How far to stretch for mortgage?
Discussion
Forum regular, throwaway account due to vulgar personal information included!
We currently owe around £210k on a property worth around £300k. Mortgage payments at approx £800pcm. My net income is £5500pcm off a salary of £108k, wife will be bringing in £1300 net when she returns part time from maternity leave. This makes mortgage about 12% of net income, which I believe is very low compared to average.
We're looking to move house. Originally we were hoping to keep it under £400k, and thus mortgage under £300k, but it doesn't seem quite enough to get what we really want.
Realistically I could "afford" up to about £2200pcm quite easily on a mortgage without feeling stretched, which at currently achievable rates would give a mortgage of £575k over 30 years (of course need to be realistic about future rates). Mentally though this makes me very uncomfortable.
To my question, how far to stretch to get that dream house? We're Cheshire based so £500k gets a very nice/large 5 bed detached, and whilst it makes me uncomfortable, mortgage payments of £1500 wouldn't be a problem. Worth noting, I always take long term for minimum commitment, then overpay or invest elsewhere.
We currently owe around £210k on a property worth around £300k. Mortgage payments at approx £800pcm. My net income is £5500pcm off a salary of £108k, wife will be bringing in £1300 net when she returns part time from maternity leave. This makes mortgage about 12% of net income, which I believe is very low compared to average.
We're looking to move house. Originally we were hoping to keep it under £400k, and thus mortgage under £300k, but it doesn't seem quite enough to get what we really want.
Realistically I could "afford" up to about £2200pcm quite easily on a mortgage without feeling stretched, which at currently achievable rates would give a mortgage of £575k over 30 years (of course need to be realistic about future rates). Mentally though this makes me very uncomfortable.
To my question, how far to stretch to get that dream house? We're Cheshire based so £500k gets a very nice/large 5 bed detached, and whilst it makes me uncomfortable, mortgage payments of £1500 wouldn't be a problem. Worth noting, I always take long term for minimum commitment, then overpay or invest elsewhere.
My first thought is to hang tight for the time being.
You have a new born ( congrats) do you really want to be adding the relaxing pleasures of the delightful and charming house chain sales process to the already deeply relaxing family environment of extremely young children?
Plus, you don’t really know what you want until the children reach a certain age and certainly what they want now isn’t the same as what they want when a tiny bit older and for the whole of their childhood.
After being back at work for a year your wife may realise that she wants to be at home with the children rather than paying a stranger.
And then there is the aspect of schools that may be good today may not be in 5 years time.
Your basic finances suggest that you can save far quicker than prices are climbing so there really seems little downside to waiting until the phase of the ‘newborn’ has passed before knowing exactly what you want, where you want etc.
Personally, I would wait, save money and spend some of that money on purchasing domestic harmony such as weekend breaks, help for your wife, time off for your wife etc.
You have a new born ( congrats) do you really want to be adding the relaxing pleasures of the delightful and charming house chain sales process to the already deeply relaxing family environment of extremely young children?
Plus, you don’t really know what you want until the children reach a certain age and certainly what they want now isn’t the same as what they want when a tiny bit older and for the whole of their childhood.
After being back at work for a year your wife may realise that she wants to be at home with the children rather than paying a stranger.
And then there is the aspect of schools that may be good today may not be in 5 years time.
Your basic finances suggest that you can save far quicker than prices are climbing so there really seems little downside to waiting until the phase of the ‘newborn’ has passed before knowing exactly what you want, where you want etc.
Personally, I would wait, save money and spend some of that money on purchasing domestic harmony such as weekend breaks, help for your wife, time off for your wife etc.
Given likely rises in interest rates in next few year, I'd exercise prudence with future affordability
https://www.mortgagestrategy.co.uk/interest-rate-p...
https://www.mortgagestrategy.co.uk/interest-rate-p...
Thanks all.
Of course the question can't be answered for me, but I have a habit of being overly conservative and looking to use the various views of the hive mind to inform my decision. Or at least, ascertain what is "normal".
This isn't our first child so many of those questions are answered. Wife wants to work and with eldest already in school (and me being a governor!) that path is pretty certain. We also want to stay in the same area we already live in.
