First time buyers...is this too much to be spending on mortgage payment per month?

[HCatley]

My husband and I are in the process of trying to buy a first home. (Both late 20s). We decided to skip the starter home due to the stamp duty and cost of moving these days and have decided to buy what will be our family home.

Husband is a dentist (nhs and private work and is self employed) and earns 90-100K and I am a vet (salaried) earning 51K. His income can go up and down a bit each month but our average take home after taxes paid would be £7.5K.

We set out top end budget of 425K which would be a mortgage payment per month (with interest rates as they are now) just under 2.1K. We based on the rent we pay now plus the amount we have comfortably been saving into an account to save for the house deposit. I already save a good chunk into a works pension before take home and also save 10% after take home into a stocks and share ISA.

Had a wobble this morning realising how much this is all going to cost and made me really anxious? Is this too much to be spending each month?

No kids as of yet but hoping to have one in a few years time and will need to factor nursery fees in on top.

I think you need to do a spreadsheet planning your projected costs over the next 5-7 years, to really get any sense of what will be affordable for you when you factor in kids / changes to work patterns / interest rates etc. And you should have some columns that show what your mortgage payment would be at a variety of different interest rates. Nursery fees can be huge - my kids are older now, but certainly when they were young, nursery fees were typically the equivalent of an additional mortgage payment. So it would be worth finding out what fees would be like, and considering whether you would continue full time, or part-time, and try and factor these variables in.

School as well - if this is your family home, the last thing you want to do is be put into the position of having to move when your child is three because you are no longer in any catchments for schools (that happened to a friend of mine years ago); we all didnt really think about the issue of primary schools when the babies were only 1-1.5! But applying for schools comes round really quickly, and you want to avoid upheaval again.

So make sure that the family house you will be buying is in a very safe location for applying to the primary schools you would prefer (even with possible changes to catchments).

So - I know this all sounds really complicated, but I think there is no point just seeing if the payment is sustainable now, as you have to explore all the different scenarios that might happen over the next 5 years or so. And it is far too important not to consider these things, unfortunately..

We are similar and this is our budget…we have no childcare though and I think we would struggle if we did tbh
Me 3100
DP 4100
Child benefit B 280
Total 7480

Housing
Mortgage: 1900.
Insurances(life, house): 150
Total Housing: 2050
Utilities
Electricity 150
Waste collection: 30
Broadband & TV: 70
Mobile phones x3: 60
Total Utilities: 310
Food & Groceries
Groceries & household food: 500
Dining out / takeaways: 200
Total Food: 700
Transportation
Fuel: 250
Car insurance & tax: 150
Maintenance & NCT: 100
Public transport / Parking: 20
Total Transport: 520
Education & Kids
School books, uniforms, fees: 50
Activities, sports, clubs: 50
Pocket money/treats: 60
Total Kids & Education: 160
Entertainment & Lifestyle
Family outings, hobbies, gifts: 200
Subscriptions, books, etc.: 60
Miscellaneous expenses (haircuts,nails): 60
Personal spends:200 x 2 = 400
Total Entertainment: 730
Savings & Miscellaneous
Emergency fund / Savings: 2,000
Holidays (monthly allocation): 500
Clothing: 200
Miscellaneous buffer: 300
Total Savings & Misc.: 3,000
TOTAL MONTHLY SPENDING: 7,480

Do it! Buy as big as you possibly can as soon as you possibly can.

First mortgages always seem massive. Do a budget including monthly savings and work out what you can comfortably afford. Overpay if you can before children.

How much are your your salaries like to increase by in the future?

This sounds fine.

Both in professional roles so salaries likely to go up too.

It’s still nearly £5.5k a month after the mortgage has been paid.

Mine definitely has some scope to improve (buying into the practice I work for) and his can do too (but then again needs investment in the courses etc to make that happen).

Thanks I'll get cracking on a spreadsheet now. The one house we were considering has a primary school in the village (is a very small village) and then is in catchment in the nearby towns, one of which has good secondary/ grammar schools etc.

