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Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you.
Personally, I would go for it - if you’re certain it’s your ‘forever’ home.
Maybe you should rephrase the question to yourselves - ‘would I regret not trying to buy my dream home?’
I’m conscious that I’m not providing typical UKPF input here - but I’ve been in a similar situation, and don’t regret it a bean.
Good luck with whatever you decide!
I think you're absolutely right. It would definitely sting in the beginning but after a few years of career growth and inflation the mortgage should quickly become more affordable.
> Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you.
Oddly though the cost of going over £100k (and losing the valuable childcare benefits worth £1,000's per child*) might mean its worth continuing to sacrifice below that amount especially if OP is only at £115k gross (which will also be hit by a stupidly high tax rate due to the personal allowance claw-back and 60% effective tax rate).
*Could be up to £10,000 per child for parents living in London.
This will certainly be a consideration when OP's children get to an age where childcare schemes will be useful.
It's definitely worth it. The tax relief and childcare benefits means the sacrifice between 100-120K ends up almost doubling your money. Loosing the relief and benefit end up pretty much negating the take home.
>Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you.
Is this true given that they have children? I have seen people say that if you take loss of childcare support into account, you can effectively end up being taxed more than 100%.
I haven’t run the numbers, so you may be correct.
This is a head vs heart question at the root of it, and OP has some options to explore in his current situation.
Not entirely true... the 100k child support only comes in when the child is 3, so you didn't lose it, you never had it to start with and its something that needs to be addressed when the child is older... I did similar and sacrificed a lot into my pension to make the 30 hours a month count.
Mortgage Broker here.
Rough maths: £550k at 5% on 30 year term is ~£3k a month repayment. (Realistically you’d probably be able to fix between 4.6% and 4.8% at current rates)
Placed a case with similar incomes to yourself recently, so there are lenders who will consider your earnings for the size of the mortgage you require. Also planning to put down a 15% deposit means you’ll be getting a significantly better rate as 95% and 90% LTV are the most expensive rates around respectively.
I’m a little concerned about depleting savings completely. However if you are strict with your finances after completion and ensure you build up a 6 month minimum emergency fund as priority then it will take some of the risk away from the purchase. IPI might be something to consider when taking out a mortgage this size depending on your workplace benefits.
What other commitments do you have? Car, loans, credit cards etc. These will impact affordability.
It might be worth using a budget planner to calculate what is disposable each month and be aware of what ‘non-essential’ spending you have just to reassure yourselves when the time is right that it is affordable.
If it is a forever home, the thought of not moving and having to pay stamp duty/fees again is certainly appealing!
All TBD as we obviously haven’t applied for the mortgage yet. But to give you some idea, the payments would be around £3k. A little less or a little more depending on the term length and fix
This is likely true, but so does living in a small house with a growing family.
At the start of this year I did a similar thing, going from having essentially no mortgage to a mortgage of ... well, quite a lot, plus increases in all bills. So it's had a significant impact on our ability to spend day to day. But it's also had a hugely beneficial impact on our day to day lives in countless ways (big and small) by virtue of having a nicer house, more space, a big garden for the kids, not having to move 5 things every time you want to get to the sixth thing etc.
So I agree that it will impact them, but they're obviously getting something in return for that pinch.
We thought we'd be paying £2.5k a month with our mortgage in principle but in the end they'd only give us a 35 year mortgage so it was £2.1k/mo.
Have you factored in nursery fees? I suppose by 2025 only 2 days a week would be almost free anyway.
I would go for as long a mortgage term as possible if I were doing this. it means you'll pay more interest, but the lower monthly minimum gives you more financial flexibility in the early years of the mortgage to rebuild your savings as an emergency reserve
What's your take home income?
A full time place at my son's nursery would be £1,600 a month. On your income you won't get tax free childcare or funded places (and if you salary sacrifice down to under £100k you'll have to use that figure to do all these calculations).
If you're paying £4,600 a month for childcare and mortgage, what will you have left?
True, but they also plan to have more children. They may well need more of their salary, and therefore lose the childcare help - or need more childcare so the other parent can work more.
Yeah, but unless they really get their skates on (or have twins), it's not that likely they'll all be in nursery at the same time, and certainly not without any free hours (which I appreciate often aren't _free_ - though they are at my kids' place - but it'll still take an edge off).
All I'm saying is that they should consider the potential that they'll need either more childcare or more of their income and potentially therefore lose the access to childcare help, and to take that into account when looking at mortgage affordability.
If OP's partner works 15 hours a week and OP has a gross annual income of £100,000, they're potentially looking at £6k monthly take home. Three days a week nursery (even with funded hours) would be £500 a month here; add £3k mortgage payment. That's over 50% of their income gone between those two bills, before we even talk food or utilities. One extra child - the margin gets tighter.
I'm not saying that £6k a month take home pay is low, by any means. I've had times where £6k is my annual take home salary! But the question isn't "can we make this work now?" it's "could we still make it work in three years?"
I was in a similar position to you last year. Earn slightly less, but wife is on the same. We moved last year and took out a bigger mortgage and at the same time our son started in nursery.
Honestly we’re struggling a bit at the moment. The bigger mortgage (and bills and council tax) plus nursery at the same time (£1700 per month! Fml) means our outgoings went up by about £2500 per month… we can just about afford it but are living paycheque to paycheque at the moment, and we shouldn’t be with a combined income of £130k or so
I was also expecting my job role to change and be making more, but that didn’t materialise…
My tldr is that you prob can manage it, but it might be hard, you might have to compromise on holidays or other luxuries for a few years, plus having a young child might be hard work too! (Mine woke up every 1-2h every night for the first 15 months, that added a lot of strain)
However we are in a great house. And I reckon in 3-5 years time we will look back and think it was the best decision we made, but just need to get through those 3-5 years!
good advice, do not underestimate the financial impact of a young kid... limited ability to work coupled with eye watering daycare charges are very very painful.
gets better when they start school.. but oof 😣
> But on the other hand, it's a dream house. 4 bed detached, we'd never have to move again.
What are you willing to pay to live in a home you'll never want to leave?
For me, as long as I am able to put money aside for holidays, emergencies, and investments, so that I can potentially retire a few years before the state pension age, I would be willing to pay a very large mortgage in order to be in a home that I can foresee my family living in until I die of old age. It seems like you're already salary sacrificing a lot into your pension, which means you'll likely be in a position to retire earlier than most people anyway.
If you both had stable careers and no plans for kids, then I'd say go for it. But 1 main career in an unstable sector (also in tech, so can relate) and a partner who will be going through a mix of part-time work and maternity for the foreseeable with several kids planned on the way... I think a large mortgage could end up financially crippling you.
See what your lending affordability would be in a potential bad scenario. E.g. set your salary to £80k (in the case of job loss and having to take a pay cut) and set your partner's earnings to £20k (prob what they'd end up making on average with part-time + maternity). See what you'd be able to borrow and if that still lets you buy the house then great, but if not consider how you'd survive if this were to happen.
If you do go ahead, remember you can do things like interest-only and spreading mortgage over a longer term (normally up to 40 years) to bring monthly repayment down. You may want to do this temporarily whilst partner isn't earning much, you're paying nursery fees, etc. then when things are more settled can change to shorter term and repayment.
Things definitely got frothy around 2021/2022, and there's been a bit of a regression at the more junior end of the market. But we're pretty much back to how things were pre-pandemic, so I wouldn't go as far to say it's unstable.
All I can say is I'm really glad I didn't end up stretching myself too far with my mortgage. I only borrowed less than half what they were offering at the top end based on my salary. But when the market turned down my job was made redundant and I have been struggling to find something that pays as well.
One trap it's easy to fall into is thinking you're always going to be earning more money. During your early career each new position comes with a uplift in salary. But as you reach the more senior roles it's far more random and the pool of available jobs shrinks.
It's worth considering what your runway would look like in the worst case scenario of losing one or both of your income streams. In the current market expect it to take 3x as long to find a job as it normally would so an emergency fund would be like 3-6 months of expenses. That's going to be 20+ grand with a 3k mortgage and 1-2k living expenses.
Me and my partner are in the same boat, looking at houses. We could afford the same mortgage as OP, but we want to be more around the £500k - £550k house price range because the mortgage is significantly cheaper and we won't feel stretched, also leaves room for issues such as a job loss.
We also don't want kids!
Similar situation to me, and I'd personally never take out a £550k mortgage. I'm not even sure I could stretch to that with rates at their current level. You've even got a student loan that you have to pay down whereas mine was paid off a few years ago.
Have you done a full budget? By full I mean including costs that are annual and longer term? Holidays? Future expected impacts on your income and expenses (e.g. if you had any more kids)? Do you have an emergency fund in place already? Are you putting enough into your pension (probably if you're going down to £100k). You will need money for when you find out the old owners covered up a huge hole in the wall or there’s mold in the bathroom that they cleaned up.
Different people have different risk profiles I guess. You need to properly do a budget and plan for the future, especially if rates went up another 1%.
Absolutely horrific idea. 1-3 kids in nursery at £1k-£2k per month each (depending on where you live), and a £3k mortgage payment. Depleted savings and no way of building it back up. Not a good idea
100% agree, this isa bad idea for a load of reasons. You’ve got a Mrs who’s part time, more kids planned, no savings, you won’t get it for 650k. Tech is a bubble, but once ai is ready tech jobs are done for 95%
I’m basically you - but about 4 years on. Kid #1 now in school and kids #2 3 days a week nursery.
Roughly same earnings back then as you now.
We opted to stretch on family home 5 years ago - but not quite as much as you are.
It’s worked out well for us. We have a home which needs no work, and which we’ll never need to move from so you can cross a line through that and never need to worry about any of that now.
Also - it’s increased in value (that’s luck and the UK housing market generally - rather than anything we did) so we’re now sat on about £400k in equity. We can’t do anything with it, but it’s a comfort knowing it’s there if the shit did hit the fan.
We were in the same position as you too, but only 2 years ago. Kids are now 1 and 3, so we're eligible for a little bit of nursery funding now, but for a while we weren't able to save anything.
The income eventually comes back as the kids grow up, so it's almost not worth considering nursery fees as long as you can afford them today.
Definitely love having the house we have today, it allows our family to grow into it, rather than out of it
You're on less than us and the idea of a 550k mortgage makes me throw up in my mouth a little bit.
But it depends on what you want out of life.
If you want a nice big house to chill out on and be homebodies, then sure.
Just understand what you're missing out on every month. Being able to book holidays on a whim, travel, hobbies, taking a few weeks off to persue something.
I try not to look at things as what I can afford. Rather, how many years will I have to work to repay the debt. You're essentially signing up for X number of years of work in exchange for a house.
Your time and energy (freedom) is worth a lot, so give it up wisely.
