Household income (after tax) vs mortgage

[PropertyLookout]

I’m 28, DH is 34….2 kids 3y/o and 5 month old

Current situation: H/hold income £4,900 vs £580 mortgage (16 yrs left)

Looking to upsize: £4,900 income vs £1,350 (30 years)

We would be upsizing from a small 3 bed semi to a 4 bed detached in a nicer area with better school prospects and great links to 2 big cities (thinking job opportunities for when DC are older). The financial jump seems daunting!!! We want to see what everyone else is doing.

Is this a normal income to mortgage ratio? Whats yours? (If you’re happy to share) I’m looking to be talked into it….or out of it :)

Ours is about 25% of what we bring in. 1 primary school aged child so no extortionate childcare costs.

We are doing the same percentage wise household income 7900 current mortgage is 1300 new mortgage will be 2500 .
Same as you moving to 4 bed better area etc !

Childcare for 2 kids will be £650 as they’ll both qualify for 30 hours each when I’m back at work in October.

We don’t smoke, only drink socially, don’t have expensive hobbies or pay for any beauty treatments. We take £250 a month each for ‘fun’. This usually goes on takeaways, a meal out, day trips or activities for the kids.
3 holidays a year, one week abroad for £2k, one week caravan getaway £200 and one log cabin getaway £600. usually paid monthly for months and months before. Really frugal with the food shop we budget £400 a month for this and shop around for good deals.

We should have around £700 a month disposable for savings/clothes/car related costs/miscellaneous things/holidays/birthdays/xmas. Then in a few years we’ll have no childcare costs. Hopefully some pay rises too.

The biggest risk is that if one of us loses our job, we will have to downsize as it’s unaffordable on one salary.

This our current risk too . With our house now we can afford it if one of us loses their job but with the new house not so much . Is quite nerve wracking but we are doing it for better schools so hopefully is worth it in the end

You might have no childcare costs in a few years but once your eldest starts school you'll be tied to school holidays when I doubt you'll get a week abroad for £2k! Also, do not under-estimate the cost of wrap around care, clubs and activities, and how much more growing children will eat compared to babies and toddlers. I reckon you could easily balance out the £650 a month saving on childcare on those things.

Hard to judge tbh on monthly payments without knowing the property price LTV and total amount borrowed . I’d be happier on a 25 year term but ideally would keep to the 16 year term you have atm

We have £120k equity on our current property, but minus stamp duty, estate agent fees, solicitor fees for buying and selling and moving fees, it’s £100k.

The property we want to buy is £375k so it’d be £275k mortgage. £1350 over 30 years

Mortgage just over 1k
Household income about 2.8k

Don't mind the mortgage previous landlord was trying to sell so would of had to leave anyway and all other rentals in the area are way more than my mortgage now

the £4,900 figure was based on DH full time and me doing 32 hours. So when they start school I’m hoping to do wrap around care myself until they’re in secondary at least. But yes I want them to pursue their hobbies/clubs so that will get expensive!

It’s so daunting isn’t it?! We could buy for 50k cheaper in our current area but it’s an old mining village thats just getting worse, halfway houses opening all over, druggies openly getting high in the town centre, young kids in big groups congregate in the parks intimidating and harassing locals, we’ve lived here for 7 years and whilst it was fine for us on our own, it doesn’t feel ‘safe’ for the girls.

Our take home is about £7,000 and our mortgage is £1,100. We looked at moving and it would have almost doubled our mortgage so we are staying put. I’d be too nervous and love my holidays 🙈

Don't under-estimate how hard it might be to find a 32 hours a week job that fits with school hours if you were to move jobs! You'll also school holidays to provide child care for unless one of you teaches (and I'm guessing you don't if you can get that pattern of working hours).
Do you really need to go from a small 3 bed to a detached 4 bed? Could you move area but have a smaller property? Realistically you only need 4 beds if you are planning another baby (and even then you could manage with 3), need a home office or potentially if you live away from family/friends who regularly come to stay.

Great thanks for this so I guess your rate is around 4.24% for interest - a quick play around on MSE mortgage calculator gives £1488 for 25 years and £1975 over 16 years .
your current overall cost of borrowing plus capital over 30 years is £486,250.
going down to 25 years reduces this by £40k, to £446300. I suspect keeping to the 16 years is too expensive but your total costs reduce down to £379120 which saves you £90k

maybe keep the existing loan at 16 years and do the new loan over 25 or 30?

😂 literally no one under the age of 30 would buy a house these days. You get the 30 year mortgage and ideally over pay. Your comment shows you’re out of touch. Often mortgage is cheaper than rent these days so it’s a sensible investment.