There is certainly no harm in waiting, however I suppose my thinking is if we are going to do it, why not now? Get the additional borrowing paid down whilst rates are low, whilst using the extra space and making a home. We're not stressy people, so the move itself doesn't worry us much. Last move was a 7 property chain whilst our daughter was 18 months old!
Of course the question can't be answered for me, but I have a habit of being overly conservative and looking to use the various views of the hive mind to inform my decision. Or at least, ascertain what is "normal".
This isn't our first child so many of those questions are answered. Wife wants to work and with eldest already in school (and me being a governor!) that path is pretty certain. We also want to stay in the same area we already live in.
There is certainly no harm in waiting, however I suppose my thinking is if we are going to do it, why not now? Get the additional borrowing paid down whilst rates are low, whilst using the extra space and making a home. We're not stressy people, so the move itself doesn't worry us much. Last move was a 7 property chain whilst our daughter was 18 months old!
DonkeyApple said:
My first thought is to hang tight for the time being.
You have a new born ( congrats) do you really want to be adding the relaxing pleasures of the delightful and charming house chain sales process to the already deeply relaxing family environment of extremely young children?
Plus, you don’t really know what you want until the children reach a certain age and certainly what they want now isn’t the same as what they want when a tiny bit older and for the whole of their childhood.
After being back at work for a year your wife may realise that she wants to be at home with the children rather than paying a stranger.
And then there is the aspect of schools that may be good today may not be in 5 years time.
Your basic finances suggest that you can save far quicker than prices are climbing so there really seems little downside to waiting until the phase of the ‘newborn’ has passed before knowing exactly what you want, where you want etc.
Personally, I would wait, save money and spend some of that money on purchasing domestic harmony such as weekend breaks, help for your wife, time off for your wife etc.
This. I agree with DAYou have a new born ( congrats) do you really want to be adding the relaxing pleasures of the delightful and charming house chain sales process to the already deeply relaxing family environment of extremely young children?
Plus, you don’t really know what you want until the children reach a certain age and certainly what they want now isn’t the same as what they want when a tiny bit older and for the whole of their childhood.
After being back at work for a year your wife may realise that she wants to be at home with the children rather than paying a stranger.
And then there is the aspect of schools that may be good today may not be in 5 years time.
Your basic finances suggest that you can save far quicker than prices are climbing so there really seems little downside to waiting until the phase of the ‘newborn’ has passed before knowing exactly what you want, where you want etc.
Personally, I would wait, save money and spend some of that money on purchasing domestic harmony such as weekend breaks, help for your wife, time off for your wife etc.
throwaway7942 said:
Thanks all.
Of course the question can't be answered for me, but I have a habit of being overly conservative and looking to use the various views of the hive mind to inform my decision. Or at least, ascertain what is "normal".
This isn't our first child so many of those questions are answered. Wife wants to work and with eldest already in school (and me being a governor!) that path is pretty certain. We also want to stay in the same area we already live in.
There is certainly no harm in waiting, however I suppose my thinking is if we are going to do it, why not now? Get the additional borrowing paid down whilst rates are low, whilst using the extra space and making a home. We're not stressy people, so the move itself doesn't worry us much. Last move was a 7 property chain whilst our daughter was 18 months old!
Sounds like you want to do it and want us to talk you into Of course the question can't be answered for me, but I have a habit of being overly conservative and looking to use the various views of the hive mind to inform my decision. Or at least, ascertain what is "normal".
This isn't our first child so many of those questions are answered. Wife wants to work and with eldest already in school (and me being a governor!) that path is pretty certain. We also want to stay in the same area we already live in.
There is certainly no harm in waiting, however I suppose my thinking is if we are going to do it, why not now? Get the additional borrowing paid down whilst rates are low, whilst using the extra space and making a home. We're not stressy people, so the move itself doesn't worry us much. Last move was a 7 property chain whilst our daughter was 18 months old!
throwaway7942 said:
I guess that's partly true, but mainly I'm looking for anecdotal evidence from people who have stretched and either regretted it or it was the best thing they ever did.
You sound like you are stressing over numbers on spreadsheets, the news, Brexit etc etc.Trust me......all of that will dissipate when you are standing in that dream home and your wife turns round and says..."Can we get it?? PLEEEEEEEASE???"