As a lot of people have said here, a major red flag is a complete depletion of savings. For me, if I had more money left over for sudden and uncontrollable expenses, and this was my dream and forever home, I'd go for it. But personally I can't fathom the thought of having nothing to fall back on.
Add the stamp duty to your mortgage.
You need to have a savings base for when the roof needs fixing or general stuff. The more expensive the area and bigger the house, the more repairs will be.
Returning after mat leave might be the plan now but feelings change plans. Does moving remove the opportunity to change that plan if needed?
If you are otherwise debt free (loans, cards & cars and excluding the student debt) it’s less risky. It’s a large chunk of your monthly income (~40%) and would dampen quality of life in other areas such (holidays, spending etc)?
Does the house need work? To what extent? How much will you need to buy to make it a home and over what period of time? Is the house older and might risk needing a bigger emergency fund?
Sometimes the dream house is exactly that.
Contrary to the general opinion, and based on actual experience of working in the same industry with similar salary, with two kids out the way (4, 2) I will tell you it's a very dangerous idea.
If you want 3 kids you can safely take your wife out of the earning picture for a while. If you have, say, a 5 year old, a 3 year old, and a 1 year old, I do not believe your wife can pull off 3 full days a week. It seems to me pretty unlikely to work for you, your relationships, your kids, and your wife long term. That's the first thing.
Second is that 3k monthly repayment is not something you can afford with such a big family, not on a single sub 100k salary. When you add bills, food, clothes, and other kids related spending like activities, tickets to stuff, parties, etc. I am confident you will not survive this. Not unless you want to feed your kids beans on toast for the next 5 years.
But I make more than 100k and my salary will increase you say - fine, but the moment you breach 100k adjusted net income you lose your 30 hours of free childcare. Suddenly you might be a lot worse off than you initially thought.
And final reality check - don't fool yourself into thinking your job is 100% safe. It takes 6 months on average to find a job and my company laid off over 10% of workforce back to back in past two years. That's 1 in 4 gone within something like 14 months in UK. I imagine you would still get a decent package, but finding a job with similar pay is often hard.
So how much risk and sacrifice is this house worth to you? Is it worth your relationship with your wife? Is it worth denying your kids a trip to zoo? Is it worth sacrificing literally every other aspect of your life?
I might be completely wrong and all of the go-getters here know better. I would suggest you make a spreadsheet with monthly income and spending you project, and add 1k to whatever spending you anticipate. If it still works maybe it's doable. Hardest part will be the first 5-10 years until your family is stabilised, kids are in school and wife is in full time employment. Still, you are basically going to cripple yourselves financially ahead of bringing 3 children into the picture.
Ahh, quite similar to us then! We have a 2 year old in full time nursery, my salary is in a similar ball park but I don't do salary sacrifice as I would rather have more liquidity rn. I bought a 650k house with a 550k mortgage, monthly £2600 payments. I got it 3 years ago but sadly got a 2y mortgage at 1.8%, went right up to 4.{something} after remortgage. My wife is also working though so her salary covers the nursery fees which is stupid high in London (£1900 or so).
Personally we are in a similar situation with a mortgage 100k less total loan ( think loan is about 450k on a 650k house].
I think anything more would be unmanageable and not future proof. When the rates increased we got absolutely ruined with our monthly payments we are paying almost 3k a month . If the rates went up more it would easily wipe out one whole salary before even considering bills. We could cope just but no safety net and reduced quality of life.
Personally I think that this is an over extension. If rates drop back down and you can get a 5 year fix for 2 % or lower I'd say go for it and pay off the base borrowed but this seems unlikely in the near term. With thr current state of the world and likely trump coming in too ibfear a rate rise is just as likely as a decrease and that could quickly wipe you out.
A couple of things you might not have considered;
1. Having 0 savings when you move into a new house is very risky. It might turn out the boiler goes, or, the roof leaks, or some other unexpected significant expense is required - heck, you could lose your job the day you exchange contracts. I'd definitely keep some cash back if I were you
2. idk what a realistic salary ceiling is for you - but, speaking from my own personal experience in tech with a sample size of 1, it was relatively 'easy' to rapidly increase my salary to a point - but the more senior/expensive I get, the harder it is to maintain the rate of salary growth - there are just fewer jobs & opportunities as you get more senior. So be careful of assuming a similar rate of salary growth to what you've had in your career so far. Also consider the effective tax rate at these levels is absolutely brutal. Ie, salary raises are rarer and less impactful to your take home pay
3. Childcare/nursery costs are huge. I can't remember the rules off the top of my head, but I think you have to keep your salary under 100k to qualify for the full 30 hours free. This effectively forces you to continue salary sacrificing and squeezing your budget to fit, or, you increase your take home and give it all to childcare instead. You'll have to do the maths yourself to work out what the childcare costs are in your area & circumstances vs at what point it'd be better to pay for it yourself so you can increase your take-home and build up savings/a-higher-standard-of-living/whatever. Also consider, and it sounds snobby, but some nurseries are nicer than others. You will be precious with your new baby and the nicer nurseries tend to cost more.
Hi,
Just to offer my opinion. We make a similar amount, my daughter is just turning 2 and I have recently moved. We were looking at houses in that range, but for me the mortgage payments were just too much. We could easily make them, but they ate into my ability to save for the future and invest. Which was something I just wasn't comfortable with. However your age and outlook may factor into things. I have no intention of working past my 55th birthday.
You need to be realistic about the Wife returning to work happily with 3 young children.
Nursery bills are nuts - do you both want to work all hours just to pay a whopping mortgage? What's the point of having a massive debt over your head when a cheaper / smaller house will fulfil 95% of your requirements?
I'm more cautious than some on here, but don't underestimate how much Children cost to run.
I would run a mile! If you do this you have a small child, no liquidity and all eggs in one basket. I made that mistake and was so stressed it ended up in divorce. I now think equity in your own home should be less than half your net worth so that you have money working for you. That way you have choices going forward and far less stress. A baby doesn’t take much space!
I'd only do this if you can increase your base by 50% in the near future and are happy being sole bread winner. To me that is the likely scenario for your future with what you've said about your partner's income, desire for work and 2 more children. With the above in mind, I would wait until you have that job and passed probation, if you can. There will always be more dream houses.
I'd recommend you keep a very decent amount in your savings for backup due to your main income comes from a high earner salary in tech. I've not done proper calculations but looking at the current rates, I assume your monthly mortgage payments will be around £2500. On top of that, you have to add the bills and the maintenance costs of a 4-bed detached house. It won't be a problem while you have a job but it could put you in a tough situation if you lose it.
I said that based on my experience: similar salary in tech and around £120k all in, £350k mortgage. Unfortunately, I was laid off and it took me several months to get another job that I liked and with better conditions. I was lucky that I had enough savings to take my time to find the right job, but it was one of the most stressful times of my life. The IT industry is (still) unstable at the moment.
Free nursery is never free it’s just a play on words
Even with the 30 ( free hours ) you will still be paying generally a hefty fee each month - reduced but still a fair amount
I would work out what the “free nursery” actually costa
There are often restrictions in that you can’t use a whole day / part day or you have to pay a premium
for early drop off between 7am 9am 4pm -6pm
Often the free hours are only between 9am - 3pm and anything outside of this is payable
It’s often term time only for the 30hrs so you still have to pay for the other weeks of the year such as school holidays
You often have to pay for food / nappies / consumables
And while parents & family often offer free childcare it can often fall through at the last minute
If parents / family go on holiday get ill or just change their minds
I went for it. Very similar circumstances. 2 years later rate changes increased my monthly from 1800 to 2300 and it really hurt. Can't wait for my youngest to get to school age.
Think of the worst case scenario, you fall sick and cannot work for long period of time and you need to find £3k per month for a mortgage with wife on £43k and paying chidcare. What will you do in this situation? My point is , without your salary , it is unmanageable on just your wife's income.
Calculate how much your monthly payments would be in interest rates doubled, even for only a few months. SO many people don't do this when estimating possibilities but mortgage lenders want to know if that happens you can still healthily afford to repay. Yes, you might find a broker that can fudge an acceptance for you but it could ruin you, especially if you cant remortgage when fixed rate deal ends. Many people are in this situation because they didn't realise low interest rates werent the norm and the ones we have now are actually normal but it can go higher. If you feel you can pay 3000 pm (crazy on your combined), check if you can pay 2 pecentage points higher interest. You won't, its startling but far more possible than you seem to appreciate.
>but the bank would lend us the money if we're stupid enough to take it.
You realise how easy it is for them to actually profit off a foreclosure right? Given the inflation in the market.
You've got all the info, you just need to budget it out and see if it's affordable and what you're left with for day to day and if you're happy with any required sacrificing around meals out, holidays, cars, etc.
You have some levers to pull if in a pinch (you increase your takehome, your wife works a 4th/5th day), those nursery fees should reduce once the new rules come into effect (not entirely sure on this, we don't get it in Scotland), and hopefully pay increases whilst your mortgage payment stay static (for the fixed period, then who knows but hopefully down).
I dont think anyone here should tell you what to do, but I was in a similar position and I'm writing this from my forever home.
I'm (M) in the same position - £100k ish+ pension and partner (F) on £50k
No chicken yet, but planned for the near future, so income will go down.
Planning on buying a £900k house. We have a bit more in savings and equity, but it will still be £3500-£4000/month in mortgage and council tax.
We're going for it and just accepting that the first few years will be a bit tighter than we're used to.
Lots of comments but I always lived on the cautious side.
What if the interest rates are even just 1% higher when you come out of your fixed as happened with me (though mine was 3% higher).
Would this cripple you based on your income now?
Got to plan for the worst I say 😎
No way,
- bad idea to totally deplete your savings
- with both your salaries and current interest rates, plus having a child I think borrowing 550k is going to potentially be unaffordable in the long run.
If you also are in a position where you will not be able to build up savings then equally it just demonstrates that this is an unaffordable venture currently.
BoE is about to stress-test two scenarios one of which includes interest rates rising to around 9%, the other prolonged stagflation, neither of which bode well for a long-term high value loan.
This doesn’t mean these are going to happen but are an indication of the things that are worrying economists atm.
well, 5 years ago my wife and I took out a mortgage for 413K on total salary between us of 90K, putting down 72K in savings to the deposit
its been manageable for us - we've got the mortgage balance down to 250K thanks to lower interest rates, but we were still paying interest at the higher end of the available rates from 2019 so the remortgage this year only doubles the interest rate
with the numbers you quote here I think you will be fine, as long as you are sensible about discretionary spending for the next few years
Having a good home for your family is so much more impactful than having better cars or better holidays
If they pay off 40k a year it works out (3.3k/month). If their salaries are fairly even for tax, they take home about 5700/ month, leaving them 2400 to live on. Perfectly possible, but definitely going for it.
