Mortgage affordability

[VillaOfReducedCircumstances]

I have a salary of £53k and one DC, and I live in the North of England.

I have a mortgage decision in principle of £200k affordable / £295k max.

I’m trying to work out what would be an affordable monthly mortgage payment - does anyone have any comments?

It depends on your outgoings.

There’s lots of calculators available through banks to help with what the mortgage payments would be.
The affordability depends on your other outgoings.

I know 😄, I’m just looking at my budget now.

I think they’re fairly standard / low - I’m beyond needing childcare etc.

Surely this depends on your other outgoings. Roughly 1/3 of salary could be mortgage.

It feels complicated because I’ll probably buy a house, then get divorced, then pay a chunk of the mortgage off.

I realise there are downsides to this plan, but then life feels like a lot of downsides at the moment. And there would also be upsides.

Totally depends on your other outgoings but I would say that what the calculator says is “affordable” and what is ACTUALLY affordable for you are very different things.

I would really recommend sitting with your bank statements, pen, paper and a calculator and go back a few months, write down everything you currently spend right down to takeaways, days out, coffees etc and see what you would be left with.

A £200k lend at say 4.5% is just over £1000 a month mortgage payment for example, only you know if that is too much.

Yes, that’s definitely what I’m concerned about - the bank’s measure of affordability not matching up to mine.

Don't let it get to above 1/3 of your take home.

Consider a longer mortgage year fix so you've got some stability and don't have to.worry about a huge increase in 2 years time.

Thanks @Isekaied.

I feel like I’m tempted to go higher because I can pay off a chunk when I get divorced, and I can probably do overtime etc., but none of these things are guaranteed really.

If you're expecting a large lump sum pretty soon.
It may be worth doing a shorter fix length. So you can remortgage to a better term.

That’s why you need to judge it for yourself, not trust some computer to tell you it’s affordable.

List what all your outgoings will be including the new mortgage payment, then see how much would be left over. Only you will know if that’s enough to live on.

I’ve done a very detailed budget - from mortgage, food, utilities etc. to professional fees, TV subscriptions, and Christmas presents etc., and according to that (and assuming a monthly mortgage payment of £1,333, which is probably on the high side), I’d have around £500 left. I haven’t included holidays.

I could also reduce my pension payments a bit, although I’d probably rather not unless I have to.

Don't reduce your pension payments, have a longer mortgage term or a cheaper house.

What do you have in savings so you can cope if boiler goes etc?

I’d only consider decreasing my pension payments because I’ve been prioritising them for a few years.

I’ve personally never gone higher than the 3.5 times total gross salary, which would put you under £200k - that affordability looks on the high side to me

I'd choose to rent while awaiting the divorce to go through. Then you'll know exactly what your finances are and will be in an A1 position as a buyer. House prices are not increasing by more than (wage) inflation in most areas - although its very regional - so you are not at much risk of "being left behind".

You sound really clued up but I would double and triple check my pension forecasts to make sure that you are on target to retire when you want and with as much as you need.

Good luck.