Mortgage amounts

[plaintomatopasta]

Hi, we have sold our house and buying A new one this summer. We are currently looking at mortgages and have so far got it down to £740-760 a month. This seems excessive to me as my last house was £296 a month!

The loan amount will be £172495 over 30yrs. The value of the house is £230000 and we are paying the difference as a deposit.

Is this a lot monthly?

296 a month? Was that in 1989?!

Yes that figure looks about right to me.

You haven't been paying interest only have you?

Ours is £170,000 (ish) on a house value of 190,000 over 25 years and we are paying about £650 a month. Fixed for two years.

We took it out two months ago and went through a mortgage broker.

The payments on a repayment mortgage depend on the amount borrowed, the term you are borrowing over and the interest rate. That is is.

There isn't anything that can 'look high' about them. They are a function of the inputs.

You can borrow less, try and achieve a lower interest rate or increase the term to reduce your monthly payments (although note that increasing the term will increase the total amount paid as you are paying interest for longer).

so you would be better off asking "what interest rate at the moment is reasonable on a 75% LTV mortgage?"

What's the interest rate?

I just got 1.89 with Skipton on a similar loan to value ratio

Mortgage 162000
House price 214000
30 years
Mthly payments £590ish

We borrowed £335k over 25years and it's £1350/month.

We got our mortgage in 2002 and pay £634 per month. You must have had a small mortgage to only pay £296 per month.

That doesn't sound like a lot, everyone I know has a mortgage at least double that, though we are in the south. Yours sounds reasonable.

What's the average rent in your area? Anything less then that is good. Although of course it's better to pay it off quicker!

To rent in my area is 600 for a one bed. 1k plus for a house. Our mortgage is £800

You can do a basic calculation and see it doesn't look that wrong. Even if you weren't paying ANY interest, your payments would be 172,495 / 30 / 12 = £480 per month!!

If you were only paying 296 before, clearly the amount you were borrowing must have been way less!

@Squishedstrawberry4 average rent is £450/500 a month. A house on the same development as the new one is rented for £495 a month because a friend lives there.

My mortgage was taken out in 2008 and was a repayment mortgage over 30yrs. Originally it was fixed at 3.75% for three years and then I changed to a fixed term of 2.95%. I'll admit the house wasn't as big as the one we are trying to buy but I didn't think it would have been that high!

I've done more research and the issue is we HAVE to go through a broker instead of arranging it ourselves so he has chosen for us. We have found cheaper online but they are direct ones and don't go through a third party.

Thank you for your help everyone.

@Smidge001 as I said above we've realised it's because we are going through a broker. We will have to bite the bullet. I'm just worried as it's 75% of my monthly income and it'll make things tight.

Thank you for your input xx

@Firewall I asked on fb too and people were surprised how high it was as locally that's a lot to pay and would be cheaper to rent. 😆

@TheBakeryQueen 3.25% fixed for 5yrs

@wowfudge no it was a repayment. It was my first house so my parents advised a repayment because interest only would have been pointless.

A broker is usually cheaper than going direct as they have whole of market knowledge.

How on earth did you pass the affordability criteria for that size of mortgage if the repayments are going to be 3/4 of your monthly income?

If you rent, that money is gone, as soon as you pay it over, with nothing more to show for it than a roof over your head, that month, so renting isn't really comparable to buying.

The mortgage itself woukd have been much smaller though which is why the payment would have been smaller

@PickAChew because the mortgage process was started when there was two incomes for it but there will be some months when we might not have the full amount of my partners income so I have to be able to afford it myself.

If it's normal that's fine.

We had a great deal on my last mortgage and we overpaid big time and had got down to 6 years remaining and payments were 225 a month. We just moved and borrowed 92k this time and are paying 440 over 20 years, we hope to overpay again and reduce the term. Be very careful here about affordability, it sounds like it is going to be very tight for you. Our mortgage payments are about an eighth of our income, three quarters sounds foolish tbh.

It's not that reassuring. If you have months with only £1000 coming in, then that will be (more than) taken up by council tax, water rates and utilities plus insurance How will you buy food, those months? What would you do if the washer broke? if the boiler conked out? If a pipe burst? If the kids (I assume you have them hence your need to move) had a massive growth spurt and needed new everything?

@PickAChew my take home is reduced because I pay the council tax before tax because I work for the same council I live in. The insurance we have been quoted at £112 a year for buildings and contents combined and that's with accidental damage cover to both and only a small excess.
As to if anything breaks it's all brand new so in terms of if a wall falls down etc the builder will fix it and if the boiler breaks it's under 10yr warrantee with free servicing for that time. I've yet to buy my son any clothes except for the hat with his name on it for when he was born 😆
The reason it might have to fall to me is because sometimes my dh will have to pay for holidays and weekends away when he goes with his friends and that will cut into his wages.

Anyway thank you all for the input. I'm glad it's normal and we will be fine