Joint Income £70k, Mortgage £250k

[Soir]

Morning folks, not sure if this should be in homes section

I know it's each to their own, but do people think this is stretching it financially?

A couple (early 30's, + baby) both work, no other debts, joint income £70k - works out around £4k after tax per month taking out a 25yr £250k mortgage so replayments approx £1700 per month (46-ish % of joint take-home pay)

Wife may have another kid some day (700pm nursery costs per child) but husband likely (hopefully) to earn more in future. No toys as such, no expensive hobbies..focus is on providing a decent family home

Is this stretching it??

[Dupont666]

get an interest only mortgage and make the over payments yourself.... this gives you freedom to decide if you want to pay one month or if things are a little tight, not paying.

[scotal]

Dupont666 said:

get an interest only mortgage and make the over payments yourself.

That may not be possible, depending on LTV. Lenders have tightened up on I/o and on repayment plans these days.

Soir, what are you going to do if you lose an income? Are you a saver, and will you have enough put by to get by if it goes wrong.
Have you considered a longer term? (There are caveats with that)
Are you fixing the rate for a decent period of time?
If rates rise how will you cope?

[Soir]

scotal said:

Dupont666 said:

get an interest only mortgage and make the over payments yourself.

That may not be possible, depending on LTV. Lenders have tightened up on I/o and on repayment plans these days.

Soir, what are you going to do if you lose an income? Are you a saver, and will you have enough put by to get by if it goes wrong.
Have you considered a longer term? (There are caveats with that)
Are you fixing the rate for a decent period of time?
If rates rise how will you cope?

Would look to fix for 5yrs min (rates around 6% expecting)
We would consider 30yr term - would you recommend this (as can always overpay to 10%)?
If rates raise it would be a struggle, fix for 5yrs and hope earnings are more by then..
Lose an income...struggle
Savers currently yes, but not if we take this mortgage (partner has pension via work, I dont)

[Deva Link]

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

[scotal]

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Have they told their insurance company?

[Dupont666]

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

[scotal]

Soir said:

Would look to fix for 5yrs min (rates around 6% expecting)
We would consider 30yr term - would you recommend this (as can always overpay to 10%)?
If rates raise it would be a struggle, fix for 5yrs and hope earnings are more by then..
Lose an income...struggle
Savers currently yes, but not if we take this mortgage (partner has pension via work, I dont)

I cant recommmend anything without doing the numbers, but if you want me to drop me a line.

[Deva Link]

Dupont666 said:

(minus NI, etc),

I like the way you add that in as if it's a mere detail!

Their repayment morgtage and mortgage insurance is around £1200/mth, council tax £120/mth, gas/elec/water/phone/broadband/running 2 cars (both have longish commutes) /food etc etc.

[SJobson]

Dupont666 said:

50k a year is 4.1k a month income (minus NI, etc)

Ha ha! Tax free as well? And how are you paying off the capital on yours?

[Dupont666]

Deva Link said:

Dupont666 said:

(minus NI, etc),

I like the way you add that in as if it's a mere detail!

Their repayment morgtage and mortgage insurance is around £1200/mth, council tax £120/mth, gas/elec/water/phone/broadband/running 2 cars (both have longish commutes) /food etc etc.

The only difference they had to me was that I footed everything myself and the mortgage was 80k more on mine, I didnt have 2 cars and admittedly I didnt have any other debit to my name.

I was able to afford that and much more.... though I did a lot of saving whilst in that situation.

[jameshaworth]

Dupont666 said:

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

The £50k pa income nets down to c. £3k per month after tax. From this there would be all the usual expenses, utilities, direct debits, cars, holidays, clothes, insurances, pension contributions, debt repayments (inc. student loans if applicable) etc. etc.

Then they have the mortgage costs to pay and as a result you can see how they struggle. Although some people could manage this, others are less frugal with their income and have greater discretionary spending habits!

[Dupont666]

jameshaworth said:

Dupont666 said:

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

The £50k pa income nets down to c. £3k per month after tax. From this there would be all the usual expenses, utilities, direct debits, cars, holidays, clothes, insurances, pension contributions, debt repayments (inc. student loans if applicable) etc. etc.

Then they have the mortgage costs to pay and as a result you can see how they struggle. Although some people could manage this, others are less frugal with their income and have greater discretionary spending habits!

I get that, I understand that, just seemed like someone would weight up the odds first and then jump in for the mortgage, etc...

I bet they didnt tell the lender its been let out? I would get more renting mine out than I pay mortgage on it, but they would hike up the % as I didnt pay 25% upfront and I reckon they would find out.