On paper you can afford it.........so go for it......take a 5 to 10 year fixed rate to remove worries over interest rates.........life is for living, not worrying about
The trouble with stretching as a term is that in an internet conversation you simply don’t know the relevant details.
I could spend every single bit of monthly income financing a household if I wished as I don’t need my income to maintain my chosen lifestyle. Someone else may be able to barely spare money as their monthly income is essential for paying other things. We would both have the same income, they could have more but wildly different definitions of what stretching is even before you start to take onboard personal preferences and character.
As a cautious person I would calculate what impact key changes would have to my net income (as a family man, net income is crudely taxed income less another 20% or so into some form of credible pension). Key changes being a wife stopping working, an unwell child, interest rates rising, lenders asking for larger deposit out of the blue, that sort of thing. What’s left over is genuine spare capacity for lobbing about on what is best for your family. But alongside that you need to measure your personal appetite for gearing up. Someone like you doesn’t end up with almost no monthly mortgage charge unless they get pleasure and security from that and so you need to be honest whether moving to a larger home and larger debt will have a negative impact on your serenity. And then there is the aspect of what funds, assets you hold elsewhere that can act as a safety cushion etc.
There are so many variables that are unique to each of us that it’s almost impossible to endorse any particular tactic.
For me personally, I took a punt before children came along and while the market was rising strongly. It paid off. I now have children and the market isn’t really going anywhere and I would never take a punt but I am very cautious in this regard.
I could spend every single bit of monthly income financing a household if I wished as I don’t need my income to maintain my chosen lifestyle. Someone else may be able to barely spare money as their monthly income is essential for paying other things. We would both have the same income, they could have more but wildly different definitions of what stretching is even before you start to take onboard personal preferences and character.
As a cautious person I would calculate what impact key changes would have to my net income (as a family man, net income is crudely taxed income less another 20% or so into some form of credible pension). Key changes being a wife stopping working, an unwell child, interest rates rising, lenders asking for larger deposit out of the blue, that sort of thing. What’s left over is genuine spare capacity for lobbing about on what is best for your family. But alongside that you need to measure your personal appetite for gearing up. Someone like you doesn’t end up with almost no monthly mortgage charge unless they get pleasure and security from that and so you need to be honest whether moving to a larger home and larger debt will have a negative impact on your serenity. And then there is the aspect of what funds, assets you hold elsewhere that can act as a safety cushion etc.
There are so many variables that are unique to each of us that it’s almost impossible to endorse any particular tactic.
For me personally, I took a punt before children came along and while the market was rising strongly. It paid off. I now have children and the market isn’t really going anywhere and I would never take a punt but I am very cautious in this regard.
DonkeyApple said:
The trouble with stretching as a term is that in an internet conversation you simply don’t know the relevant details.
I could spend every single bit of monthly income financing a household if I wished as I don’t need my income to maintain my chosen lifestyle. Someone else may be able to barely spare money as their monthly income is essential for paying other things. We would both have the same income, they could have more but wildly different definitions of what stretching is even before you start to take onboard personal preferences and character.
As a cautious person I would calculate what impact key changes would have to my net income (as a family man, net income is crudely taxed income less another 20% or so into some form of credible pension). Key changes being a wife stopping working, an unwell child, interest rates rising, lenders asking for larger deposit out of the blue, that sort of thing. What’s left over is genuine spare capacity for lobbing about on what is best for your family. But alongside that you need to measure your personal appetite for gearing up. Someone like you doesn’t end up with almost no monthly mortgage charge unless they get pleasure and security from that and so you need to be honest whether moving to a larger home and larger debt will have a negative impact on your serenity. And then there is the aspect of what funds, assets you hold elsewhere that can act as a safety cushion etc.
There are so many variables that are unique to each of us that it’s almost impossible to endorse any particular tactic.
For me personally, I took a punt before children came along and while the market was rising strongly. It paid off. I now have children and the market isn’t really going anywhere and I would never take a punt but I am very cautious in this regard.
Indeed.I could spend every single bit of monthly income financing a household if I wished as I don’t need my income to maintain my chosen lifestyle. Someone else may be able to barely spare money as their monthly income is essential for paying other things. We would both have the same income, they could have more but wildly different definitions of what stretching is even before you start to take onboard personal preferences and character.
