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Original poster

Living with a mortgage

27 replies

PrettyCandles · 20/01/2005 21:14

We're very lucky and have a negligible mortgage. Dh has never had to live with a mortgage, and when mine was a substantial part of my income we were DINKYs. Now we're discussing how much mortgage we could afford in the future. I'm a FTM, he's the money-earner. We like not having a major debt on our shoulders, but that would really limit what we could afford to buy when we eventually move. So what's it like living with a 3xsalary mortgage when you've got a family to support, plus a larger home to maintain?

OP posts:
galaxy · 20/01/2005 21:15

It's hard but not as hard as living with one that's 4 times joint income as we do YOu need to ensure you've done all your sums before you commit to it.

KatieMac · 20/01/2005 21:21

Work out how much you want to pay...and for how long

Then you can work it back to an amount to borrow

LIZS · 20/01/2005 21:30

Allow in your calculations for interest rate hikes - atm around 4.75 is average but remember they have been as high as 15% in the past (not that they will hopefully ever approach that again).

Original poster
PrettyCandles · 20/01/2005 21:49

I suppose the question I'm asking is really a bit more personal than that. For example, do you find that you have to use an overdraft facility, or things get tight towards the end of the month? Can you save while paying off such a mortgage? What about things like building a conservatory or getting a new kitchen.

If I'm being a bit too prying I apologise, but nobody need answer if they don't want to .

OP posts:
Gobbledigook · 20/01/2005 21:55

Well, if you don't want things to get tight, use overdrafts etc then you only borrow what you think will allow you to avoid that iykwim.

It totally depends on what your mortgage outgoing per month is with respect to your income and other outgoings. When our purchase of new house goes through our mortgage will be around £1000 per month and we have endowments on top of that but we don't ever go into overdraft or really struggle for money. Only you can decide based on your income and how much disposable income you need/want each month, what is reasonable to borrow.

Gobbledigook · 20/01/2005 21:56

Oh and yes, we save - our mortgage 2 years ago was £142K and we've chipped it down to £115K now (it's a 'one account' type mortgage).

milge · 20/01/2005 21:59

I guess it is a question of priorities - if your mortgage is low now, you may be used to having more disposible income. If you carry on spending as before, with an increased mortgage, then yes, you will be forced to use unsecured credit. If you are a budgetting type, then you should be fine, as long as you are realistic in which "luxuries" you are going to want to keep, and which can go...

Earlybird · 20/01/2005 22:02

I think you also have to decide what "extras" you're willing to forego in order to accomodate a larger mortgage. For instance - holidays, eating out, theatre, optional childcare, a second car, etc. Personally, I prefer to have some spare cash for "fun" things, rather than living a tight budget because I'm house-poor. But, that is a personal choice. And I do have a smaller flat than I would like in order to have more disposable income.

marialuisa · 21/01/2005 09:14

We are facing up to this at the moment, our mortgage repayments are a tiny proportion of our take home pay and we're used to having a good amount of disposable income and a lot of "pocket money". We have put together a spreadsheet with our current outgoings, including monthly savings etc. and have decided that we do not want to borrow up to our limit, but are happy to increase the mortgage substantially.

In practice we are going to have to become better savers, esp as we have a trip to Australia planned for this time next year, but we will still have the cash if the washing machine dies or whatever.

Original poster
PrettyCandles · 21/01/2005 14:01

Dh is definitely the budgetting type, and I can keep to a budget if I have to. We're hardly big spenders, nor do we tend to paint the town very often (OMG, we're still in our 30s but we've turned middle-aged! ). I just can't imagine what it would be like having less disposable income - it's so much easier to budget when you don't have children's needs to consider.

Do children get any cheaper to run once they're in (state) school? Or are there hidden costs? I suppose their clothing and food gets more expensive as they grow.

OP posts:
marialuisa · 21/01/2005 14:43

well, i look like a tramp and DD is "beautifull yurned out" (as my gran puts it) so not the right person to ask about cost of kids' clothes!

DD wears uniform to school and has done for the past year. Although it seems like a massive out lay at first it does seem to last and she defo doesn't NEED the amount of ordinary clothes/shoes she has!

yoyo · 21/01/2005 14:53

My own experience is that they get more expensive as they get older. Clothes are definitely more expensive although having a uniform helps. My food bill is also fairly substantial and on top of that you have children's clubs/lessons, school outings, birthday parties, etc.