I was one of the tightfisted gits who hates to buy expensive stuff and likes to save, so I managed on the 3k a month to pay off everything and afford things as Im a bastid when it comes to not increasing my standard of living when more wages come in and it worked fine.

[jameshaworth]

Dupont666 said:

jameshaworth said:

Dupont666 said:

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

The £50k pa income nets down to c. £3k per month after tax. From this there would be all the usual expenses, utilities, direct debits, cars, holidays, clothes, insurances, pension contributions, debt repayments (inc. student loans if applicable) etc. etc.

Then they have the mortgage costs to pay and as a result you can see how they struggle. Although some people could manage this, others are less frugal with their income and have greater discretionary spending habits!

I get that, I understand that, just seemed like someone would weight up the odds first and then jump in for the mortgage, etc...

I bet they didnt tell the lender its been let out? I would get more renting mine out than I pay mortgage on it, but they would hike up the % as I didnt pay 25% upfront and I reckon they would find out.

I was one of the tightfisted gits who hates to buy expensive stuff and likes to save, so I managed on the 3k a month to pay off everything and afford things as Im a bastid when it comes to not increasing my standard of living when more wages come in and it worked fine.

Your right some can manage it if you manage your finances tightly, others can't!!

I think what Scotal was getting at when he asked if the OP has told the insurance company is that if there is a claim and the property has been rented out then under the normal domestic residential policy they will not be insured!!

[Dupont666]

jameshaworth said:

Dupont666 said:

jameshaworth said:

Dupont666 said:

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

The £50k pa income nets down to c. £3k per month after tax. From this there would be all the usual expenses, utilities, direct debits, cars, holidays, clothes, insurances, pension contributions, debt repayments (inc. student loans if applicable) etc. etc.

Then they have the mortgage costs to pay and as a result you can see how they struggle. Although some people could manage this, others are less frugal with their income and have greater discretionary spending habits!

I get that, I understand that, just seemed like someone would weight up the odds first and then jump in for the mortgage, etc...

I bet they didnt tell the lender its been let out? I would get more renting mine out than I pay mortgage on it, but they would hike up the % as I didnt pay 25% upfront and I reckon they would find out.

I was one of the tightfisted gits who hates to buy expensive stuff and likes to save, so I managed on the 3k a month to pay off everything and afford things as Im a bastid when it comes to not increasing my standard of living when more wages come in and it worked fine.

Your right some can manage it if you manage your finances tightly, others can't!!

I think what Scotal was getting at when he asked if the OP has told the insurance company is that if there is a claim and the property has been rented out then under the normal domestic residential policy they will not be insured!!

not only not insured, but if they claim on the insurance the lender would find out and then there is some explaining to do with regards to why the circumstances have not been amended.... some people get away with it, some put head in sand and claim ignorance and some like me brick it and couldnt do it on a clear concious for fear that the lender would whack the % up to a massive amount and then place a £5k get out clause on the mortgage.

[Deva Link]

Dupont666 said:

jameshaworth said:

Dupont666 said:

jameshaworth said:

Dupont666 said:

Deva Link said:

My daughter and her partner have a £200K mortage and joint income of £50K. They've given up trying to afford to live in their house and have rented it out (for a fair bit less than the mortgage).
Thankfully he gets a flat with his job.

Eh?

Mine is 270k morgage and is £950 per month interest only and what ever I want to pay on that.... 50k a year is 4.1k a month income (minus NI, etc), how much did they have in debit not to be able to aford that?

The £50k pa income nets down to c. £3k per month after tax. From this there would be all the usual expenses, utilities, direct debits, cars, holidays, clothes, insurances, pension contributions, debt repayments (inc. student loans if applicable) etc. etc.

Then they have the mortgage costs to pay and as a result you can see how they struggle. Although some people could manage this, others are less frugal with their income and have greater discretionary spending habits!

I get that, I understand that, just seemed like someone would weight up the odds first and then jump in for the mortgage, etc...

I bet they didnt tell the lender its been let out? I would get more renting mine out than I pay mortgage on it, but they would hike up the % as I didnt pay 25% upfront and I reckon they would find out.

I was one of the tightfisted gits who hates to buy expensive stuff and likes to save, so I managed on the 3k a month to pay off everything and afford things as Im a bastid when it comes to not increasing my standard of living when more wages come in and it worked fine.

Your right some can manage it if you manage your finances tightly, others can't!!

I think what Scotal was getting at when he asked if the OP has told the insurance company is that if there is a claim and the property has been rented out then under the normal domestic residential policy they will not be insured!!

not only not insured, but if they claim on the insurance the lender would find out and then there is some explaining to do with regards to why the circumstances have not been amended.... some people get away with it, some put head in sand and claim ignorance and some like me brick it and couldnt do it on a clear concious for fear that the lender would whack the % up to a massive amount and then place a £5k get out clause on the mortgage.

