New house purchase, am I being an idiot??

[Sarnie]

Sheetmaself said:

Do you mean to get the mortgage?

I have qualified for £255,000 if no overtime allowed for and £278,200 if it is allowed for.

Both of these figures allow me to purchase the property and I have about £8,000 in the bank at the moment.

If you mean to live from this is my concern.

She id used to living very simply, I am coming round to it but am with people on here, £6000 savings a year (minus a holiday should we want one, plus the potential of £4500 overtime) doesn’t sound a huge amount to me. But like I have said before I get that I have been very privileged before and that this is the first time I have had to think about money.

How have you "qualified" for £255k?

Which lender is it?

[Sheetmaself]

Unsure of the lender to be honest but I have had 2 brokers qualify me as looking at 2 different houses.

First one was meridan mortgages (suggested by Bellway homes) which was about two weeks ago who said £272,800 max

Second one was today called Evolve (suggested by Harron Homes) who said £255,000 or £272,000 if could prove 3 months of overtime above £300.

I qualified by giving my address, work address, outgoing and pay. Apologies if you mean something else.

[Diplomatico]

What’s in your outgoings including food and petrol? Meals out each week? Clothes/toys for the kids? Or just the essentials?

[Sheetmaself]

Diplomatico said:

What’s in your outgoings including food and petrol? Meals out each week? Clothes/toys for the kids? Or just the essentials?

Outgoings are

Mortgage
Mobile
Apple music
Sky
House ins
Car
C tax
Utilities
Car insurance
Car ins elle
Car tax
Tv license
Bike
Food
Petrol
Lenses
sofa

Meals out will come out of the £300 we will be giving ourselves per month as will clothing etc.

[Sten.]

Sheetmaself said:

Diplomatico said:

What’s in your outgoings including food and petrol? Meals out each week? Clothes/toys for the kids? Or just the essentials?

Outgoings are

Mortgage
Mobile
Apple music
Sky
House ins
Car
C tax
Utilities
Car insurance
Car ins elle
Car tax
Tv license
Bike
Food
Petrol
Lenses
sofa

Meals out will come out of the £300 we will be giving ourselves per month as will clothing etc.

Any childcare costs or maintenance payments to the ex?

[Diplomatico]

I guess the risk is something happens before you have sufficiently built your reserves back up.

But then if you are in the house you want what are you saving for? You don’t need to save for the next house.

[Sheetmaself]

No both children are my new partners me and the ex have non.

Current partner gets no maintenance but does get child benefits of just over £1500 which will go towards clothing and shoes for the kids.

[Sheetmaself]

Diplomatico said:

I guess the risk is something happens before you have sufficiently built your reserves back up.

But then if you are in the house you want what are you saving for? You don’t need to save for the next house.

What we would be saving for is the what ifs, and to replace the cars as and when required as don’t want car finance and currently own both outright.

My plan is save all the money we have extra so £7200 per year and use the overtime for holidays, so no overtime no holidays but holidays are 3 weeks of a year vs the other 49 weeks in a lovely home.

[The Moose]

To make sure I have this clear, without overtime you guys earn a little over £3,500 after tax?

Your proposed mortgage payment is £917?

I'd say that was a little high. Can you pick up some other income to help (over and above the overtime)? Or can she earn some more?

Edited by The Moose on Tuesday 4th August 23:22

[Sheetmaself]

The Moose said:

To make sure I have this clear, without overtime you guys earn a little over £3,500 after tax?

Your proposed mortgage payment is £917?

I'd say that was a little high. Can you pick up some other income to help (over and above the overtime)? Or can she earn some more?

Edited by The Moose on Tuesday 4th August 23:22

The above is correct, household income of £3500 plus overtime, after all outgoings including food and petrol we will have £2155 left. Minus the mortgage of £917 = £1238 left over. Minus £300 each equals £638 per month savings.

In a years time there will be no bike to pay for (£57 per month), mobile phone will be reduced to sim only (saving £50 per month) and a payrise (£90 per month)

So an extra £197 per month into savings minus cost of living increase in a years time.

For now, no opportunity for her to earn more.

[Sarnie]

Sheetmaself said:

Unsure of the lender to be honest but I have had 2 brokers qualify me as looking at 2 different houses.

First one was meridan mortgages (suggested by Bellway homes) which was about two weeks ago who said £272,800 max

Second one was today called Evolve (suggested by Harron Homes) who said £255,000 or £272,000 if could prove 3 months of overtime above £300.

I qualified by giving my address, work address, outgoing and pay. Apologies if you mean something else.

You said your income was "about £40k".................is that including your overtime or not?

If so, how much is your basic pay and how much is overtime?

[The Moose]

Sheetmaself said:

The Moose said:

To make sure I have this clear, without overtime you guys earn a little over £3,500 after tax?

