to pay your mortgage then don't do it but if you knwo you can make payments then go for it I say.

allgonebellyup · 31/01/2008 21:16

ooh just saw your childcare costs are £600 so thats a lot, i guess you need to write down everything that you spend money on each month, including clothes, days out, presents for parties, eating out/takeaways/booze, petrol, kids clubs or activites etc.

it all adds up as i guess you already know!

Original poster

belle74 · 31/01/2008 21:17

Thats it Smaug, yes its a bit scary! We would fix our mortgage for at least three years so not soooo worried about that but £950 pm just seems like such a massive amount, nearly a third of our combined salaries. unfortunately thats what it takes to get an extra bedroom in these parts grrr!!! lol!!

My garnny was telling me a few weeks ago that their mortgage was somehting silly like £7 a week back in the day, and my gramps only earn £10 a week, but my calculation that still seems a better bet than our situation!

OP posts:

allgonebellyup · 31/01/2008 21:18

where do you live?

catsmother · 31/01/2008 21:19

Am guessing that if you're talking about £950 a month for a £200k mortgage then you're probably talking about an interest-free loan ?? ( ... either that or you've found a fantastic rate which I'd like to know about !)

Bear in mind then that one day the loan will have to be paid off. Most people used to plan for this with endowments but most financial advisors wouldn't recommend these now. Otherwise, unless you're sure of getting some sort of inheritence or windfall, you'd need to sell the property at the end of the loan period (some people gamble on doing this and downsizing, but that's risky, and you'd need to think about what you might be able to realistically afford with any equity in the future and whether you'd be happy with either a small flat and/or moving away 100s of miles maybe).

Anyway .... it's just something else to think about.

allgonebellyup · 31/01/2008 21:20

catsmother, do you mean interest-only loan? as thats what i have at the mo

Sidge · 31/01/2008 21:20

Is that figure of £950 per month interest only?

Our mortgage is £140k and we pay £850 per month, part repayment part interest only. And that's on a pretty good deal.

But looking at your income and expenditure it looks very do-able.

SenoraPancake · 31/01/2008 21:23

I'd say you can afford 950 a month on 2700 (after childcare, which is an easier figure to use I think). but is that an interest only loan? have you thought about how you'll pay it off?

Original poster

belle74 · 31/01/2008 21:25

the £950 quote was for a interest only mortgage, can't even contemplate repayment at present!

We are not terribly worried about the market as we plan on staying in our next house long term, staying where we are is creating all sorts of problems and stresses so we really are desperate to move.

Luckily neither of us has expensive tastes and as long as we get the odd weekend away i can do without holidays for a few years.

Would quite like to have another DC so this is a worry as although I would be returning to work, there will be a period of time where we would be on reduced income.

Will definately have a look at the money saving expert spreadsheet as it seems to be the lots of little things that seem to massively add up in my experience!

Oh for a mum who lived close by and would help out with childcare !

OP posts:

ConnorTraceptive · 31/01/2008 21:26

Looks a lot better than it is smaug I promise!

Forgot to mention that we also put money away in differerent accounts for various things each month

£250 p/m to cover dh's tax bill
£100 p/m birthdays and xmas
£80 p/m for annual bills eg car insurance/tax/mot

House needs a lot of work too so I guess that consumes most of the excess.

fingerwoman · 31/01/2008 21:27

ours was 158,000 and we pay £850 a month.

that said, our joint take home pay is around £3000, sometimes more, sometimes less depending on dp's commission and we don't seem to ever have much spare.

do you think we must be really bad with our money?

Oblomov · 31/01/2008 21:27

Our mortgage is 160k and we pay £1100.
Have we established that 950 on 200k is interest only ????

ConnorTraceptive · 31/01/2008 21:28

Original poster

belle74 · 31/01/2008 21:30

As people have said, having the interest only mortgage isn't great either, but our plan is to convert to replayment with option of overpayments when any DC's (present and maybe future!) are at school and hence the massive nursery bill is no more! if things go half way according to plan then this should be when we are about 40 so gives us a reasonable amount of time to achieve.

Oh its all just such a worry, but then I suppose maybe we are lucky to have these worries not some others.......

OP posts:

catsmother · 31/01/2008 22:08

Yes, AGBU, that's what I mean ...... you pay interest monthly but the actual loan never goes down. So if you borrow £200k at the start, you'll still owe £200k at the end.

As I said, lots of people have traditionally used endowments to pay their mortgage off, but most endowments are performing dreadfully and many people are facing shortfalls (and therefore having to make extra payments on the loan). Other people bank on a lump sum from their pension, or, if they rent out other property for example, plan to sell that in 20 years time to pay off the residential loan. One way or another it's got to be paid though.

There's articles in the paper quite frequently about people taking out interest only mortgages without having any real idea how they're going to pay them off ..... but understandably, they're desperate to buy somewhere, and take the attitude of worrying about it "later" ..... which is obviously a huge gamble.

PrincessPeahead · 31/01/2008 22:12

if you can do it with the equity I'd take out a slightly bigger mortgage and pay off whatever loan you are already paying £250pm on. The mortgage rate is bound to be cheaper and so the increased mortgage payment is likely to be quite a lot less than £250, saving you some cash on a monthly basis

looks doable

barlow · 04/02/2008 22:08

Adding the loan to the mortgage and reducing your monthly outgoings sounds a good idea (we've done it twice in the past) but I'm now realising that its not! Although a loan rate is more than a mortgage rate, you'll pay the debt off a lot quicker with a loan than a 20/25 year mortgage so will save loads (usually thousands) by getting rid of your debt quickly at a higher rate.

I hope that makes sense... if not, Martin Lewis, "money saving expert" can explain it a lot better than me!

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