To get a mortgage or not

[Marie324]

Hello
Looking for some impartial advice what on what to. We are currently renting and family of 5. Our outgoings are very high as we live in SE. Rent is £1900 pcm, food bill is £1000 per month and that's if we are strict, bills come to £1000 per month. We have one disabled child due to this claim £1500 in universal credit per month. My part time salary is 28k and my DH is 49k. We also get DLA of £550 and child benefit of £240 per month. This seems like a huge amount of money coming in but we honestly struggle every month and are in a lot of debt. We have a deposit for a mortgage which has kindly been gifted to us but means we will lose our universal credit allowance making us £1500 worse off a month. My post is basically to ask for advice on whether to take a massive financial risk in order to get a mortgage. The minimum we could get our repayments to is £1600 per month. My employer currently is unable to increase my hours. Any advice welcome. Thank you!

Seriously try chatGPT for meal planning - I asked for 7 lunches and evening meals for 4 adults for less than £120 and it suggested this:

Day 1
Lunch: Tuna & mixed bean salad wraps
Dinner: Cheesy tomato pasta bake (with added veg)

Day 2
Lunch: Jacket potatoes with baked beans & grated cheese
Dinner: Chicken, veg & rice stir-fry

Day 3
Lunch: Egg mayo sandwiches (with salad)
Dinner: Simple chicken & vegetable curry with rice

Day 4
Lunch: Pasta salad with leftover veg & dressing
Dinner: Spaghetti Bolognese (beef or lentil version)

Day 5
Lunch: Leftover curry wrapped in flatbread or warm tortillas
Dinner: Sausage & bean casserole with mash

Day 6
Lunch: Cheese, tomato & cucumber sandwiches
Dinner: Vegetable fried rice with scrambled egg

Day 7
Lunch: Omelette (cheese & veg) with bread
Dinner: Jacket potatoes topped with chilli (meat or bean) mix

And gave me a shopping list.

We do home made spag bol/ chilli/ curries/ roasts/ burgers/ pasta such as mac n cheese or carbonara/ mexican/ casseroles. I have to buy very specific and reasonably expensive snack food for my disabled DC as he has a very restricted diet and doesn't eat much so we have to make sure he's getting calories in one way or another. He's already quite underweight.

Does that total include the DLA? I’m confused to how you get £1500 a month in benefits if you’re earning 80k together?

First of all pay off the debt. That will affect a mortgage so just get rid of it.

Have you done any mortgage calcs? It could be about 4 times salary so let’s say £320k plus your deposit although you’d need money for fees, stamp duty etc
I would be so worried renting in the current climate. Lots of landlords selling up etc
Id go for the mortgage if possible. And remember that they get smaller as time goes on, so if your DH gets paid more over time it’s just those initial couple of years that can be tough.

Thanks for this

I would do it just for the security of having your own home. Is that income pre or post tax? If it’s post then your combined income is around £8,700 a month… in which case it seems insane to me as to why you wouldn’t get a mortgage and why you’d have been trying to apply for council housing.

So our combined income is 77k. No that is not including DLA. The amount we get in universal credit is huge and I don't necessarily agree with it. We get different elements and my child's disability makes up a large chunk of it in the disabled child element. I also have another child in nursery so that makes up another element as UC contribute 85% of childcare costs. However if we get a mortgage, losing the housing element will mean that our entitlement will likely by £0 once my youngest is not at nursery

Use a benefit calculator. When you don't have a housing element you get a higher overall earned income allowance. Also, if you get into trouble with repayments down the line there is a support for mortgage interest loan that is available to those on universal credit which is repayable only when you sell the house. It goes direct to the lender.

Ah ok that makes more sense then.

Yes it will go right down then but being able to have your own home and not at risk of being booted out will be worth it. I’d go and speak to a mortgage broker once you have the money.

Sorry I don't know where those figures come from. We will lose UC if we get a mortgage which lowers our monthly income to 5k per month. We are leasing a car on salary sacrifice which also lowers our monthly income.