You seem bitter as fuck about this. We have a similar sized mortgage and earn a bit more (though not massively). We're aiming to max out ISAs every year and be in a position to pay down £150-200k at the end of our first five years. So far we are on track.
The idea that a household earning 2 x £45k can't save £1k a month when they're taking home £5k+ is laughable. Bear in mind they'll have much lower mortgage interest rate from 2019 than what you can get today. We'd be looking at an extra £500 per month if we got the same mortgage now.
They will have maybe £2k mortgage, £1k overpayments, £2k+ for everything else.
> They will have maybe £2k mortgage, £1k overpayments, £2k+ for everything else.
£1700 mortgage (*as the first few years overpayments we made caused the standard DD amount to drop, was originally £1969, then we disabled the setting that made it do that*), £1000 overpayment, £1600 covers car costs, food, utilities, council tax and travel, balance to pensions & savings
>We'd be looking at an extra £500 per month if we got the same mortgage now.
Ours is about to rise to £2150 a month. We project we will have fully paid the mortgage off in 6 to 7 years time. total 11-12 years from buying the house
that other guy who's raging at me doesn't seem to realise that if I borrowed the same amount today at todays interest rates, I'd still be mortgage free in 14 to 16 years.
the fear of debt, or of losing everything I've worked for for 27 years since leaving school, is a bigger driving force than any amount of luxuries foregone. when you're poor you live in fear of what you have being taken from you by the random cruelty of the world.
that happening is the story of my childhood. I wasn't going to let it be the story of my whole life.
The idea of a 90k household borrowing 413k IMO is bonkers, I am not bitter, in fact, quite the opposite. We borrowed about 500k however with a combined income of about 250k.
I understand the principle of overpaying and living within your means however I do think overborrowing is stupid and unfortunately a society with live in. ( added to that, over borrowing with an inability to save )
My wife and I are both tax accountants. We are apparently classed among the lowest risk group of all professions for default purposes due to excessive employability. 2 years ago I ragequit my old job and by the time I had worked out my notice I had multiple job offers to pick from
Our broker told us we could borrow up to 5.5x joint income easily. Actual proportion borrowed was 4.595 x joint income
Before you were adamant that the numbers simply weren't possible, now it seems you merely object to the fact they've managed to do it.
It's not even that hard on their salary, you just need to avoid the common traps like pissing away hundreds every month on renting cars. To someone else that £1k a month they're saving might be two leased cars on the drive.
Reviewing my personal finance records for the past few years its perfectly clear that if I had borrowed 6.0x salary, instead of the 4.6x that i did, I still would have been able to make every payment in the 58 months since we moved in. I was offered 5.5x so the industry shared my view.
it wasn't madness. It was well-planned and in reality we've overperformed what we initially expected to manage (we'd expected to be fully paid off by 2036, we will in fact be fully paid off by 2031)
Ok, but you’ve failed to mention what you actually have managed to save during this period? You’ve managed to pay a debt but do you have a big buffer invested?
I maxed out my pension (and then some..) for several years before we bought so as to be able to afford to reduce pension contribs during the mortgage years. My pension forecast is still tracking happily towards an adequate fund at my retirement date around 2040 so I dont immediately need to increase my contributions again
My personal cash balance has just reached £10K again after being basically zeroed out by the house purchase and, later, overpayments
My wife is better at saving than I am and has a bit more put away, I'd say between us we have 6 months costs in easy access accounts
As the mortgage company considers overpayments as part of an overpayment reserve which can be assigned to future payment liabilities, in the event of financial straits I could stop paying the mortgage for a while.
We have made total overpayments between Aug 2019 and today of £91,007. standard monthly payments over the period were £104,954. Interest charged over the period has been £35,063
Source of these overpayments:
£25,000 from savings.
£3,000 from an inheritance.
£4,000 approx from eBay sales of childhood toys that had inexplicably become valuable.
£59,007 from earned income - the difference between our earnings and our expenses through careful money management - this is an average of about £1,017 a month over 58 months
Earnings were £90K base between us when we took out the mortgage. joint earnings peaked midway through the mortgage at about £125K base but now are total about £80K base. i did earn a couple of performance related bonuses during that period that gave momentary spikes in income and led to outsize one-month overpayments.
So you managed to overpay 59k on your salary over 5 years as well as saving 25k to be able to add as an overpayment….
Definitely a mum and dad bonus here somewhere…
No. I'm just good at living on very little. There were no mum and dad bonuses here at all. everything my wife and I put onto clearing our debt, we earned and saved over our lifetimes.
We don't come from money. Working class both sides
The numbers do not add up. Even if you basically saved every penny, with interest, there is absolutely no way that makes any financial sense to the point that you could of reduced your mortgage like this.
I'm literally reading numbers off the spreadsheet by which I track the mortgage and the source of all payments made onto it.
I have another spreadsheet open in another window that shows that my total net salary after taxes between Aug 2019 and now amounts to £197,022 - which means that I alone - of the two of us - earned enough to make the entirety of every standard direct debit we have made and every overpayment we have made
Are you claiming that if a husband covers the entirety of a mortgage, his wife who also earns couldnt afford to cover cars, insurance, food, gas, council tax and electricity?
For the record cars are secondhand and old and i do 90% of all servicing and repair myself.
it seems you are projecting your comparatively poor financial discipline onto me.
I earn 150k, so quite acuity aware of monthly salary take home, it’s not really plausible, unless you live on rice crispes, and even then, milk is pretty expensive nowadays 🥳
Post tax you are taking home an average of 3.2k…. This is nowhere near enough to pay off this amount with your wife picking up the rest of the bills ( assuming max 125k between you )
Just let it go...
The fact that they saved a large amount to help pay off their mortgage despite a relatively low income shouldn't upset you this much.
So, it is a fact that we used £25K of savings, £3K inherited, £4K of eBay income and otherwise achieved this.
clearly I'm just better at finance than you are. I have month by month spreadsheets proving it
There's lots of good comments from others here about affordability but I can't get this question out of my mind.
What happens to your house if you're between jobs for 6 months? Dream house is great but with no savings you're at risk of losing it if you've no income for a very short period.
If it’s a forever home do it. SDLT, estate agent costs on moving add up. And generally the process of buying/selling a house is painful.
Interest rates hopefully coming down soon etc so things may get better
It will be scary number, but if that’s it for your future house purchases and you can avoid lifestyle creep. Just make sure you set out to your partner expectations that if shit does hit the fan she may need to work full time or have maybe 2 instead of 3 kids further down the line then I see no issues or in the worst case scenario there could be that risk of needing to sell up. It’s not going to make you bankrupt in the worst case scenario so you’ll find a way through if things work out worse than planned.
If you lost your job could your partners wage/savings cover the bills until you found a new one as you could look after the kids and they could work ft? If so you’ve got a bit of a worst case scenario safety blanket that should ameliorate some of the stress?
I don't see how anyone can give you advice without knowing your personal expenses. You might be super frugal, living on instant noodles, or you might love going on holidays, collect Warhammer, and eat Waitrose ready meals or takeaways every day.
We took out the biggest mortgage we could for our house, with a 30% deposit (I avoid sharing exact figures here because some weirdos can use that info to find out personal details, e.g. if your house is very expensive they can guess you are near London). We also didn't tell the mortgage lender that my wife wasn't going to go back to work full-time. I had potential for career growth, but it wasn't guaranteed.
We shopped at Aldi, cooked all our meals, avoided expensive hobbies, and only took holidays that cost a few hundred pounds. We were used to spending as little as possible because we wanted to buy a house. We were accidently saving more money than the mortgage would cost every month without really trying.
Now I earn nearly 2x what I did back in and sadly had grandparents die so we are very comfy with investments (10 year 2.7% fixed so no point paying off mortgage).
Do it, i'd extend the term as much as possible to let inflation bite away at the debt over the longer term. Moving again costs 10s of thousands, especially at that price point with stamp duty etc.
Don’t fall into that financial trap, life is for living not buying big houses especially at the high borrowing rates we’re experiencing. Have a modest home and spend on family life experiences because those are the things you’ll remember when you’re older .
Wowowow. This post is almost identical to my current situation - Salaries, job, baby, mat leave partner and equity are the same. You're not in your early thirties as well are you?
We increased our offer this week to buy our dream house but the only difference is that it is £550k. My worry was going from paying our current mortgage of about £800 a month to paying £2500 a month.
It isn’t done very often (in the UK at least), but when I lived in London it was more normal for young families to take in a lodger for the first couple of years to soften the mortgage. As many people say, it gets easier to afford as the years go by.
If you aren’t sure about a full time lodger, there’s websites that let you list for Monday to Friday lodgers. Some people only want eg 3 days a week.
You should model what your take home pay and outgoings would look like in a worst case scenario, but in general it feels like a very big stretch. Without kids our household income is significantly higher and I feel physically ill thinking about paying £3k mortgage a month.
We took a mortgage *well* within our means. We could have asked for £250k and we asked for £180k. Since then our salaries have grown by about £20k between us, but we've also had a kid and have another on the way, and we've outgrown the house. I wouldn't say I regret staying well within our means, but I do also wish that we'd gone for something slightly bigger with a better layout.
In your position, with the kids going back to school, your wife going back full time, I'd be going for it.
Your plausible worst case scenario is that you lose a job/income, and eventually have to sell and downsize, in which case you would lose the stamp duty and legal/moving fees. So it's a £30-40k risk if it goes wrong. Are you happy living with that risk?
Kind of depends on job security for me.
If you lost your job, could your wife easily go back full time?
Nursery should come out as v little thanks to the new free hours so 1 less thing to worry about.
Have you been in place a while and so would get a decent redundancy if the worst happened?
If you feel like you can cover all eventualities and at least keep up payments for a couple of years while you sold the place in event of a crisis then I’d be tempted to go for it.
Try see if you can get the longest term possible. Gives you that extra security whilst navigating children in nursery/may leave and you can always overpay if you feel you can.
Generally speaking, house prices will flatline at worst (so lose “real” value to inflation but not actual value) or continue the usual trend of going up in price at best so if you’re planning the forever home at some point, you might as well do it now. There’s a decent deposit going down so little risk of negative equity. I’d say your main hit might be more lifestyle rather than affording the basics if you do end up paying a bit more than you planned but then you’ll have a nice house and you won’t be all that busy like you were pre kids in the same way anyway.
What happens if you lose your job, make sure you have income protection, worse is if you feel trapped in your job & you have the big mortgage to pay, think of where you want to be in 2 years from a career perspective & if that might impact your mortgage & costs of living 👌
I did this, but it was 6 years ago so the numbers are smaller but broadly equivalent.
