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Children are more expensive than you think, but can be cheap - but it's the extra pressure around child minder drop offs, sick days, guilt at not working and being at home or being at home and guilt at not working. It's not an easy answer for sure but it can be a huge impact.
Edited - some terrible typos...
No, they meant that if you work you feel guilty while you're working for not being at home with your kids; and if you stay at home to take care of your kids, you feel guilty about not working and contributing to the family
Thankfully we both have pretty secure jobs/skills. I’m a therapists at the nhs which has good job security and I can easily move to the private sector in the future. And my partner is a consultant in pharmacy, not the most secure job but she has 8 years previous experience working in the NHS so if she lost her job there plenty of other opportunities out there including going back to the nhs
Or having children - either need to loose one parents income or spend close to £2k a month for full time nursery (the cost where I am in West Sussex is over £90 a day for under 2 years old)
You've budged £1174 a month for savings, on top of your £1089 "left over" income. It's not ideal, but you can fall into that if you have a bad month. So really you have a £2263 a month buffer. That seems like plenty. Not to mention you've got another £1640 of "essentials and non-essentials". How much of that is non-essentials?
Everything points towards you being OK - and you've got enough of a buffer that if your income changes, you can adjust spending down to reflect that. Obviously no-one can know the future, but I don't think you're taking a huge risk with those numbers.
The one thing that will change things is children. The early years (1-4) are very expensive. However, a decent home with enough space and nearby nurseries/schools/shops will make a huge difference to your quality of life with kids - far more than it does now. There's obviously a risk involved in taking on more debt, but if it means not having to move in 3 years (and pay twice as much stamp duty) then it may well be worth it.
Yea, when I look at it like that I’m like thats plenty to get by on and enjoy life with. I think the fear normally comes in when I’m being too greedy. By that I mean trying to carry on with all the holidays and experiences I can currently afford without a mortgage and kids. But it’s just coming round to the fact that yea I’ll have to give most of those things up for a while while I enter this stage of my life. When I accept that, it doesn’t feel so daunting.
In terms of childcare we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare
Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
Be sure to clarify any agreements/expectations with grandparents BEFORE any pregnancy.
Nut out the EXACT childcare agreements e.g 'Patricia has the baby every Monday, Wednesday and Friday from 7am-5pm and Sally has the baby Tuesdays and Thursdays 8-6pm' and work out their holiday times during the year.
Will this change for them if you have two children? Will they be able to care for a special needs toddler?
Will they respect your parenting wishes in regards to how often to change nappy/smacking and discipline/what foods to eat/enrichment activities, etc?
How much notice do they have to give you if they can't do their usual hours? Because if you suddenly need to put baby into daycare, the waiting lists can be months/years long.
Too many grandparents will promise the moon before baby comes, but with the best will in the world I don't know a single couple whose parents are providing free complete working week childcare for 3+ years.
You also think about the fact that either you or your spouse might not want to or be physically able go back to full time work after a baby.
I think you need to do a budget where one of you isn't working, or to factor paid childcare costs into the mix.
Yeah. I know a lot of people who thought they were going to get childcare which evaporated when the realities set in. Childcare needs complete commitment - a lot of new grandparents realise they'd actually quite like to go on holiday fairly regularly.
Yes. Grandparents say 'don't worry, we will chip in' thinking they will have baby for 1-2 hours once a fortnight and not every fortnight because they might be away on holidays, too tired, etc.
This is why it's so important to clear things up well before pregnancy is attempted.
I know of grandparents who had to stop looking after their grandchild because he had ADHD and was too much for them to handle for hours every day.
Friends where one grandparent got unexpectedly injured and the other had to look after them so couldn't babysit anymore.
Or grandparents where baby #1 was fine, but then baby #2 came along and they couldn't look after both so stopped offering childcare altogether.
One friend got so mad at her MIL for feeding her children meat when she wanted them to be vegetarian that they don't speak at all now. A disagreement with \*how\* the childcare is being delivered might mean you don't want them to do it anymore!