The question is, do you have the extra money spare each month going into savings that would cover the increased mortgage payments?

Back in 2007 we were earning £3000 and mortgage was £900 due to the 5.4% interest rates of the time. We lived frugally but were happy.

We’re similar but have 3 teens. We could afford more but don’t want the stress if one of us gets seriously ill or loses our job. It’ll still be stressful but far less than if we’d maxed out. That said, we did max out when buying this. Dh was on about £32k a me part time in £17k. We took a risk with £3k left in the bank. Now the house is worth £120k more than 7 years ago and we earn far more as dc are older.

Seems perfectly doable to me.

About 16% of joint income a month.

We've fixed for another 8 or so years to get certainty and we have 2 kids under 4 in childcare (1 gets the 30 hours funded hours, we're in Scotland).

We're late 30s though OP, I wouldn't be comfortable taking on a 30 year mortgage now but at your age I'd say go for it.

Mine is similar to yours OP, but we are at a different time of life, just one child left in senior school and both perhaps going to leave home in the next few years and hopefully retirement not long after that! I wouldn’t like to be paying more, but we could afford it ok

We have the same income as you and a mortgage of £1450 and it's absolutely fine. Our mortgage term is 26 years, we're both 35 and have two children, aged 7 and 5. We have enough to live comfortably on and we save every month. I'd obviously love to have a smaller mortgage but we wanted to live in the area we love, in a house that's big enough - for us it is worth it. I'm hopeful that my husband's earning will keep increasing, not at all reliant on mine as I love my job and have no plans to move regardless of any potential pay increases!

We're just about to move from £350 mortgage to £1186 on a similar income.
We're both 29. DH is the bigger earner and will likely increase.
We have no childcare costs as one in primary and the other gets free nursery hours.
We put it off for a long time because we bought our house (FTB) at a great price and felt very lucky to have such a cheap mortgage.

But we have out grown it and have different needs for our home ow so it felt like the right time.
We spend a lot of time at home so for us it's worth it. We don't have high car payments or any debt etc so still able to save a decent amount every month.
God luck op!

£7000 vs £1700 on a very long term currently...planning on overpaying in our 40s/50s, we had our kids young and not prioritising the mortgage right now, plenty of time for that (yes I realise we'll pay a lot more in interest).

We're currently in a similar situation, albeit DP is mid 40s so unlikely to be able to borrow over 30 years.

Current mortgage on our three bed terraced is about £470 plus £200 to pay off a further advance we took out to have some work done. Further advance has around 2.5 years left, mortgage 13.5 years.

We've been looking at new builds houses in a nicer area, less busy, nicer for DS as he's at an age where he should be able to play outside, but it is quite a cost increase. To get similar space to our Victorian terrace we'd be looking at a four bed and the mortgage would go up to around £1500 a month from what we've seen so far.

It looks, sounds and feels like a lot, but when DS was small his childminder fees were around £700 a month, we used to joke we could get a second mortgage. We've also both had wage increases since then, so really I think we would still have more disposable than we did then.

Really we'd need to borrow around £280k and I'm thinking we won't ever pay it off, more likely we'd take the equity and downsize once DS grows up.

You are both young, and you seem to budget well. I would say go for it!
but as others said, your holiday costs are low now but will double in term time. Plus atm you are paying nothing for the youngest.

re clubs, I doubt you will spend £650 a month unless you pay for horse riding and golf. I am paying for 6 activities per month (2 kids: 2xswimming, plus other clubs), plus one instrument lessons and it’s around £250 per months max. I also pay for some after school clubs and holiday clubs though so you might have to calculate extra childcare costs.

Very similar to us. We’d need a £275k loan, which is more than double the first loan we took out when we first bought 7 years ago, so it seems monstrous. But we really do spend a lot of time at home. The pros are definitely outweighing the cons at the moment and so I’ve gone ahead and booked some viewings.

We have our first viewing booked at 5pm tomorrow and we’ve provisionally booked a second viewing for Friday at 2pm to see it better in the daylight.

The house has been on the market for 10 months nearly now, originally put on for £425k, it’s had 4 reductions in that time and it’s now up for sale £375k as of 3 weeks ago. It’s had 55 viewings and 4 offers in total that have all been rejected. They can’t tell us what the offers were either. If we love it we’ll offer £365k, if it’s rejected we will offer full asking price. As long as all goes well at the viewings. Really hope we love it!

Good luck op!! Let us know how the viewing goes 🥰