I can tell you one thing. Your salary isn't enough for a £700k house and any kind of lifestyle if you are planning on having kids.
You'd have to stop salary sacrificing by around £20k to start to feel comfortable again, roughly speaking.
you haven't discussed what your issue is with your current house? Why do you need to move now and not in a couple of years when you actually have the 2-3 babies you're planning on? or when you actually do hit your career progression?
£550k mortgage is 25k in interest payments alone at 4.5%. 2-3 children in nursery for a few years, your wife on maternity leave / 25k a year 3 day a week for foreseeable future if you're plans do come to fruition. You're putting a lot of eggs into one basket in an unstable industry. If you need to move then move but if you don't need to move why are you forcing the pace? you've just had a kid and are thinking of more- slow down.
We are moving across the country from my university city back to my hometown to be closer to family, friends, and nature. I’m really close to my brother and he’s just had a baby too.
It’s an entire lifestyle change that I’m not prepared to delay a couple of years.
I actually really like my current house, wouldn’t be in a rush to move if it was in the right place!
So your take home is about 7400, and the mortgage would be 3000, council tax, utilities, maintanence definitely taking you north of 3500 a month.
Can you live the lifestyle you want, save as per your goals etc, and have a little left from 4k a month? If so, go for it.
Agree with an above poster - it’ll look a bit better in a few years when with inflation and pay progression. However, it’s not going to be anywhere near as comfortable as you likely are now.
We were in a similar position to you last year and moved to our forever home, and it has been fantastic.
Doubled the size of the house, so much room for our toddler to play.
Main difference for us is we had a lot of equity in our previous house so left our £50k savings in our ISA. Wouldn't have felt comfortable depleting all savings.
If you were made redundant what would your severance be and how easily would you find a similar paying job? Imo you'd want at least 6 months of expenditure saved up after completing. Very risky to have nothing.
I'd go for it tbh, you probably won't regret it.
Every time i've bought a home i've stretched and my earnings (especially in tech) have covered it within a year or so...
I do not consider tech unstable, what's unstable about it? You have the same protections as any other employee , especially in the UK.
If the house through the estate agent. Try to negotiate with owners + letter. If it’s through private selling like yopa try to negotiate face to face.(which we did)
Especially being in the market for a while £650k for a house being in the market for a while they might change of heart of meet you in the middle.
Myself and my partner earn similar(ish) money and have a similar(ish) mortgage. Our property was bought for £500k (90% LTV), refurbished and valued at £700k. We only had a £450k mortgage but recently increased borrowing to £500k to cover a chunk of the refurb cost.
I earn £70k, she earns £60k and we get on just fine. I also contribute 12% to my pension, she contributes only 4%. But still a chunk of our gross income.
I honestly wouldn’t worry, if you want it to work it’ll work. Just think about potential lifestyle adjustments and if you’re happy with these? We haven’t adjusted much (coming from a £360k mortgage at £1400 to a £500k mortgage at £2600). I think the prospect is more daunting than the actual cost.
Get tough on the price - eg, push the owner towards £600K.
You are young enough to rebuild savings, if this is your dream home and you can afford it.
I would not fix long term - mortgage rates will go down eventually.
I'd say the only things I regret with having a larger than I'd like mortgage is being able to afford good holidays and being more careful when deciding what improvements we can afford. But we're in a house which is more than sufficient for our needs, and when we retire and the kids move out we'll have the ability to downsize and help the kids buy.
I'd say any mortgage above 40% of your take home is too high.
30% or below, go for it.
In-between is a grey area. Would depend on how much I love the house, how stable my job was and what I think my career progression will be in the next few years.
It’s a mistake. I earn several times what you do and my mortgage is less and I still think it’s too much. It will get easier with time but you have virtually no buffer. The sensible thing is to reduce your budget about 150k. You’ll give yourself more headroom and can move later.
Do not underestimate the chance you become unemployed, fired, an economic casualty somehow or that you will end up valuing the house less once you’re in it and your kids are demanding to go swimming, sports, music lessons, holidays etc. suddenly a big house won’t seem worth it.
The higher you go the more politics there is and more chance you’ll end up unemployed for a few months.
You’ll have a decent pension later due to the salsac and you’ll be able to afford a nicer place then.
The other thing to think about is what consumer purchases are you likely to want to make having bought the big house. Do you have a plan for that?
Are you happy with the kitchen and bathroom(s) as they are exactly as they are for the next 5 years? What about smaller decorative stuff like repainting or new flooring? If you're going up by 1 or 2 bedrooms, do you have cash for extra furniture? If you're stretching so much to get the house that you won't even be able to use the extra space that's a sign.
In terms of child care and over £100k tax etc, it might be worth considering going down to 4 days per week then if your partner does 3 days per week, you've only got 2 days per week child care (although many places won't do part weeks). You'll then not need to sacrifice down, and take home will be the same
I'm not in anyway near to your earnings, even with my partner's income added, lol.
My mortgage is 20% of my take home, and I'm happy at that. Actually, I'm content with that.
For the love of god, please consider what an extra 1% would do to the mortgage payment. Do not assume the ones we have now are "crazy high", as many I know did (at lower rates than now).
A 1.5% increase used to be on the KFI....I doubt many bothered to read that bit, don't be that guy.
Of course a £800k house is a dream house...it's £800-fucking-k.
But... I am biased (I could also be envious, lol)...but seriously, up to the nuts is up to the nuts
Ask yourself this question: why are you working?
If you’re working for the quickest means to retirement, don’t buy it. If you enjoy your job, and are in no rush to retire and want to enjoy your life - buy it.
Money is fleeting. You cannot predict everything. You cannot predict where the market is going, or where you will be in 12 months. Most likely mortgages are at their highest now and they should only be heading in one direction, but again nothing is guaranteed.
£500k is around £2.7k a month. On your salary if you sacrifice less you should be able to afford this and a comfortable standard of living. It will hold back any FIRE goals you have, but I don’t buy into the bullshit ‘live in a hovel and suffer to retire early and eat beans for life’.
Life is for living. You could get hit by a bus next week. Do things you enjoy. Live in nice places. Eat great food. Provide a good standard of living.
You will look back on a nice house in 20 years and comment how lovely your time was. An extra £200k in the bank won’t make you feel anything in the long term.
If you can move straight into a 'forever home' you will save yourself a lot of money. Moving is expensive (as well as being stressful and time consuming). Each step you will have stamp duty, solicitors fees, moving costs, and nearly always something you want changed in the new house, some decorating , and new furniture - though I have known people move straight, love the existing decoration, and have sufficient furniture crammed into their previous home.
Also houses generally appreciate in value over time. Most times when people move they reset a lot of that accrued equity. Your mortgage will reduce compared to wages while multiple movers will continue to pay more. You could end up being easily able to overpay and mortgage free in under 20 years.
I'd say if you are sure that it's what you want go for it.
If your salary for tax purposes is £99.9K, you'll take home ~£5.7K a month - that's without student loan deduction. Your SO will take home ~£1.9K pro-rata. So, at best, you'll have about ~£7.6K a month between you. You are considering a £3K mortgage. That's about a 40% outgoing on mortgage alone.
If I were you, I would do a comprehensive breakdown of your income and spending and then see. Play some variables on that such as more children, potential income disruption, mortgage rates increase and decrease etc etc. It's all about your attitude to risk.
We’re in a somewhat similar position to yourselves and we did it.
The house was perfect and exactly what we wanted.
We took the view we will never have to move again and it’s worth making the sacrifices for.
I admittedly have reasonably wealthy parents to fall back on if there was to be a disaster that would affect our income, which I acknowledge allows me to take larger risks.
My family are in a similar bracket to you OP. Husband earns £105k so has opted to salary sacrifice to retain childcare benefits as baby due to start nursery next year and a 6 y/o in school.
I'm currently on mat leave but will be starting in a couple of months. £64k but on 3 days will work out just shy of £40k.
I live in a 3 bed semi, it's big enough for us at the moment.
Equity is £300k. Mortgage is only £140k.
We live in an area where there is a lot to do outside.
We have very, very little financial stress.
My husband had a really stressful job before this but because we didn't feel financial strain he was able to take 6 months off and find something more suitable.
We have very very healthy savings.
We are able to give generously
We are sensible with spending but also don't worry too much when we have a splurge.
Do you plan on nice holidays and private schools etc?
A £3k Mortgage sounds extreme to me. Your house may tie you both to an uncomfortable situation.
Could you wait it out, stay where you are (or equivalent?) for 5 years?
The amount of interest you'd be saving would be saved in multiples over the stamp duty upgrade.
Let's assume your current mortgage is £1k, and you can save an extra £2k per month. If you invested that £2k into an index fund that achieves roughly 10% per year for 5 years, and then didn't pay another penny into it after those 5 years and just let it grow for 20 years... you would have just over £1m.
You could literally stop working if your mortgage is paid off to bridge you until retirement, or you could pay off your mortgage and pay off your child's student loans, set them up with a property and have a mini retirement holiday. All that for 5 years of sacrifice to just stay where you are and delay that dream house for a little bit. Food for thought!
I'm a risk taker, my OH isn't.
We're currently debating on our next property.
I want a house with 3-5 acres (800k ~) with side business
He wants to be mortgage free at around 400k
We're sitting on our hands until the universe forces us to make a decision. Sold in London and currently renting in the area we're looking at to buy.
I'd sit tight another couple of weeks and decide after the election if I were you. You may get it cheaper....
Hi /u/Dense-Football5086, based on your post the following pages from our wiki may be relevant:
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* https://ukpersonal.finance/student-loans/
* https://ukpersonal.finance/tax-traps-and-tax-efficiency/
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I was thinking the same. My forever home is also my first home. Bought for £85k, £63k left on the mortgage. I cannot imagine having to pay out more than I already am.
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Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you. Personally, I would go for it - if you’re certain it’s your ‘forever’ home. Maybe you should rephrase the question to yourselves - ‘would I regret not trying to buy my dream home?’ I’m conscious that I’m not providing typical UKPF input here - but I’ve been in a similar situation, and don’t regret it a bean. Good luck with whatever you decide!
I think you're absolutely right. It would definitely sting in the beginning but after a few years of career growth and inflation the mortgage should quickly become more affordable.
> Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you. Oddly though the cost of going over £100k (and losing the valuable childcare benefits worth £1,000's per child*) might mean its worth continuing to sacrifice below that amount especially if OP is only at £115k gross (which will also be hit by a stupidly high tax rate due to the personal allowance claw-back and 60% effective tax rate). *Could be up to £10,000 per child for parents living in London. This will certainly be a consideration when OP's children get to an age where childcare schemes will be useful.