As a cautious person I would calculate what impact key changes would have to my net income (as a family man, net income is crudely taxed income less another 20% or so into some form of credible pension). Key changes being a wife stopping working, an unwell child, interest rates rising, lenders asking for larger deposit out of the blue, that sort of thing. What’s left over is genuine spare capacity for lobbing about on what is best for your family. But alongside that you need to measure your personal appetite for gearing up. Someone like you doesn’t end up with almost no monthly mortgage charge unless they get pleasure and security from that and so you need to be honest whether moving to a larger home and larger debt will have a negative impact on your serenity. And then there is the aspect of what funds, assets you hold elsewhere that can act as a safety cushion etc.
There are so many variables that are unique to each of us that it’s almost impossible to endorse any particular tactic.
For me personally, I took a punt before children came along and while the market was rising strongly. It paid off. I now have children and the market isn’t really going anywhere and I would never take a punt but I am very cautious in this regard.
There was a thread on here a few years ago about a guy who'd bought a Ferrarri outright, on a £35k a year salary. Needless to say he didn't own his own home, saved for years and did not go on holidays or have any other costs of living.
Most people wouldn't sacrifice what he did, to get the Ferrari.
You can't look at what others have or what decisions they made to get to that point and apply them to your own decisions.
OP, when you are in that dream house, it will make you want to stretch for it.......it it doesn't, it's not the dream home.
As others say - this is a really personal decision.
I have recently applied for a mortgage where the payments will be 31% of my take home - which is as high as I would really want to go - and that is what houses where I am cost if you want something not flash but a usable size and in an ok area. but on the other hand I have zero other financial commitments (aside from the costs necessary to be alive and get to and from work) that I couldn't halt instantly - so the bailiffs can be fended off reasonably well come doomsday.
I have gone for a 5 year fixed though so no nasty surprises short term at least.
As others have said its personal though.
I have recently applied for a mortgage where the payments will be 31% of my take home - which is as high as I would really want to go - and that is what houses where I am cost if you want something not flash but a usable size and in an ok area. but on the other hand I have zero other financial commitments (aside from the costs necessary to be alive and get to and from work) that I couldn't halt instantly - so the bailiffs can be fended off reasonably well come doomsday.
I have gone for a 5 year fixed though so no nasty surprises short term at least.
As others have said its personal though.
At the minute our mortgage is £1500 pcm and 32% of our combined take home
We stretched ourselves to buy the home we wanted that we don’t see ourselves moving out of, certainly not in the next ten years
With baby number 1 on the way we will be down to my wage plus stat maternity at which point mortgage will be 45% of net pay - will be tight enough for 6-12 months but we know that and are prepared in terms of sacrificing holidays etc
Personally in your position I think you are being massively over cautious given your income
We stretched ourselves to buy the home we wanted that we don’t see ourselves moving out of, certainly not in the next ten years
With baby number 1 on the way we will be down to my wage plus stat maternity at which point mortgage will be 45% of net pay - will be tight enough for 6-12 months but we know that and are prepared in terms of sacrificing holidays etc
Personally in your position I think you are being massively over cautious given your income
The problem is that it’s just so bloody expensive to move house, so the fewer moves the better. I’d keep saving as much as you can to make sure that when you do move, it’s to your forever home. It will be worth pushing it a bit to do this. Of course, one day, when you’re sat in your nice forever pile, looking at all the jobs you need to get done, you’ll wish you lived in a smaller house. I’ve spent 5 hours today mowing the lawns FFS!
troika said:
The problem is that it’s just so bloody expensive to move house, so the fewer moves the better. I’d keep saving as much as you can to make sure that when you do move, it’s to your forever home. It will be worth pushing it a bit to do this. Of course, one day, when you’re sat in your nice forever pile, looking at all the jobs you need to get done, you’ll wish you lived in a smaller house. I’ve spent 5 hours today mowing the lawns FFS!
This ^^^ Wifey and I found a great house in the country which looked like a forever home almost 20 years ago and was quite a bit over our comfortable budget but on the edge of affordability. Both our IFA (family friend) and our solicitor both advised us to go for it as it would pay off in the future and would save us a small fortune in the cost of moving up the ladder over time. We're still here and the property price has increased over 300% in that time.That said, we ate a lot of beans on toast and loaded up debt on credit cards for about 2 years. Also, we don't have children so it's just the two of us we have to keep.
