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Original poster

Help - our mortgage offer has come in, and we can't afford it. Please help me budget!

19 replies

lunavix · 18/12/2006 13:53

Title says it all really - we were so excited about finally exchanging and we were reading the small print on the offer and the payments are going up horrendously over the next few years. Can someone please help me budget??? I feel sick...

OP posts:
Quootiepie · 18/12/2006 13:54

OK - is it fixed for 2 years at an affordable rate?

Quootiepie · 18/12/2006 13:56

ours is something like 5 %, but after than it goes to 7.25 because its a self certified mortgage, but we can transfer then to a lower mortgage with no lock in.

Original poster
lunavix · 18/12/2006 13:57

For the first month the payment is huge (twice current rent). The next 8 months are manageable (an extra 50 a month) . The next 12 will be a struggle (another 60 on that), the next 12 will be very hard, (another 70 0n that) and the rest are sky high... (another 120 on top of the last!)

Once it gets to the sky high one, it's variable, the rest are fixed.

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Original poster
lunavix · 18/12/2006 13:57

quootie - ours may be similar. Its 5 for the first 8, then 5.5 then 5.99 then 7....

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Quootiepie · 18/12/2006 13:58

thats quite alot of steps... How long are you locked into mortgage with repayment penalties?

Original poster
lunavix · 18/12/2006 13:59

PIL have offered to help us get a repayment mortgage (this is interest only which makes it even worse in my eyes) but it involves them putting a large sum upfront, plus the repayments will be fixed, but at around 180 on top of what we're paying now. So ideally its better, but I don't think we can afford the 180.

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Original poster
lunavix · 18/12/2006 14:00

Don't know will ask dh he has the paperwork. I believe but I may be wrong, we're locked in until it turns variable, but not sure of repayment penalties, as it is an interest only mortgage.

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FredBassett · 18/12/2006 14:02

Lunavix - how will you cope if interest rates go up? If it is really tight with no room for increasing income/decreasing outgoings then I'd rethink buying now - have you actually exchanged contracts though?
Write down all of your income then all of your outgoings - if you put it on here maybe MNers can help save you pennies

Original poster
lunavix · 18/12/2006 14:07

That's what I'm worried about

The trouble is, houses around here are just so expensive. We know we're blowing our earnings paying rent, (we're privately renting) but it'll be years before dh earns enough for us to get a decent mortgage, even though he's a graduate...

This truly sucks. Will rework our budget and will have to see....

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FredBassett · 18/12/2006 14:21

If it's an interest only mortgage then you are effectively renting without the benefits of not paying for repairs and buildings insurance. Renting is not dead money in your situation, it is neccessity (unfortunately). Is it possible to move to a cheaper area? If house prices drop in the future you are also at risk of negative equity - I am worried for you!!

taylormama · 18/12/2006 14:27

if you need advice on budgeting then you need to go to:
uswitch.com to see if you are getting the best deals on your utilities
get an all inclusive broadband and telephone line package to save money on phonecalls
cancel anything unecessary such as Sky TV etc
Buy in bulk - everything from nappies to pasta. The cheapest nappies are in LIDL and they are the best ... if you post your budget on here i can have another look ... also moneysavingexpert.com

DingDongDraculaOnHigh · 18/12/2006 14:28

Can you not go for a long term fix that you can afford

The first month is just additional accrued interest btw

Quootiepie · 18/12/2006 14:29

Can you for a longer term? Just until you are on your feet, than you can re-shuffle?

DingDongDraculaOnHigh · 18/12/2006 14:29

fwiw if you are at the top of your budget on an interest only mortgage then you are asking for trouble. You have nowhere to go if rates go up significantly. At least if you are on a repayment mortgage you can switch to interest only if things get tough.

I wouldn't do it if I were you

FredBassett · 18/12/2006 14:29

Have a really good read through some of These threads, not all will be relevent but it might help to read other peoples stories and maybe post your concerns. There is another concentrating more on the mortgage aspect Here .

DingDongDraculaOnHigh · 18/12/2006 14:32

lunavix

what is the mortgage you have applied for and why?

DingDongDraculaOnHigh · 18/12/2006 14:34

eg Portman have a 5 year fix for 5.15% with no tie in after that

Original poster
lunavix · 18/12/2006 18:59

Hi everyone and thanks for responding.

This mortgage was originally the only one we could go for as (shhh) we'd fibbed a tiny bit about our earnings, and were told the repayments would be the same as we're paying rent. Fair enough, if they were.

However it's all gone a bit wonky, PILs have gone guarantor (not for any good reason mind, the mortgage advisor cocked up the application) so now they have our true income on record.

PILs have got back to us with something else, where they go guarantor, it's a repayment mortgage, but the repayments are between the 2nd and 3rd 'steps' on the interest only mortgage. However, obviously we'd prefer a repayment mortgage.

We're going to sit down and work out a budget, and see if I do more hours etc hours what we can manage with some room left for interest rate rises. I'll be getting back to this thread!

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Stockingsofdinosaurs · 18/12/2006 19:49

If PILs are happy to give you some money or offer a low-interest loan type thing, could you stick it in a couple of ISAs? A minimum £1000 one to earn some good interest for the leaner years and a quick access one for emergencies?
And does your mortgage advisor definitely have the whole market to work with? Some are tied to certain companies and brokers add vital time to the whole process.

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