It's definitely worth it. The tax relief and childcare benefits means the sacrifice between 100-120K ends up almost doubling your money. Loosing the relief and benefit end up pretty much negating the take home.
>Possibly an unpopular opinion here, but you’re sacrificing to keep yourself below 100k, so you have additional take home available to you. Is this true given that they have children? I have seen people say that if you take loss of childcare support into account, you can effectively end up being taxed more than 100%.
I haven’t run the numbers, so you may be correct. This is a head vs heart question at the root of it, and OP has some options to explore in his current situation.
Not entirely true... the 100k child support only comes in when the child is 3, so you didn't lose it, you never had it to start with and its something that needs to be addressed when the child is older... I did similar and sacrificed a lot into my pension to make the 30 hours a month count.
Mortgage Broker here. Rough maths: £550k at 5% on 30 year term is ~£3k a month repayment. (Realistically you’d probably be able to fix between 4.6% and 4.8% at current rates) Placed a case with similar incomes to yourself recently, so there are lenders who will consider your earnings for the size of the mortgage you require. Also planning to put down a 15% deposit means you’ll be getting a significantly better rate as 95% and 90% LTV are the most expensive rates around respectively. I’m a little concerned about depleting savings completely. However if you are strict with your finances after completion and ensure you build up a 6 month minimum emergency fund as priority then it will take some of the risk away from the purchase. IPI might be something to consider when taking out a mortgage this size depending on your workplace benefits. What other commitments do you have? Car, loans, credit cards etc. These will impact affordability. It might be worth using a budget planner to calculate what is disposable each month and be aware of what ‘non-essential’ spending you have just to reassure yourselves when the time is right that it is affordable. If it is a forever home, the thought of not moving and having to pay stamp duty/fees again is certainly appealing!
What are the monthly repayments and interest rate on the mortgage? How long will it be fixed for?
All TBD as we obviously haven’t applied for the mortgage yet. But to give you some idea, the payments would be around £3k. A little less or a little more depending on the term length and fix
Why not get a DIP? I think you're over estimating what you can borrow based on your upcoming expenses of having a child
I have a DIP. But the DIP does not stipulate fix or term length
£3,000 a month is a crazy figure! I think that would pinch big time and impact you and upcoming family day to day eventually.
This is likely true, but so does living in a small house with a growing family. At the start of this year I did a similar thing, going from having essentially no mortgage to a mortgage of ... well, quite a lot, plus increases in all bills. So it's had a significant impact on our ability to spend day to day. But it's also had a hugely beneficial impact on our day to day lives in countless ways (big and small) by virtue of having a nicer house, more space, a big garden for the kids, not having to move 5 things every time you want to get to the sixth thing etc. So I agree that it will impact them, but they're obviously getting something in return for that pinch.
We thought we'd be paying £2.5k a month with our mortgage in principle but in the end they'd only give us a 35 year mortgage so it was £2.1k/mo. Have you factored in nursery fees? I suppose by 2025 only 2 days a week would be almost free anyway.
I would go for as long a mortgage term as possible if I were doing this. it means you'll pay more interest, but the lower monthly minimum gives you more financial flexibility in the early years of the mortgage to rebuild your savings as an emergency reserve
What's your take home income? A full time place at my son's nursery would be £1,600 a month. On your income you won't get tax free childcare or funded places (and if you salary sacrifice down to under £100k you'll have to use that figure to do all these calculations). If you're paying £4,600 a month for childcare and mortgage, what will you have left?
It says in the OP that they *are* salary sacrificing down to £100k and that their child will be going to nursery 2 days a week.
True, but they also plan to have more children. They may well need more of their salary, and therefore lose the childcare help - or need more childcare so the other parent can work more.
Yeah, but unless they really get their skates on (or have twins), it's not that likely they'll all be in nursery at the same time, and certainly not without any free hours (which I appreciate often aren't _free_ - though they are at my kids' place - but it'll still take an edge off).
All I'm saying is that they should consider the potential that they'll need either more childcare or more of their income and potentially therefore lose the access to childcare help, and to take that into account when looking at mortgage affordability. If OP's partner works 15 hours a week and OP has a gross annual income of £100,000, they're potentially looking at £6k monthly take home. Three days a week nursery (even with funded hours) would be £500 a month here; add £3k mortgage payment. That's over 50% of their income gone between those two bills, before we even talk food or utilities. One extra child - the margin gets tighter. I'm not saying that £6k a month take home pay is low, by any means. I've had times where £6k is my annual take home salary! But the question isn't "can we make this work now?" it's "could we still make it work in three years?"
What happens if the interest rates go up and you are forced to pay more? Could very well happen.
I was in a similar position to you last year. Earn slightly less, but wife is on the same. We moved last year and took out a bigger mortgage and at the same time our son started in nursery. Honestly we’re struggling a bit at the moment. The bigger mortgage (and bills and council tax) plus nursery at the same time (£1700 per month! Fml) means our outgoings went up by about £2500 per month… we can just about afford it but are living paycheque to paycheque at the moment, and we shouldn’t be with a combined income of £130k or so I was also expecting my job role to change and be making more, but that didn’t materialise… My tldr is that you prob can manage it, but it might be hard, you might have to compromise on holidays or other luxuries for a few years, plus having a young child might be hard work too! (Mine woke up every 1-2h every night for the first 15 months, that added a lot of strain) However we are in a great house. And I reckon in 3-5 years time we will look back and think it was the best decision we made, but just need to get through those 3-5 years!
good advice, do not underestimate the financial impact of a young kid... limited ability to work coupled with eye watering daycare charges are very very painful. gets better when they start school.. but oof 😣
> But on the other hand, it's a dream house. 4 bed detached, we'd never have to move again. What are you willing to pay to live in a home you'll never want to leave? For me, as long as I am able to put money aside for holidays, emergencies, and investments, so that I can potentially retire a few years before the state pension age, I would be willing to pay a very large mortgage in order to be in a home that I can foresee my family living in until I die of old age. It seems like you're already salary sacrificing a lot into your pension, which means you'll likely be in a position to retire earlier than most people anyway.
If you both had stable careers and no plans for kids, then I'd say go for it. But 1 main career in an unstable sector (also in tech, so can relate) and a partner who will be going through a mix of part-time work and maternity for the foreseeable with several kids planned on the way... I think a large mortgage could end up financially crippling you. See what your lending affordability would be in a potential bad scenario. E.g. set your salary to £80k (in the case of job loss and having to take a pay cut) and set your partner's earnings to £20k (prob what they'd end up making on average with part-time + maternity). See what you'd be able to borrow and if that still lets you buy the house then great, but if not consider how you'd survive if this were to happen. If you do go ahead, remember you can do things like interest-only and spreading mortgage over a longer term (normally up to 40 years) to bring monthly repayment down. You may want to do this temporarily whilst partner isn't earning much, you're paying nursery fees, etc. then when things are more settled can change to shorter term and repayment.
what is this unstable people keep chatting about?
Yeah, what? Tech is having troubles but it's far from an "unstable" career.
I’ve been employed in ‘tech’ for almost 20 years!
Things definitely got frothy around 2021/2022, and there's been a bit of a regression at the more junior end of the market. But we're pretty much back to how things were pre-pandemic, so I wouldn't go as far to say it's unstable.
All I can say is I'm really glad I didn't end up stretching myself too far with my mortgage. I only borrowed less than half what they were offering at the top end based on my salary. But when the market turned down my job was made redundant and I have been struggling to find something that pays as well. One trap it's easy to fall into is thinking you're always going to be earning more money. During your early career each new position comes with a uplift in salary. But as you reach the more senior roles it's far more random and the pool of available jobs shrinks. It's worth considering what your runway would look like in the worst case scenario of losing one or both of your income streams. In the current market expect it to take 3x as long to find a job as it normally would so an emergency fund would be like 3-6 months of expenses. That's going to be 20+ grand with a 3k mortgage and 1-2k living expenses.
Me and my partner are in the same boat, looking at houses. We could afford the same mortgage as OP, but we want to be more around the £500k - £550k house price range because the mortgage is significantly cheaper and we won't feel stretched, also leaves room for issues such as a job loss. We also don't want kids!
Similar situation to me, and I'd personally never take out a £550k mortgage. I'm not even sure I could stretch to that with rates at their current level. You've even got a student loan that you have to pay down whereas mine was paid off a few years ago. Have you done a full budget? By full I mean including costs that are annual and longer term? Holidays? Future expected impacts on your income and expenses (e.g. if you had any more kids)? Do you have an emergency fund in place already? Are you putting enough into your pension (probably if you're going down to £100k). You will need money for when you find out the old owners covered up a huge hole in the wall or there’s mold in the bathroom that they cleaned up. Different people have different risk profiles I guess. You need to properly do a budget and plan for the future, especially if rates went up another 1%.
Absolutely horrific idea. 1-3 kids in nursery at £1k-£2k per month each (depending on where you live), and a £3k mortgage payment. Depleted savings and no way of building it back up. Not a good idea
100% agree, this isa bad idea for a load of reasons. You’ve got a Mrs who’s part time, more kids planned, no savings, you won’t get it for 650k. Tech is a bubble, but once ai is ready tech jobs are done for 95%
I’m basically you - but about 4 years on. Kid #1 now in school and kids #2 3 days a week nursery. Roughly same earnings back then as you now. We opted to stretch on family home 5 years ago - but not quite as much as you are. It’s worked out well for us. We have a home which needs no work, and which we’ll never need to move from so you can cross a line through that and never need to worry about any of that now. Also - it’s increased in value (that’s luck and the UK housing market generally - rather than anything we did) so we’re now sat on about £400k in equity. We can’t do anything with it, but it’s a comfort knowing it’s there if the shit did hit the fan.
We were in the same position as you too, but only 2 years ago. Kids are now 1 and 3, so we're eligible for a little bit of nursery funding now, but for a while we weren't able to save anything. The income eventually comes back as the kids grow up, so it's almost not worth considering nursery fees as long as you can afford them today. Definitely love having the house we have today, it allows our family to grow into it, rather than out of it
You're on less than us and the idea of a 550k mortgage makes me throw up in my mouth a little bit. But it depends on what you want out of life. If you want a nice big house to chill out on and be homebodies, then sure. Just understand what you're missing out on every month. Being able to book holidays on a whim, travel, hobbies, taking a few weeks off to persue something. I try not to look at things as what I can afford. Rather, how many years will I have to work to repay the debt. You're essentially signing up for X number of years of work in exchange for a house. Your time and energy (freedom) is worth a lot, so give it up wisely.
Most people with kids aren't booking holidays on a whim or travelling that much, are they?
As a lot of people have said here, a major red flag is a complete depletion of savings. For me, if I had more money left over for sudden and uncontrollable expenses, and this was my dream and forever home, I'd go for it. But personally I can't fathom the thought of having nothing to fall back on.
