Monthly repayments

[CountAdhemar]

Hello wise people of MN,

Can I please get a sense check of what borrowings are sensible for a new mortgage for first time buyer? Am I undercooking/overcooking the borrowings?

Circs: married, one (LOVELY) DD, 5m.
Take home: £6k combined, having taken account of part-time lower salary after mat leave ends.
Mortgage: £350k at 5% gives monthlies of £2k pcm on 25 year term.

33% feels about right for mortgage payments, and don't want to stretch further - am I being a coward?

Large deposit, so not worried about neg equity. Not extending the term of 25y either.

Salaries will increase in small increments, and no massive bonuses or big hikes expected.

Expensive area of SE, so the property we will be looking at will hopefully be well located, but certainly no palace.

Hit me with your opinions!

Regards

Count Adhemar

Where are you getting 5% on that mortgage amount with a large deposit? We are getting 4.82% on 90% LTV with First Direct, and they’re not the cheapest out there right now. Assuming you have more than a 10% deposit, I think you should be able to do better than that.

Any loans or significant other outgoings?

Unless you have TCC plans for the near future, the numbers look okay to me.

We have similar income and no mortgage or childcare and money doesn't seem to go that far!

We do have a car payment but household bills, food, insurances etc take up a massive chunk of our income. I am aware we could cut back on things but I don't know how people manage with massive mortgage payments.

Have you got costs for when you go back to work and have to pay childcare ?

Sounds like a sensible plan. Should leave you some money to do fun things as well.

Thanks Kiev. Yes, I haven't been to a broker yet, and suspect we can get 4.75 on a 5y fix, putting 40% down. Maybe even less. Dealing in ballpark figures at the moment.

No loans, or other debt, but we'll want another DC once DD is a bit older.

I have a spreadsheet with costs and stuff, and I think we'll be fine if not living like kings.

Yes, the money doesn't go as far nowadays! Yes, will have childcare costs, and put those in a spreadsheet...

I don't think spending 6k a month on who knows what is normal.

Our income and outgoings are similar to the OP's, also with no DC, and we put 27k into savings last year (albeit I was really pushing it on the 'must not buy anything whatsoever' to save for a mortgage deposit front).

Kiev you will have to teach me that! I only save £400 a month!

Kiev, on a slightly different note, I sometimes see you on the forums inputting that we might be in a house price drawdown. What are your thoughts on this?

CA

Spreadsheets

Shopping around for EVERYTHING

Planning stuff and policies that will run out far in advance so you don't get caught out on last minute scrambles

Denying yourselves any pleasure (although we never scrimp on food)

No holidays, clothes, gifts

We felt we HAD to do it to get out of our rental. But, in all seriousness, if you're saving 400 pm out of 6k with no mortgage, you need to head over to Money or Cost of Living because there's something seriously amiss with your finances :(

I'll try to keep this simple: my OH is of the opinion that prices are falling fastest in places where people do not HAVE to live.

We're moving to a busy town and prices aren't falling, there's a lot of jobs there are people have to live there.

The place we WANTED to move to, a sleepy little village three miles outside a quaint N Yorkshire town - well, I've seen 16 houses within a 1/2 mile radius go on the market there in the last 14 months and as far as I'm aware, only 1 of them has sold. Loads have come off the market and/or lowered their prices. I think their house prices will tank over the next 12 months or so.

Their prices went through the roof during covid because it's very pretty, but - it has no bus service/pub/shop - it's just a few hundred pretty houses with nothing else to offer. People don't 'have' to live there. And in normal times it's actually not all that convenient.

Similarly, in the town we're moving to, there's a 5 to 15 year old estate that's not accessible as where we're moving to, and there are dozens for sale, most of whom are having to drop their prices - none of these places are within walking distance of businesses or many shops, so they have little to offer other than housing.

We just buy what we want and don’t really think about it. So yes a financial overhaul is probably worth it.
We do spend lots of things like trips, kids hobbies, days out. I want the kids to enjoy their childhood.
Currently buying a BTL so that will take up a lot of money I’m sure but will be a good investment.
We also plan to build another two houses, one to let and one to live in and rent this. So I’m not totally clueless I promise!

Get thee to a broker as first port of call, and don't forget to factor in insurances, especially important if you have DC. Sounds perfectly ok to me though based on what you've said here.