That's helpful thank you i wasn't aware

Buy the house! It will give you long term security for your family. UC is a hot topic and this or another govt could easy reduce what you get. Long term your house value is much more likely to go up whilst your mortgage will go down even with some interest hikes long term it's the best value option. Short term pain long term gain. You also have a chance at leaving some inheritance for your dc

Thanks for doing to my post @Gerwurtztraminer . @Marie324 its easy for other people to say “forever home”, but a house purchase is a big responsibility and if you can’t look after it, its a depreciating asset. The flexibility of renting isn’t to be sniffed at either - if you needed to cut hours, a total lifestyle change and move areas that’s a lot easier to do when renting than waiting for a buyer and a chain to complete and all the costs like stamp duty associated with it.

I agree about buying a house and feeling settled somewhere, but as you’re trying to calculate this with losing UC and the only way you’re able to buy a house is through a gift from a relative, rather than earnings, I don’t think it’s as simple as forever house. If you need bailing out and you can’t earn more, where will the money come from.

If you do buy, buy something easily sellable so you can downsize if needed.

Wishing you all the best OP. I don’t think £250pw is extortionate for groceries, including household goods like cleaning products, detergents, kitchen roll. That’s our spend for 2 adults and 2 under 5yo but includes nappies. We eat well.

I think I’d wait until some of the DC have left home and then move to a cheaper area and buy there.

These are my concerns exactly. There's a lot to consider and I guess stability for the children is the priority. I think our options are either i work more hours somehow or we go for shared ownership potentially to allow us to get on the property ladder or we find somewhere cheaper that needs work and do it up slowly over the years. I think renting isn't the best option long term. Thanks for your input.

If you’re looking at shared ownership, research staircasing. It has the same costs as buying a house all over again like conveyancing. And if you staircase too much it is hard to sell the property and to find a buyer who earns enough to afford your portion and little enough to pass the shared ownership criteria. They can also increase your rent on the “shared portion” a lot. And again even if don’t staircase, can be hard to sell and find the right buyer that passes the other owner’s affordability criteria. I think shared ownership only makes sense for key workers in areas out of their budget.

Sorry don’t mean to be negative, but there’s nothing worse than feeling trapped in a house you can’t afford and unable to sell. Really hope you find the right home for you and are able to manage the budget.

I think I’d feel more comfortable buying a home if relative paid off your debt and if you managed to spend a year living within your income with headroom of the UC you would lose. If you fail that test then you know you shouldn’t buy. Would the relative help you by paying the debt off first?

Personally I think renting is dead money, and as you’re in the SE, property is still rising incrementally over the long term despite a sluggish market and higher than previous mortgage rates. It’s quite property dependent: some types of property have stalled or fallen while others have risen. Rents on the other hand have risen, by as much as 7% in the last year in some areas of London. It’s not true that a house is a depreciating asset if you don’t look after it - you only need to bear minimum of roof and general maintenance which you can do yourself.

Are your jobs transferable to a cheaper area?

400 a month. Is that a hire /lease car

if you do have £5k as one poster said

maybe write somewhat your outgoings are and often posters can help where fl save

but yes if mortgage is less than a third of nett pay that’s average /good

many have half as interest rates rose

So your take home monthly is around £7.5k and bills, rent and food is about £4k what is the rest being spent on?

I’d really work on your budgeting and clearing debt as a priority and then look at buying somewhere.

I would avoid shared ownership if you can. For the reasons posted above, I'd do everything you can to not buy a house with it.

Things like leaks, mould, subsidence, burst double glazing, windows frames, deteriorating bathrooms and kitchens, storm damage to fences which are £££ to replace would count as depreciation to me if you can’t rectify.

Wow, do you not have a Lidl or an Aldi near you, OP? I don’t scrimp and spend about £130 a week at Lidl for four adults. I would be easily be spending£200 if I did the equivalent shop in Sainsburys

Oh wow I wasn't really aware of all that. Really useful information thanks! Most of the debt will be paid off by the time we look to buy which will be in the summer time as some of money we are gifted will go towards this. I really want to not rely on the UC . 4 years ago I was full time and we didn't even receive it so there has been a time when we managed fine without it but our rent is now £500 more than it was 4 years ago.

🤣 I keep meaning to try and shop there to see if it actually saves us any money! Think I will test it out next week. Plenty of Aldi and Lidl near us

Yeah this is the scary thing. On paper it makes absolutely no sense! Back to the spreadsheet..

This! We have a similar income, now granted we own our cars outright and have no childcare. We save 2.5k per month. Have a mortgage of 2k. Also. It’s manageable @Marie324 you need to budget!!