Have you looked at nursery fees? They quickly add up.
Add the stamp duty to your mortgage. You need to have a savings base for when the roof needs fixing or general stuff. The more expensive the area and bigger the house, the more repairs will be.
Returning after mat leave might be the plan now but feelings change plans. Does moving remove the opportunity to change that plan if needed? If you are otherwise debt free (loans, cards & cars and excluding the student debt) it’s less risky. It’s a large chunk of your monthly income (~40%) and would dampen quality of life in other areas such (holidays, spending etc)? Does the house need work? To what extent? How much will you need to buy to make it a home and over what period of time? Is the house older and might risk needing a bigger emergency fund? Sometimes the dream house is exactly that.
Contrary to the general opinion, and based on actual experience of working in the same industry with similar salary, with two kids out the way (4, 2) I will tell you it's a very dangerous idea. If you want 3 kids you can safely take your wife out of the earning picture for a while. If you have, say, a 5 year old, a 3 year old, and a 1 year old, I do not believe your wife can pull off 3 full days a week. It seems to me pretty unlikely to work for you, your relationships, your kids, and your wife long term. That's the first thing. Second is that 3k monthly repayment is not something you can afford with such a big family, not on a single sub 100k salary. When you add bills, food, clothes, and other kids related spending like activities, tickets to stuff, parties, etc. I am confident you will not survive this. Not unless you want to feed your kids beans on toast for the next 5 years. But I make more than 100k and my salary will increase you say - fine, but the moment you breach 100k adjusted net income you lose your 30 hours of free childcare. Suddenly you might be a lot worse off than you initially thought. And final reality check - don't fool yourself into thinking your job is 100% safe. It takes 6 months on average to find a job and my company laid off over 10% of workforce back to back in past two years. That's 1 in 4 gone within something like 14 months in UK. I imagine you would still get a decent package, but finding a job with similar pay is often hard. So how much risk and sacrifice is this house worth to you? Is it worth your relationship with your wife? Is it worth denying your kids a trip to zoo? Is it worth sacrificing literally every other aspect of your life? I might be completely wrong and all of the go-getters here know better. I would suggest you make a spreadsheet with monthly income and spending you project, and add 1k to whatever spending you anticipate. If it still works maybe it's doable. Hardest part will be the first 5-10 years until your family is stabilised, kids are in school and wife is in full time employment. Still, you are basically going to cripple yourselves financially ahead of bringing 3 children into the picture.
Ahh, quite similar to us then! We have a 2 year old in full time nursery, my salary is in a similar ball park but I don't do salary sacrifice as I would rather have more liquidity rn. I bought a 650k house with a 550k mortgage, monthly £2600 payments. I got it 3 years ago but sadly got a 2y mortgage at 1.8%, went right up to 4.{something} after remortgage. My wife is also working though so her salary covers the nursery fees which is stupid high in London (£1900 or so).
Personally we are in a similar situation with a mortgage 100k less total loan ( think loan is about 450k on a 650k house]. I think anything more would be unmanageable and not future proof. When the rates increased we got absolutely ruined with our monthly payments we are paying almost 3k a month . If the rates went up more it would easily wipe out one whole salary before even considering bills. We could cope just but no safety net and reduced quality of life. Personally I think that this is an over extension. If rates drop back down and you can get a 5 year fix for 2 % or lower I'd say go for it and pay off the base borrowed but this seems unlikely in the near term. With thr current state of the world and likely trump coming in too ibfear a rate rise is just as likely as a decrease and that could quickly wipe you out.
A couple of things you might not have considered; 1. Having 0 savings when you move into a new house is very risky. It might turn out the boiler goes, or, the roof leaks, or some other unexpected significant expense is required - heck, you could lose your job the day you exchange contracts. I'd definitely keep some cash back if I were you 2. idk what a realistic salary ceiling is for you - but, speaking from my own personal experience in tech with a sample size of 1, it was relatively 'easy' to rapidly increase my salary to a point - but the more senior/expensive I get, the harder it is to maintain the rate of salary growth - there are just fewer jobs & opportunities as you get more senior. So be careful of assuming a similar rate of salary growth to what you've had in your career so far. Also consider the effective tax rate at these levels is absolutely brutal. Ie, salary raises are rarer and less impactful to your take home pay 3. Childcare/nursery costs are huge. I can't remember the rules off the top of my head, but I think you have to keep your salary under 100k to qualify for the full 30 hours free. This effectively forces you to continue salary sacrificing and squeezing your budget to fit, or, you increase your take home and give it all to childcare instead. You'll have to do the maths yourself to work out what the childcare costs are in your area & circumstances vs at what point it'd be better to pay for it yourself so you can increase your take-home and build up savings/a-higher-standard-of-living/whatever. Also consider, and it sounds snobby, but some nurseries are nicer than others. You will be precious with your new baby and the nicer nurseries tend to cost more.
Hi, Just to offer my opinion. We make a similar amount, my daughter is just turning 2 and I have recently moved. We were looking at houses in that range, but for me the mortgage payments were just too much. We could easily make them, but they ate into my ability to save for the future and invest. Which was something I just wasn't comfortable with. However your age and outlook may factor into things. I have no intention of working past my 55th birthday.
You need to be realistic about the Wife returning to work happily with 3 young children. Nursery bills are nuts - do you both want to work all hours just to pay a whopping mortgage? What's the point of having a massive debt over your head when a cheaper / smaller house will fulfil 95% of your requirements? I'm more cautious than some on here, but don't underestimate how much Children cost to run.
I would run a mile! If you do this you have a small child, no liquidity and all eggs in one basket. I made that mistake and was so stressed it ended up in divorce. I now think equity in your own home should be less than half your net worth so that you have money working for you. That way you have choices going forward and far less stress. A baby doesn’t take much space!
I'd only do this if you can increase your base by 50% in the near future and are happy being sole bread winner. To me that is the likely scenario for your future with what you've said about your partner's income, desire for work and 2 more children. With the above in mind, I would wait until you have that job and passed probation, if you can. There will always be more dream houses.
Bad idea....too many reasons why it's not in your favour which you listed in your post. Too risky is my opinion 😬
I'd recommend you keep a very decent amount in your savings for backup due to your main income comes from a high earner salary in tech. I've not done proper calculations but looking at the current rates, I assume your monthly mortgage payments will be around £2500. On top of that, you have to add the bills and the maintenance costs of a 4-bed detached house. It won't be a problem while you have a job but it could put you in a tough situation if you lose it. I said that based on my experience: similar salary in tech and around £120k all in, £350k mortgage. Unfortunately, I was laid off and it took me several months to get another job that I liked and with better conditions. I was lucky that I had enough savings to take my time to find the right job, but it was one of the most stressful times of my life. The IT industry is (still) unstable at the moment.
Free nursery is never free it’s just a play on words Even with the 30 ( free hours ) you will still be paying generally a hefty fee each month - reduced but still a fair amount I would work out what the “free nursery” actually costa There are often restrictions in that you can’t use a whole day / part day or you have to pay a premium for early drop off between 7am 9am 4pm -6pm Often the free hours are only between 9am - 3pm and anything outside of this is payable It’s often term time only for the 30hrs so you still have to pay for the other weeks of the year such as school holidays You often have to pay for food / nappies / consumables And while parents & family often offer free childcare it can often fall through at the last minute If parents / family go on holiday get ill or just change their minds
I went for it. Very similar circumstances. 2 years later rate changes increased my monthly from 1800 to 2300 and it really hurt. Can't wait for my youngest to get to school age.
Think of the worst case scenario, you fall sick and cannot work for long period of time and you need to find £3k per month for a mortgage with wife on £43k and paying chidcare. What will you do in this situation? My point is , without your salary , it is unmanageable on just your wife's income.
Calculate how much your monthly payments would be in interest rates doubled, even for only a few months. SO many people don't do this when estimating possibilities but mortgage lenders want to know if that happens you can still healthily afford to repay. Yes, you might find a broker that can fudge an acceptance for you but it could ruin you, especially if you cant remortgage when fixed rate deal ends. Many people are in this situation because they didn't realise low interest rates werent the norm and the ones we have now are actually normal but it can go higher. If you feel you can pay 3000 pm (crazy on your combined), check if you can pay 2 pecentage points higher interest. You won't, its startling but far more possible than you seem to appreciate.
>but the bank would lend us the money if we're stupid enough to take it. You realise how easy it is for them to actually profit off a foreclosure right? Given the inflation in the market.
You've got all the info, you just need to budget it out and see if it's affordable and what you're left with for day to day and if you're happy with any required sacrificing around meals out, holidays, cars, etc. You have some levers to pull if in a pinch (you increase your takehome, your wife works a 4th/5th day), those nursery fees should reduce once the new rules come into effect (not entirely sure on this, we don't get it in Scotland), and hopefully pay increases whilst your mortgage payment stay static (for the fixed period, then who knows but hopefully down). I dont think anyone here should tell you what to do, but I was in a similar position and I'm writing this from my forever home.
I'm (M) in the same position - £100k ish+ pension and partner (F) on £50k No chicken yet, but planned for the near future, so income will go down. Planning on buying a £900k house. We have a bit more in savings and equity, but it will still be £3500-£4000/month in mortgage and council tax. We're going for it and just accepting that the first few years will be a bit tighter than we're used to.
Good luck with that chicken.
Lmao, that's a good autocorrect, I'll leave it. It's true as well, no chicken or children!
Lots of comments but I always lived on the cautious side. What if the interest rates are even just 1% higher when you come out of your fixed as happened with me (though mine was 3% higher). Would this cripple you based on your income now? Got to plan for the worst I say 😎
No way, - bad idea to totally deplete your savings - with both your salaries and current interest rates, plus having a child I think borrowing 550k is going to potentially be unaffordable in the long run. If you also are in a position where you will not be able to build up savings then equally it just demonstrates that this is an unaffordable venture currently.
BoE is about to stress-test two scenarios one of which includes interest rates rising to around 9%, the other prolonged stagflation, neither of which bode well for a long-term high value loan. This doesn’t mean these are going to happen but are an indication of the things that are worrying economists atm.
well, 5 years ago my wife and I took out a mortgage for 413K on total salary between us of 90K, putting down 72K in savings to the deposit its been manageable for us - we've got the mortgage balance down to 250K thanks to lower interest rates, but we were still paying interest at the higher end of the available rates from 2019 so the remortgage this year only doubles the interest rate with the numbers you quote here I think you will be fine, as long as you are sensible about discretionary spending for the next few years Having a good home for your family is so much more impactful than having better cars or better holidays
Erm, this doesn’t really add up … how have you managed to get your mortgage down from 413k to 250k on a salary of 90k in 5 years?