Your proposed mortgage payment is £917?

I'd say that was a little high. Can you pick up some other income to help (over and above the overtime)? Or can she earn some more?

Edited by The Moose on Tuesday 4th August 23:22

The above is correct, household income of £3500 plus overtime, after all outgoings including food and petrol we will have £2155 left. Minus the mortgage of £917 = £1238 left over. Minus £300 each equals £638 per month savings.

In a years time there will be no bike to pay for (£57 per month), mobile phone will be reduced to sim only (saving £50 per month) and a payrise (£90 per month)

So an extra £197 per month into savings minus cost of living increase in a years time.

For now, no opportunity for her to earn more.

30 years is a long time to be paying for the place!

I don't think you're being an idiot, but I think you could do better, financially, if you didn't spend so much.

[Sheetmaself]

Sarnie said:

You said your income was "about £40k".................is that including your overtime or not?

If so, how much is your basic pay and how much is overtime?

Basic pay is £39,520.

I then generally get about £4500 of overtime on top of this.

However, i have seen others in different jobs make the mistake of using overtime to live off of and I do not want to fall into this trap. I am happy to use the overtime to pay for things such as holidays but i don't want to rely on it for day to day living.

[Fore Left]

Sheetmaself said:

... parents in 70s who have a fair bit in the bank (think just north of a million combined).

So, they have £1m in the bank that they're never going to spend earning f'all interest and you're struggling to get by on the mortgage you need. The sensible option would be for them to gift you half the mortgage each. See it as an advance on you inheritance

[eliot]

The Moose said:

To make sure I have this clear, without overtime you guys earn a little over £3,500 after tax?

Your proposed mortgage payment is £917?

I'd say that was a little high. Can you pick up some other income to help (over and above the overtime)? Or can she earn some more?

Edited by The Moose on Tuesday 4th August 23:22

That’s a ratio of 26%,I had a higher mortgage on a higher salary (28%), with a wife earning 10k pa, so I was the main breadwinner and that mortgage would of taken me to 65 to repay - so broadly similar situation.

It’s doable, but you have live carefully. It was a constant stress to think that I needed to stay on top of my game (IT) until I was near pension age which made me feel sick sometimes.

What it did force me to do was chase a better salary which initially was via a new job, but was retained with a promotion - which got mortgage/earnings ratio down to 22% - life became easier after that, but I’m still careful with money.
tldr;
It’s doable - but it’s stressful and if you don't have a route to earning more money in the next few years then i would think hard about it.
Certainly dont include any inheritance in your calculations.

[grahamm]

I suggest you buy the best house you can get. We have stretched ourselves twice to move and after a few years in both cases it proved to be a good decision. We saved the costs of moving more frequently and had the benefit of living in homes we loved with plenty of space for a growing family.
The proportion of your pay on mortgage payments seems OK to me but I am not a financial advisor

[Sheetmaself]

The other option is a cheaper house which is same size, still new, but in a different location and next to a main road.

This would leave £8900 savings per year without overtime, again a likely £4500 on top of this.

This is the one I think makes most sense as a good trade off between size (1500 sq ft) and cost with the down side being the main road, hawthorn hedge between is and it so kids will be okay.

Does this sound a good figure? Obviously it is better but is it a good amount of savings?

[DavidY]

I think you need to take Sarnie's advice here.

What you 'may' have been offered as a maximum mortgage value is probably very different from a real mortgage offer. Your proposed multiplier is very high (for the current cautious mortgage market), and will only come down once things like car finance, credit card debts, etc, etc are taken into account.

I would suggest that you get a broker to put forward some real numbers to lenders and get a proper level of borrowing capability. WIthout that this thread is all conjecture.

What we were told we could initially borrow was very different from what we could actually borrow!!!

[Phunk]

It's certainly doable, we have a combined earning of £45-50k, £275k house with £50k equity and our mortgage is £780 a month with Council tax, Gas, elec etc coming to another £400 a month.

We've got two boys under three and while we're by no means flush we certainly aren't struggling. You just adjust your lifestyle to suit, I drive the most non-PH car there is, I do a lot of DIY myself, very rarely order takeaways etc. We still manage to go on foreign holidays and treat ourselves and the kids every so often.

I used to have a lot fewer outgoings when I was free and single, apart from buying a bargain Porsche 911 which I smoked around in for a while and don't feel any worse off now. I just spend less on rubbish and drive a bloody Prius.

As long as you're both in a stable and secure job, have some rainy day money and you can cut back on your spending then you can manage.

[MaxFromage]

Sheetmaself said:

Apologies, could you please clarify what you mean?

If you lost your income, then you would have a cash buffer to last you more than a few months to cover your outgoings.