They have the lending banks permission to rent and they have landlords insurance. The bank permission was a bit of a family favour (as was getting a ridiculous mortgage in the first place ).

[dibbly_dobbler]

Soir said:

Morning folks, not sure if this should be in homes section

I know it's each to their own, but do people think this is stretching it financially?

A couple (early 30's, + baby) both work, no other debts, joint income £70k - works out around £4k after tax per month taking out a 25yr £250k mortgage so replayments approx £1700 per month (46-ish % of joint take-home pay)

Wife may have another kid some day (700pm nursery costs per child) but husband likely (hopefully) to earn more in future. No toys as such, no expensive hobbies..focus is on providing a decent family home

Is this stretching it??

Yes but nothing ridiculous imho. I have always thought that it was wise (ish !) to push it a bit when buying a house. Historically cheap debt at the moment as well so if not now then when ?

If you can survive the next few years then you'll be laughing.

[Deva Link]

Soir said:

Morning folks, not sure if this should be in homes section

I know it's each to their own, but do people think this is stretching it financially?

A couple (early 30's, + baby) both work, no other debts, joint income £70k - works out around £4k after tax per month taking out a 25yr £250k mortgage so replayments approx £1700 per month (46-ish % of joint take-home pay)

Wife may have another kid some day (700pm nursery costs per child) but husband likely (hopefully) to earn more in future. No toys as such, no expensive hobbies..focus is on providing a decent family home

Is this stretching it??

You mentioned the possible extra £700/mth being offset by your rising income - but to what extent?

What do you spend month to month now - if you've got to live on £1800/mth is that feasible?

I don't know - I stuck with the house I bought 22 years ago for £33,500 and I honestly don't know how much the mortgage is - we pay £200/mth but that's way overpaying due to endowment shortfall. It seems weird now but the next step up for us was houses at £45K and that just seemed insane at the time! We lived through 15.75% mortgage interest rates.

Maybe in years to come you'll laugh at your £1700/mth mortgage - it just seems difficult to imagine that at the moment.

[Mr POD]

Soir said:

Morning folks, not sure if this should be in homes section

I know it's each to their own, but do people think this is stretching it financially?

A couple (early 30's, + baby) both work, no other debts, joint income £70k - works out around £4k after tax per month taking out a 25yr £250k mortgage so replayments approx £1700 per month (46-ish % of joint take-home pay)

Wife may have another kid some day (700pm nursery costs per child) but husband likely (hopefully) to earn more in future. No toys as such, no expensive hobbies..focus is on providing a decent family home

Is this stretching it??

YES and NO.

£4K AFTER tax minus £1700 minus £700 minus council tax, water rates, sky, broadband and all those so called essentials.

Plus you'll need 2 new cars on easy credit ? Call it £3K outgoings before food with one child. Can they live on £250 a week ? Yes. So add another child into the mix £700 a month, and you're down to £70 a week for food. No holidays. Never actually spend time with the kids, never shape their early development? Just Lots of Stress.

[Soir]

Mr POD said:

Soir said:

Morning folks, not sure if this should be in homes section

I know it's each to their own, but do people think this is stretching it financially?

A couple (early 30's, + baby) both work, no other debts, joint income £70k - works out around £4k after tax per month taking out a 25yr £250k mortgage so replayments approx £1700 per month (46-ish % of joint take-home pay)

Wife may have another kid some day (700pm nursery costs per child) but husband likely (hopefully) to earn more in future. No toys as such, no expensive hobbies..focus is on providing a decent family home

Is this stretching it??

YES and NO.

£4K AFTER tax minus £1700 minus £700 minus council tax, water rates, sky, broadband and all those so called essentials.

Plus you'll need 2 new cars on easy credit ? Call it £3K outgoings before food with one child. Can they live on £250 a week ? Yes. So add another child into the mix £700 a month, and you're down to £70 a week for food. No holidays. Never actually spend time with the kids, never shape their early development? Just Lots of Stress.

The house we are interested in was originally on at £400k, down to £350 asnd now £335 and having looked in area for past couple of years, it is a bargain, but will need a lot of work doing on it one day (flat roof on extention, new windows..but this is not urgent to do). we can get them down to £300k if we sell our house quickly enough.

Both already have cars with no finance.

I have my own business and pay myself only a small amount (£30k) and this has been in this reccession, so I believe having survived thus far and business is getting busier/better that it should be feasible/realistic to earn at least £10k more each year.

So the general feeling is don't do it??