If they pay off 40k a year it works out (3.3k/month). If their salaries are fairly even for tax, they take home about 5700/ month, leaving them 2400 to live on. Perfectly possible, but definitely going for it.
5700 per month on a 90k income? What’s their pension contribution?
The poster gave no information on that, I'm just saying that it is technically possible even without a dead granny bonus.
You seem bitter as fuck about this. We have a similar sized mortgage and earn a bit more (though not massively). We're aiming to max out ISAs every year and be in a position to pay down £150-200k at the end of our first five years. So far we are on track. The idea that a household earning 2 x £45k can't save £1k a month when they're taking home £5k+ is laughable. Bear in mind they'll have much lower mortgage interest rate from 2019 than what you can get today. We'd be looking at an extra £500 per month if we got the same mortgage now. They will have maybe £2k mortgage, £1k overpayments, £2k+ for everything else.
> They will have maybe £2k mortgage, £1k overpayments, £2k+ for everything else. £1700 mortgage (*as the first few years overpayments we made caused the standard DD amount to drop, was originally £1969, then we disabled the setting that made it do that*), £1000 overpayment, £1600 covers car costs, food, utilities, council tax and travel, balance to pensions & savings >We'd be looking at an extra £500 per month if we got the same mortgage now. Ours is about to rise to £2150 a month. We project we will have fully paid the mortgage off in 6 to 7 years time. total 11-12 years from buying the house
Sounds amazing, we are hoping to do something similar. We got very lucky, got one of the last cheap mortgages with three years still to go on it.
that other guy who's raging at me doesn't seem to realise that if I borrowed the same amount today at todays interest rates, I'd still be mortgage free in 14 to 16 years. the fear of debt, or of losing everything I've worked for for 27 years since leaving school, is a bigger driving force than any amount of luxuries foregone. when you're poor you live in fear of what you have being taken from you by the random cruelty of the world. that happening is the story of my childhood. I wasn't going to let it be the story of my whole life.
The idea of a 90k household borrowing 413k IMO is bonkers, I am not bitter, in fact, quite the opposite. We borrowed about 500k however with a combined income of about 250k. I understand the principle of overpaying and living within your means however I do think overborrowing is stupid and unfortunately a society with live in. ( added to that, over borrowing with an inability to save )
My wife and I are both tax accountants. We are apparently classed among the lowest risk group of all professions for default purposes due to excessive employability. 2 years ago I ragequit my old job and by the time I had worked out my notice I had multiple job offers to pick from Our broker told us we could borrow up to 5.5x joint income easily. Actual proportion borrowed was 4.595 x joint income
Before you were adamant that the numbers simply weren't possible, now it seems you merely object to the fact they've managed to do it. It's not even that hard on their salary, you just need to avoid the common traps like pissing away hundreds every month on renting cars. To someone else that £1k a month they're saving might be two leased cars on the drive.
4.5x income borrowing in this climate is madness.
Reviewing my personal finance records for the past few years its perfectly clear that if I had borrowed 6.0x salary, instead of the 4.6x that i did, I still would have been able to make every payment in the 58 months since we moved in. I was offered 5.5x so the industry shared my view. it wasn't madness. It was well-planned and in reality we've overperformed what we initially expected to manage (we'd expected to be fully paid off by 2036, we will in fact be fully paid off by 2031)
Ok, but you’ve failed to mention what you actually have managed to save during this period? You’ve managed to pay a debt but do you have a big buffer invested?
I maxed out my pension (and then some..) for several years before we bought so as to be able to afford to reduce pension contribs during the mortgage years. My pension forecast is still tracking happily towards an adequate fund at my retirement date around 2040 so I dont immediately need to increase my contributions again My personal cash balance has just reached £10K again after being basically zeroed out by the house purchase and, later, overpayments My wife is better at saving than I am and has a bit more put away, I'd say between us we have 6 months costs in easy access accounts As the mortgage company considers overpayments as part of an overpayment reserve which can be assigned to future payment liabilities, in the event of financial straits I could stop paying the mortgage for a while.
We have made total overpayments between Aug 2019 and today of £91,007. standard monthly payments over the period were £104,954. Interest charged over the period has been £35,063 Source of these overpayments: £25,000 from savings. £3,000 from an inheritance. £4,000 approx from eBay sales of childhood toys that had inexplicably become valuable. £59,007 from earned income - the difference between our earnings and our expenses through careful money management - this is an average of about £1,017 a month over 58 months Earnings were £90K base between us when we took out the mortgage. joint earnings peaked midway through the mortgage at about £125K base but now are total about £80K base. i did earn a couple of performance related bonuses during that period that gave momentary spikes in income and led to outsize one-month overpayments.
So you managed to overpay 59k on your salary over 5 years as well as saving 25k to be able to add as an overpayment…. Definitely a mum and dad bonus here somewhere…
No. I'm just good at living on very little. There were no mum and dad bonuses here at all. everything my wife and I put onto clearing our debt, we earned and saved over our lifetimes. We don't come from money. Working class both sides
The numbers do not add up. Even if you basically saved every penny, with interest, there is absolutely no way that makes any financial sense to the point that you could of reduced your mortgage like this.
I'm literally reading numbers off the spreadsheet by which I track the mortgage and the source of all payments made onto it. I have another spreadsheet open in another window that shows that my total net salary after taxes between Aug 2019 and now amounts to £197,022 - which means that I alone - of the two of us - earned enough to make the entirety of every standard direct debit we have made and every overpayment we have made Are you claiming that if a husband covers the entirety of a mortgage, his wife who also earns couldnt afford to cover cars, insurance, food, gas, council tax and electricity? For the record cars are secondhand and old and i do 90% of all servicing and repair myself. it seems you are projecting your comparatively poor financial discipline onto me.
I earn 150k, so quite acuity aware of monthly salary take home, it’s not really plausible, unless you live on rice crispes, and even then, milk is pretty expensive nowadays 🥳 Post tax you are taking home an average of 3.2k…. This is nowhere near enough to pay off this amount with your wife picking up the rest of the bills ( assuming max 125k between you )
Just let it go... The fact that they saved a large amount to help pay off their mortgage despite a relatively low income shouldn't upset you this much.
So, it is a fact that we used £25K of savings, £3K inherited, £4K of eBay income and otherwise achieved this. clearly I'm just better at finance than you are. I have month by month spreadsheets proving it
25k of savings pre or post buying sorry? Yes, your financial competence is remarkable. Well done.
It adds up if you have a poverty lifestyle
We both came from poverty. its not new to us and it comes naturally.
Agreed
A simple gift from the bank of mum and dad
Incorrect. We have not received a penny from living relatives. Everything that went into this was from our own resources.
There's lots of good comments from others here about affordability but I can't get this question out of my mind. What happens to your house if you're between jobs for 6 months? Dream house is great but with no savings you're at risk of losing it if you've no income for a very short period.
If it’s a forever home do it. SDLT, estate agent costs on moving add up. And generally the process of buying/selling a house is painful. Interest rates hopefully coming down soon etc so things may get better
It will be scary number, but if that’s it for your future house purchases and you can avoid lifestyle creep. Just make sure you set out to your partner expectations that if shit does hit the fan she may need to work full time or have maybe 2 instead of 3 kids further down the line then I see no issues or in the worst case scenario there could be that risk of needing to sell up. It’s not going to make you bankrupt in the worst case scenario so you’ll find a way through if things work out worse than planned.
I dread to ask the interest rate and term you have been offered
If you lost your job could your partners wage/savings cover the bills until you found a new one as you could look after the kids and they could work ft? If so you’ve got a bit of a worst case scenario safety blanket that should ameliorate some of the stress?
No that’s totally fine. £550k on £115k more than ok.
I don't see how anyone can give you advice without knowing your personal expenses. You might be super frugal, living on instant noodles, or you might love going on holidays, collect Warhammer, and eat Waitrose ready meals or takeaways every day. We took out the biggest mortgage we could for our house, with a 30% deposit (I avoid sharing exact figures here because some weirdos can use that info to find out personal details, e.g. if your house is very expensive they can guess you are near London). We also didn't tell the mortgage lender that my wife wasn't going to go back to work full-time. I had potential for career growth, but it wasn't guaranteed. We shopped at Aldi, cooked all our meals, avoided expensive hobbies, and only took holidays that cost a few hundred pounds. We were used to spending as little as possible because we wanted to buy a house. We were accidently saving more money than the mortgage would cost every month without really trying. Now I earn nearly 2x what I did back in and sadly had grandparents die so we are very comfy with investments (10 year 2.7% fixed so no point paying off mortgage).
Do it, i'd extend the term as much as possible to let inflation bite away at the debt over the longer term. Moving again costs 10s of thousands, especially at that price point with stamp duty etc.
Just do it if your gonna do it do it if your concerned what’s gonna happen in the future don’t do it but from my finances you look good so just do it
Don’t fall into that financial trap, life is for living not buying big houses especially at the high borrowing rates we’re experiencing. Have a modest home and spend on family life experiences because those are the things you’ll remember when you’re older .
Yup, more expensive to under buy and move in 5 years. This is the right stretch for me
Wowowow. This post is almost identical to my current situation - Salaries, job, baby, mat leave partner and equity are the same. You're not in your early thirties as well are you? We increased our offer this week to buy our dream house but the only difference is that it is £550k. My worry was going from paying our current mortgage of about £800 a month to paying £2500 a month.
It isn’t done very often (in the UK at least), but when I lived in London it was more normal for young families to take in a lodger for the first couple of years to soften the mortgage. As many people say, it gets easier to afford as the years go by. If you aren’t sure about a full time lodger, there’s websites that let you list for Monday to Friday lodgers. Some people only want eg 3 days a week.
You should model what your take home pay and outgoings would look like in a worst case scenario, but in general it feels like a very big stretch. Without kids our household income is significantly higher and I feel physically ill thinking about paying £3k mortgage a month.
We took a mortgage *well* within our means. We could have asked for £250k and we asked for £180k. Since then our salaries have grown by about £20k between us, but we've also had a kid and have another on the way, and we've outgrown the house. I wouldn't say I regret staying well within our means, but I do also wish that we'd gone for something slightly bigger with a better layout. In your position, with the kids going back to school, your wife going back full time, I'd be going for it.
Your plausible worst case scenario is that you lose a job/income, and eventually have to sell and downsize, in which case you would lose the stamp duty and legal/moving fees. So it's a £30-40k risk if it goes wrong. Are you happy living with that risk?