How secure is your job? How likely are you to fall right back onto your feet in a similar salary should you get made redundant?
What age are you & wife to be considering taking on a 30yr term?
30yr term seems an awfully lengthy term if you are say mid 30's, maybe not so if early-mid 20's.
My household incomes very similar to yours. Fortunately property prices round here can be pretty modest so we only had to pay 250k for a large 5 bed detached family home in a good area. I'll be mortgage free by 40 leaving lots of options for other aspects of life. I don't think I could have it any other way. I can think of some local properties on the market a mile or 2 from here for say 500-600k where I'd maybe gain an extra bedroom or 2 and some more kurb appeal, however I'd be very uncomfortable thinking about now going for it and taking the huge jump in payment & for longer, paid by 40 plan out the window....end plan changed to 55....60yrs old....nah no thanks. Again maybe 10-15yrs ago my outlook would be different, now I can see the end of the mortgage in sight that's my only target.
What age are you & wife to be considering taking on a 30yr term?
30yr term seems an awfully lengthy term if you are say mid 30's, maybe not so if early-mid 20's.
My household incomes very similar to yours. Fortunately property prices round here can be pretty modest so we only had to pay 250k for a large 5 bed detached family home in a good area. I'll be mortgage free by 40 leaving lots of options for other aspects of life. I don't think I could have it any other way. I can think of some local properties on the market a mile or 2 from here for say 500-600k where I'd maybe gain an extra bedroom or 2 and some more kurb appeal, however I'd be very uncomfortable thinking about now going for it and taking the huge jump in payment & for longer, paid by 40 plan out the window....end plan changed to 55....60yrs old....nah no thanks. Again maybe 10-15yrs ago my outlook would be different, now I can see the end of the mortgage in sight that's my only target.
Edited by coljoh148 on Thursday 9th August 19:30
Elsie111 said:
troika said:
The problem is that it’s just so bloody expensive to move house, so the fewer moves the better. I’d keep saving as much as you can to make sure that when you do move, it’s to your forever home. It will be worth pushing it a bit to do this. Of course, one day, when you’re sat in your nice forever pile, looking at all the jobs you need to get done, you’ll wish you lived in a smaller house. I’ve spent 5 hours today mowing the lawns FFS!
This ^^^ Wifey and I found a great house in the country which looked like a forever home almost 20 years ago and was quite a bit over our comfortable budget but on the edge of affordability. Both our IFA (family friend) and our solicitor both advised us to go for it as it would pay off in the future and would save us a small fortune in the cost of moving up the ladder over time. We're still here and the property price has increased over 300% in that time.That said, we ate a lot of beans on toast and loaded up debt on credit cards for about 2 years. Also, we don't have children so it's just the two of us we have to keep.
Excellent I say.....but Never to be repeated not in my lifetime anyway.
Part of the problem is you know you can get a nice house for less than the sums you’re looking at so it’s convincing yourself that you should buy something you don’t explicitly ‘need’.
Most of the guys I work with earn roughly the same as you taking home about £6k/mth, a lot of them have partners who don’t work, some work part time, others full time in a variety of jobs but needless to say a significant number have incomes that are broadly similar to yours and they pretty much all live in £450k+ properties because that’s what it takes to get something nice down here. None of them seem to be overly concerned with their mortgages because it’s par for the course. I don’t know you or the details of your finances but I’d bet you could take on a mortgage of £450-500k without issue. The question is not can it be done it’s do you want to do it? I’d go and look at what your money could get you and let your (wifes) heart decide.
Most of the guys I work with earn roughly the same as you taking home about £6k/mth, a lot of them have partners who don’t work, some work part time, others full time in a variety of jobs but needless to say a significant number have incomes that are broadly similar to yours and they pretty much all live in £450k+ properties because that’s what it takes to get something nice down here. None of them seem to be overly concerned with their mortgages because it’s par for the course. I don’t know you or the details of your finances but I’d bet you could take on a mortgage of £450-500k without issue. The question is not can it be done it’s do you want to do it? I’d go and look at what your money could get you and let your (wifes) heart decide.
Gassing Station | Finance | Top of Page | What's New | My Stuff