It’s all very personal and subjective though … you actually spend MORE than double my household income! If you ever need to save money, you have LOADS of scope to be able to do so 😁😁

Sounds absolutely fine. Our mortgage was £1500 per month - DH earned £100k per annum, whilst I was on £36k. Even with teenage DD (and her very expensive hobby) we were still very comfortable.

I’m now divorced, paying £1.4k per month on my mortgage with a salary of £48k per annum. It is perfectly doable. You will be fine.

I'm a single parent with take home of £3.2k and my mortgage is £1470 per month and I have a teens and very little help from their dad. Sounds perfectly doable to me.

You’ll be fine.
But do consider pushing out the term to 40years, and then overpaying to the tune of £2,100 total monthly mortgage amount. This provides some protection if the rates rise in the future, or your job circumstances change. And if not, you’ll clear the mortgage over the same period as initially planned. This is what we’ve done and it’s worked well so far.

We save 2k per month. I work on a 0 based budget so every penny has a job. I still consider it gone even though it’s moved into another account.

Why?

This is definitely not as big as we can our mortgage advisor said in theory we could borrow much than this (!). This was us trying to keep levelled and it's still stressing me out a bit

Because the best time to buy a house was 10yrs ago, and the second best time is today.
There’s a supply shortage in this country, prices are only going one way.

Because buying as big as you can means you won't have to buy a bigger house further down the line and buying as soon as you can means your mortgage will be paid off earlier and you won't be wasting money on rent.

Between you, you’re earning a lot! I thought your mortgage would be much higher than you’re going for. No idea which part of the country you’re in so can’t guess what size the house is. But if the plan is never to move, you need at least a 4-bed house and/or a house that can be easily extended. If you have that, then I’d say you’re absolutely fine for longevity and you’ve got plenty of money to buy the house and extend it later.

We're in Leicestershire :)

DS and his partner have recently purchased a property as FTBs. They opted for a 3 bed house rather than a flat or two bed so they wouldn't have to move for some time. Their mortgage is similar to yours but their income, though pretty good, is less than yours. They seem like they are managing fine and still enjoy a good social life.

You have a bargain

Do they have children? I think it's just when we factor in a small human and their childcare and if the mortgage rates jump up, there's definitely the potential for it to start feeling a bit uncomfortable. Just want to have the freedom to enjoy life at the same time too

Maybe you should plan to ‘overpay’ your mortgage substantially before you have kids, then take the equivalent of a payment holiday while you are in the worst of the nursery-fees-or-childcare-type situation…?

If your mortgage lender won’t let you do this officially, then you could always earmark a separate high-interest savings account to pay your ‘overpayment’ into each month, and when you do have childcare to pay, you then pay your mortgage (or your childcare) out of these earmarked savings.

We have always found that it is easy to slip into habits of spending a certain amount of money, but you could set a monthly target of an additional amount to save as your future mortgage pot, and just send as much as you can over to it each month. We did this while trying to overpay our mortgage, and it is really satisfying seeing it being chipped away!

Will type salaries change, we stretched ourselves early, but now have a nice house and I think you’d struggle to get a room for what our mortgage is now. But you earn a lot already, can it go much higher. What about babies/maternity/childcare, but essentially I think fine.

I think it’s fine

just make sure you are saving the equivalent of nursery fees every month, plus a bit extra if you can to account for a mortgage rates increase. That way you know you have enough flexibility to afford these and can use the savings if needed.

you may have to compromise on being part time (if you wanted to) after mat leave, or drastically reducing your outgoings, but this is something all couples have to consider anyway

Oh I get that .. I just meant if you’re ever strapped for cash and need to cut back, even without your current 2 grand savings per month, there’s loads you could cut back on. I was trying to be funny 😁
The subjective part is you say you’d struggle, yet you have more than double coming in than I do, your spends are a LOT higher, I don’t consider myself to struggle, hence why it’s all subjective.

I never really understand why posters come in asking about situations like this, as no one lives in their world of finances, so no one can ever really advise. It’s always very divided anyway so I feel they don’t gain much from the thread 😆