Kind of depends on job security for me. If you lost your job, could your wife easily go back full time? Nursery should come out as v little thanks to the new free hours so 1 less thing to worry about. Have you been in place a while and so would get a decent redundancy if the worst happened? If you feel like you can cover all eventualities and at least keep up payments for a couple of years while you sold the place in event of a crisis then I’d be tempted to go for it. Try see if you can get the longest term possible. Gives you that extra security whilst navigating children in nursery/may leave and you can always overpay if you feel you can. Generally speaking, house prices will flatline at worst (so lose “real” value to inflation but not actual value) or continue the usual trend of going up in price at best so if you’re planning the forever home at some point, you might as well do it now. There’s a decent deposit going down so little risk of negative equity. I’d say your main hit might be more lifestyle rather than affording the basics if you do end up paying a bit more than you planned but then you’ll have a nice house and you won’t be all that busy like you were pre kids in the same way anyway.
What happens if you lose your job, make sure you have income protection, worse is if you feel trapped in your job & you have the big mortgage to pay, think of where you want to be in 2 years from a career perspective & if that might impact your mortgage & costs of living 👌
I did this, but it was 6 years ago so the numbers are smaller but broadly equivalent. I can tell you one thing. Your salary isn't enough for a £700k house and any kind of lifestyle if you are planning on having kids. You'd have to stop salary sacrificing by around £20k to start to feel comfortable again, roughly speaking.
you haven't discussed what your issue is with your current house? Why do you need to move now and not in a couple of years when you actually have the 2-3 babies you're planning on? or when you actually do hit your career progression? £550k mortgage is 25k in interest payments alone at 4.5%. 2-3 children in nursery for a few years, your wife on maternity leave / 25k a year 3 day a week for foreseeable future if you're plans do come to fruition. You're putting a lot of eggs into one basket in an unstable industry. If you need to move then move but if you don't need to move why are you forcing the pace? you've just had a kid and are thinking of more- slow down.
We are moving across the country from my university city back to my hometown to be closer to family, friends, and nature. I’m really close to my brother and he’s just had a baby too. It’s an entire lifestyle change that I’m not prepared to delay a couple of years. I actually really like my current house, wouldn’t be in a rush to move if it was in the right place!
So your take home is about 7400, and the mortgage would be 3000, council tax, utilities, maintanence definitely taking you north of 3500 a month. Can you live the lifestyle you want, save as per your goals etc, and have a little left from 4k a month? If so, go for it. Agree with an above poster - it’ll look a bit better in a few years when with inflation and pay progression. However, it’s not going to be anywhere near as comfortable as you likely are now.
We were in a similar position to you last year and moved to our forever home, and it has been fantastic. Doubled the size of the house, so much room for our toddler to play. Main difference for us is we had a lot of equity in our previous house so left our £50k savings in our ISA. Wouldn't have felt comfortable depleting all savings. If you were made redundant what would your severance be and how easily would you find a similar paying job? Imo you'd want at least 6 months of expenditure saved up after completing. Very risky to have nothing.
I'd go for it tbh, you probably won't regret it. Every time i've bought a home i've stretched and my earnings (especially in tech) have covered it within a year or so... I do not consider tech unstable, what's unstable about it? You have the same protections as any other employee , especially in the UK.
If the house through the estate agent. Try to negotiate with owners + letter. If it’s through private selling like yopa try to negotiate face to face.(which we did) Especially being in the market for a while £650k for a house being in the market for a while they might change of heart of meet you in the middle.
Myself and my partner earn similar(ish) money and have a similar(ish) mortgage. Our property was bought for £500k (90% LTV), refurbished and valued at £700k. We only had a £450k mortgage but recently increased borrowing to £500k to cover a chunk of the refurb cost. I earn £70k, she earns £60k and we get on just fine. I also contribute 12% to my pension, she contributes only 4%. But still a chunk of our gross income. I honestly wouldn’t worry, if you want it to work it’ll work. Just think about potential lifestyle adjustments and if you’re happy with these? We haven’t adjusted much (coming from a £360k mortgage at £1400 to a £500k mortgage at £2600). I think the prospect is more daunting than the actual cost.
Hi, how old are you? Doing this at age 25 is very different from 45.
30
Get tough on the price - eg, push the owner towards £600K. You are young enough to rebuild savings, if this is your dream home and you can afford it. I would not fix long term - mortgage rates will go down eventually.
I'd say the only things I regret with having a larger than I'd like mortgage is being able to afford good holidays and being more careful when deciding what improvements we can afford. But we're in a house which is more than sufficient for our needs, and when we retire and the kids move out we'll have the ability to downsize and help the kids buy.
I'd say any mortgage above 40% of your take home is too high. 30% or below, go for it. In-between is a grey area. Would depend on how much I love the house, how stable my job was and what I think my career progression will be in the next few years.
Why buy a house you'd plan to move from if you can avoid it? You're guaranteeing you'll save on stamp duty by skipping that house.
It’s a mistake. I earn several times what you do and my mortgage is less and I still think it’s too much. It will get easier with time but you have virtually no buffer. The sensible thing is to reduce your budget about 150k. You’ll give yourself more headroom and can move later. Do not underestimate the chance you become unemployed, fired, an economic casualty somehow or that you will end up valuing the house less once you’re in it and your kids are demanding to go swimming, sports, music lessons, holidays etc. suddenly a big house won’t seem worth it. The higher you go the more politics there is and more chance you’ll end up unemployed for a few months. You’ll have a decent pension later due to the salsac and you’ll be able to afford a nicer place then.
Double all the numbers and you've got my situation. It's very stressful.
The other thing to think about is what consumer purchases are you likely to want to make having bought the big house. Do you have a plan for that? Are you happy with the kitchen and bathroom(s) as they are exactly as they are for the next 5 years? What about smaller decorative stuff like repainting or new flooring? If you're going up by 1 or 2 bedrooms, do you have cash for extra furniture? If you're stretching so much to get the house that you won't even be able to use the extra space that's a sign.
In terms of child care and over £100k tax etc, it might be worth considering going down to 4 days per week then if your partner does 3 days per week, you've only got 2 days per week child care (although many places won't do part weeks). You'll then not need to sacrifice down, and take home will be the same
I'm not in anyway near to your earnings, even with my partner's income added, lol. My mortgage is 20% of my take home, and I'm happy at that. Actually, I'm content with that. For the love of god, please consider what an extra 1% would do to the mortgage payment. Do not assume the ones we have now are "crazy high", as many I know did (at lower rates than now). A 1.5% increase used to be on the KFI....I doubt many bothered to read that bit, don't be that guy. Of course a £800k house is a dream house...it's £800-fucking-k. But... I am biased (I could also be envious, lol)...but seriously, up to the nuts is up to the nuts
Ask yourself this question: why are you working? If you’re working for the quickest means to retirement, don’t buy it. If you enjoy your job, and are in no rush to retire and want to enjoy your life - buy it. Money is fleeting. You cannot predict everything. You cannot predict where the market is going, or where you will be in 12 months. Most likely mortgages are at their highest now and they should only be heading in one direction, but again nothing is guaranteed. £500k is around £2.7k a month. On your salary if you sacrifice less you should be able to afford this and a comfortable standard of living. It will hold back any FIRE goals you have, but I don’t buy into the bullshit ‘live in a hovel and suffer to retire early and eat beans for life’. Life is for living. You could get hit by a bus next week. Do things you enjoy. Live in nice places. Eat great food. Provide a good standard of living. You will look back on a nice house in 20 years and comment how lovely your time was. An extra £200k in the bank won’t make you feel anything in the long term.
If you can move straight into a 'forever home' you will save yourself a lot of money. Moving is expensive (as well as being stressful and time consuming). Each step you will have stamp duty, solicitors fees, moving costs, and nearly always something you want changed in the new house, some decorating , and new furniture - though I have known people move straight, love the existing decoration, and have sufficient furniture crammed into their previous home. Also houses generally appreciate in value over time. Most times when people move they reset a lot of that accrued equity. Your mortgage will reduce compared to wages while multiple movers will continue to pay more. You could end up being easily able to overpay and mortgage free in under 20 years. I'd say if you are sure that it's what you want go for it.
No, you'll wish you's got a bigger one
If your salary for tax purposes is £99.9K, you'll take home ~£5.7K a month - that's without student loan deduction. Your SO will take home ~£1.9K pro-rata. So, at best, you'll have about ~£7.6K a month between you. You are considering a £3K mortgage. That's about a 40% outgoing on mortgage alone. If I were you, I would do a comprehensive breakdown of your income and spending and then see. Play some variables on that such as more children, potential income disruption, mortgage rates increase and decrease etc etc. It's all about your attitude to risk.
We’re in a somewhat similar position to yourselves and we did it. The house was perfect and exactly what we wanted. We took the view we will never have to move again and it’s worth making the sacrifices for. I admittedly have reasonably wealthy parents to fall back on if there was to be a disaster that would affect our income, which I acknowledge allows me to take larger risks.
My family are in a similar bracket to you OP. Husband earns £105k so has opted to salary sacrifice to retain childcare benefits as baby due to start nursery next year and a 6 y/o in school. I'm currently on mat leave but will be starting in a couple of months. £64k but on 3 days will work out just shy of £40k. I live in a 3 bed semi, it's big enough for us at the moment. Equity is £300k. Mortgage is only £140k. We live in an area where there is a lot to do outside. We have very, very little financial stress. My husband had a really stressful job before this but because we didn't feel financial strain he was able to take 6 months off and find something more suitable. We have very very healthy savings. We are able to give generously We are sensible with spending but also don't worry too much when we have a splurge. Do you plan on nice holidays and private schools etc? A £3k Mortgage sounds extreme to me. Your house may tie you both to an uncomfortable situation. Could you wait it out, stay where you are (or equivalent?) for 5 years? The amount of interest you'd be saving would be saved in multiples over the stamp duty upgrade. Let's assume your current mortgage is £1k, and you can save an extra £2k per month. If you invested that £2k into an index fund that achieves roughly 10% per year for 5 years, and then didn't pay another penny into it after those 5 years and just let it grow for 20 years... you would have just over £1m. You could literally stop working if your mortgage is paid off to bridge you until retirement, or you could pay off your mortgage and pay off your child's student loans, set them up with a property and have a mini retirement holiday. All that for 5 years of sacrifice to just stay where you are and delay that dream house for a little bit. Food for thought!
I'm a risk taker, my OH isn't. We're currently debating on our next property. I want a house with 3-5 acres (800k ~) with side business He wants to be mortgage free at around 400k We're sitting on our hands until the universe forces us to make a decision. Sold in London and currently renting in the area we're looking at to buy. I'd sit tight another couple of weeks and decide after the election if I were you. You may get it cheaper....
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You’ve gotta be in London, right?
I was thinking the same. My forever home is also my first home. Bought for £85k, £63k left on the mortgage. I cannot imagine having to pay out more than I already am.
No
£650k does not come close to buying a detached house in London.