Sponge · 21/01/2005 15:28

Yes I think they probably get more expensive as they get older as their clothes cost more, they eat more and they have more expensive tastes - mobile phones, i-pods etc rather than toys for Xmas - plus more going out, activities....
We have a mortgage that we pay fairly easily and still have money to buy things, save for holidays holiday etc as well as some regular longer term savings. Ours is about twice joint though not 3 times (about 3 times mine I guess).
Agree with others that you need to work out what you can afford not what someone will lend you. Don't get into a situation where you're getting into overdraft or other forms of credit as they're very expensive. Also try and find a deal where you can fix your mortgage rate for a while then at least you're sure what your outgoings will be even if interest rates change. Hopefully by the time you come off the fixed rate dh will have had a couple of pay rises and anyway you can look around for a new deal each time.

vicdubya · 21/01/2005 21:09

It's quite useful to work out the percentage of your monthly income that your mortgage payment would be.

Before ds was born, with 2 adults in full time employment, our mortgage was 16% of our monthly income after tax.

We had a nice lifestyle and I could buy lots of shoes

Most households have a mortgage of around 20% of monthly income according to some statistic bod or other, most people could probably manage a bit more than that & still survive.

Borrowing 30% or more would be suicide IMO.

Vicky

hercules · 21/01/2005 21:13

Is that 20% from gross or net income?

KatieMac · 21/01/2005 21:33

Oh Sh*t our mortgage is more than 50% of our monthly (after tax)

tallulah · 22/01/2005 10:49

Ours is about 50% of our joint take-home pay

noddyholder · 22/01/2005 11:10

ours is a third of total monthly income and is manageable but I am fairly thrifty!

suzywong · 22/01/2005 11:14

so glad you've kept your name noddyholder

we have never had one, never owned a property that is not we are exceedingly weallthy with a private income

vicdubya · 22/01/2005 15:21

30%+ would be suicide for us because every day we would have massive rows about how dh goes out to slave for money, and I swan about at home with ds going to coffee mornings and sitting with my feet up - unless I am out spending it, of course.

Since dh has just been made redundant and we are about to move from cheap as chips Norfolk to highly expensive anywhere else, will probably have to borrow about 75% to afford anywhere decent, so might be looking for tips on how to save marriage VERY SOON...

Original poster
PrettyCandles · 22/01/2005 19:53

Interesting about the percentages. A 3x mortgage would work out about 40% of take-home pay. According to our current spending patterns we could manage that, but would have aboslutely no lee-way. I think the only way we could afford such a mortgage would be to buy a perfect place that didn't need any work doing on it. In wihc case might as well buy somewhere cheaper and do the work ourselves. Academic at the moment, anyway, but this thinking-out is groundwork that needs to be done.

OP posts:
Gobbledigook · 22/01/2005 20:16

The advice I've always been given by the older and wiser generation is that you should always borrow as much as you can possibly afford and then perhaps stretch a bit more. You might be skint for a while but otherwise how do you ever get anywhere?? It's always worked for me as it's meant I've always bought a property that I can only just about afford and struggled at the beginning but then I've made a tidy sum from each one, allowing me to climb that bit futher up the ladder each time. For our tender years I'd say we've got a pretty impressive property in a prime location but if we'd been cautious when we bought our last property 5 years ago, we certainly wouldn't be where we are now (just moved).

I guess it's a big risk to take because you don't know what's round the corner but I tend to be optimistic and think I'll always get by and I have. I think generally people get better off as time goes on so when you first get your mortgage on whatever salaries, those salaries usually get better and as the years roll by the amount you borrowed gets less and less significant. Particularly if you stretch and move on till you are in a house that you'd stay in a long time. When my parents bought a house (the one I've just bought from them!) 20-odd years ago they had sleepless nights about how they'd pay the £47K mortgage (mind you, interest rates did go up to 15% didn't they!). Well you can imagine how insignificant the payments are on that now, compared to the income of 2 full time people with no dependents (kids all grown up obviously!). They basically owe a negligible amount on it and have just sold to me for a whopping sum that they can stuff in the bank (they have a second property that they've now retired to).

Everyone's circumstances are different I know and some people just don't want to sacrifice clothes, hols etc for mortgages but for me personally, the 'stretch as much as you can' option has done me great favours.

With regard to the percentage - it depends what it's a % of. If you borrow 50% of your net income so your mortgage is £500 and it leaves you with £500 a month, you might struggle but if your mortgage is £2000 but you have £2000 left to spend each month, it's not quite the same is it?!

Gobbledigook · 22/01/2005 20:18

Rambled a bit there, sorry

I guess it also depends on how secure you feel your job is and what the chances are of promotion or of getting another similar paid job if you lost that one.

Original poster
PrettyCandles · 22/01/2005 20:25

That's pretty much what my dad says, Gobbledigook, and it's also how I bought my first property. But it's easy to do when you've no dependants, much scarier with a young family. I think I'd still be willing to take that step for the right property - dh is a much more cautious person.

OP posts:
galaxy · 22/01/2005 20:28

Our mortgage is 50% of our net salary. Huge council tax bill doesn't help and you need to think about that as well as that will increase based on rating of property.