Would you be comfortable with this mortgage?

[wellthissucks]

Our income is a total of £3681 take home.

Current mortgage is £500 (includes overpayment).

I’ve fallen in love (online) with a house that’s worth much much more than ours and the mortgage would go up to around £900.

So our total bills as best I can calculate with that mortgage payment would be £2186ish. I’ve included as many of the kids clubs etc I can think of right now plus our fuel cost. Only thing not included in that figure is food, general spending and holidays etc.

So that leaves just under £1500 per month for everything else. Is that doable?

We do also have some credit card debt which I have only included a £100 per month payment for because we’d hopefully pay that off first.

I’d hate to overstretch ourselves but would also be happy to give things like holidays, new car etc up for a nicer house!

It’s probably more than I would want to commit myself to (proportionally) but it’s obviously doable.

I’m just all to aware of how quickly £1500 a month can get swallowed up with random stuff plus Christmas, birthdays, holidays etc.

Sounds perfectly doable to me. Have you factored in any additional costs for the property ? Eg. Heating/electricity if a larger property, maintenance, refurbishment, maintenance?

That’s the thing Dragon! The money we should have left over every month just completely disappears and we never actually have it sitting there spare.

I did that as best I could Taddle. Added on £50 for gas and electric and found out the new council tax band. Adds on about £650 from current bills altogether.

I think that's a lot better off than some people are! I don't see that as a stretch personally
But it's all relative to what you're used to!

We are exactly the same. We earn a bit more than you and our mortgage is about the same. I very rarely have much left over before payday. There’s always something to pay for.

Don’t get me wrong, we live comfortably but not extravagantly so I have no idea where it all goes.

That’s the thing Dragon! The money we should have left over every month just completely disappears and we never actually have it sitting there spare.

I used to feel like this, so I became a bit of a savings mad woman. I keep enough in our current account to cover the bills each month plus a few hundred security blanket (it’s easy for me as we get paid on the same day, and both wages together cover all our outgoings including food and petrol) then any other money I have coming in that month like child benefit and maintenance I put it straight into the savings account. If we want a treat I have to transfer the cost back to the current account. It’s made me spend a lot less.

I’d be more than happy with those figures by the way, worth it to live where you want to live.

I think I’d be tempted if your jobs are secure, current house is inadequate and the new house is in a very good condition.

I think it depends how old you are, work prospects (ie any pay rises on the horizon, can you increase hours if things get tight etc).. Also, really be honest with yourselves about spending - how are you paying off your credit card? What led to that extra spending in the first place? I think I'd go for it if I was in your position but would really scrutinise spending first and make sure I had an emergency fund. I'm sure you have factored in all the moving costs, stamp duty etc as well?

You need to understand properly where that £1500 per month is going. Have you got savings for emergencies etc. If not then the first thing is to get over to www.moneysavingsexpert.com and complete a statement of affairs that will take into account everything spent throughout the year. Once you’ve done that you’ll have a clear idea as to whether you can comfortably afford the extra or need to cut back (stop wasting - all those coffees out add up 😃).

Try saving £500 a month for a few months and see how it feels?

We are in almost exactly this position. We earn around £3,550 (not including Child Benefit as I budget this seperately) and our current mortgage was £500 but has recently changed to SVR so currently £634. We are moving next month and our new monthly mortgage payment will be £968 fixed rate for 5 years. Our increased council tax, insurances and utilities mean we expect our monthly costs excluding mortgage to rise by another £215. So another £550 each month - it feels tight but affordable as we won't have any other debts. We also don't have any cars on finance, which I think helps.

Good luck!

I have similar income but £1100 mortgage as a single parent.

It's tightish but we do ok - I use money dashboard as a budgeting tool and it's really heed me see where money goes. I started with that in October and it's been great.

What I am very strict at doing is putting away an amount every month to cover annual expenditure - Insurance's, birthday and Xmas, annual car costs, amount for small diy type household jobs and vet costs. Plus an amount for clothes to try and spread out that cost. In all £500 a month goes away for those costs.

I realised I spent about £150 a month on kids clubs which was a shock! (Some offset as I use childcare vouchers).

I give myself £300 a month which is for 'Enjoyment' spending. Out of that comes any food bought and eaten outside the house, all going out, any non essential bits I want to buy for the house, school one off costs etc.

I budget £350 for food and I think there is some scope to cut that down as I come just about within in without making much conscious effort to budget shop! (Well other than cutting down on treat convenience type food)

Using a budgeting app though has really made me understand where my money is going as I too felt it just 'disappeared'

I don't really budget for holidays as I get an annual bonus on top of the monthly income and that would come out of that. It's never much though just a city break really. The rest of the bonus gets put away to do work on the house when that comes up and things like that.

If you currently have nothing left over with your lower outgoings I would be very hesitant. I think you’d find it a struggle.

Mortgages last a long time. What interest rate have you calculated at? When we started ours, rates were about 6.9% and I calculated repayments at 10%. Rates did go up but not to that extent so we were always safe. Then they went down and our repayments didn't so every reduction equaled an overpayment.

So you’d “only” have £18,000 a year left over?

Some people really have no idea

I would do it OP. I think that sounds fine

Try saving 500 a Month is v good idea, also you need to factor in costs of moving, a few £1000.

Your money is probably going on annual stuff. So look at bank statements and work out what a holiday, birthdays and Christmas cost you this year, car service, insurance etc. Then divide by 12 and factor that into each month.

It’s dosble but s mortgage provider will expect to see your workings out!

It sounds reasonable that you can afford the new house. Not knowing you ages or profession, if the assumption was to be made that your incomes will rise in the coming years, then its best to big early on the house and mortgage. Fewer steps on the property ladder save you money in the long run.
Perhaps you could use this opportunity as an incentive to go through your finances fully and see where overspend is happening, i.e switching insurers, phone contracts etc and also create a monthly budget. This way you get the house you want through stricter financial management rather continuing as you are spending on things you don’t know about and missing out on the money dream house.

New mortgage under 25% of take home pay is low

If its below 33% it is considered affordable

How you lose 1500 a month is beyond me though

I'm with overnightangel

Our money is definitely disappearing on annual things and we waste a lot. I’ve never really managed to get into the habit of putting X amount away for insurance, Christmas etc.

I think saving £500-600 for a good few months is something to consider just to see tight things would feel. Unfortunately our house needs a fair bit of work done before we put it on the market so it might just mean it takes longer to do that.

OH is probably at the top of his earning game tbh based on what he does but I’m in a trainee professional role and work part time hours for the sake of the kids so for me anyway I’m definitely at the lower end of the payscale atm and the only way that would go down was if I lost my job which is unlikely.

The house is much larger than our current house so I would be concerned about energy bills as well. It’s all very well and good living in a gorgeous big house but if you can’t afford to heat it life could be miserable. It’s a period property as well so there’s maintenance and repairs to think about - it looks very well maintained at the moment.

There not much on the market here at the moment, there is another property a good £60k cheaper which would be much more doable but it’s just not nearly as nice!!!

We're in a similar position although mortgage is a couple of hundred higher and we manage fine, although not been hear too long. We also over pay it.

Not been here too long that should say

We did similar. House has gained £100k equity while we’ve been here and our wages have increased quite a bit, so it turned out to be a good investment!

Well, with your career on the up, it should be alright.