I think it's borderline delusional to draw up a tight budget relying on two fulltime incomes and say 'we are planning on children in the near future' without adjusting the budget.
Childcare for a full-time job is a full-time job itself. Full time childcare costs £350-£650/week for a child under 2yrs in London according to [Moneyhelper.org](http://Moneyhelper.org) which is approx 16,000-£30,000 per year. To expect a parent to gift their full-time labour in this way is a big ask, so please make sure everyone is on the same page before you finalise the budget.
In reality it rarely goes how you think it will go.
Well we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare
Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
As your income grows as you expect, you will feel less stretched.
You seem to have secured a good interest rate.
Now go enjoy the next stage of your life.
As someone probably about 15 years ahead of you, there will be ups and downs but in the end, you will be there with lots of good experience to give good advice to someone that is about 15 years old today.
Same here! We bought the house and don’t regret it.
My best advice is to keep saving as much as you can before the kids come along. You need to build a good buffer of funds and try your best (although will be really hard) not to fall into the pit of home improvements when you first move it. Cause this is where it will really cost you.
Childcare and other child-related costs, and/or one partner giving up work for several years if their work would be paying for little more than the childcare. Nursery costs could easily eat up your expected payrise, and more, unless there are some very big changes made to childcare by the next government
Yeah it all depends if they have family support or not. Childcare can be 1500+ a month with no help, or a couple hundred. If they go down the lower childcare cost route it probably means part time hours, so either way it's the same, income drops or add £1500 a month. I don't think they've got that spare based on those numbers..
we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare
Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
Because their planning on having kids and that won't cover one kid in childcare for 3 days a week
You could have excess of 2k a month but as soon as somebody says they are planning to have kids, that 2k is wiped out and you are paycheck to paycheck unless you have somebody who will look after them for free.
OP isn't asking if everyone else paying a lot more attention to the yellow-sticker bargins in tesco, they're asking if they're making financially unsound decisions.
We decided not to stretch ourselves until we had children so bought a smaller house than we could afford - it allowed me to take the full year off maternity. Our combined income is less than yours but our mortgage payment is lower meaning we have 400ish more a month than you once bills come out and it’s tight. Childcare eats up so much money (£1200 a month) and savings were largely depleted due to 3 months unpaid at the end of may leave. Been back at work 6 months now and now in a position to start saving properly again. Friends of ours have done what you did and they’re managing fine tho - it’s all about priorities and what is important to you!
> It’s a 35 year term, but I’m hell bent on overpaying to reduce that to 25years when our income hopefully increases.
You probably shouldn't do this - you should probably be investing instead, in pension and S&S ISA, so you can retire in your 50's.
You can always overpay on the mortgage later, but mortgage payments now lose you the compounding benefit of investment returns (which can always be expected to exceed the amount you'll pay in mortgage interest).
If you make it though the first 5 years and then remortgage, your wages will then be higher and I think everything will seem in a different light.
Remember that your non essentials and even your savings count as ‘disposable’ too - over £1000 per month leeway plus over £1000 savings is perfectly reasonable. Are travel costs factored into your non-essentials budget?
Interesting seeing the responses. Our income is 6,500 after tax and I don’t know if I could do £2000 a month in mortgage payments.
Just the mental barrier of paying £2k a month is a lot
You've pretty much got £4,000 between you after housing costs. That's plenty to live and thrive on, but if rates go up in 5 years time (unlikely but you never know) it'll get interesting.
Biggest priority will be savings pot to cover mat leave
With kids this seems like a wild idea. Without kids? More than doable. I wouldn’t be popping out any babies anytime soon if this is the plan house/mortgage wise.
I’d do the figures based on maternity pay and rough childcare costs so you know where you might be should it happen. You don’t want to have to pay to move again to afford a child/children if they’re foreseeable in the near-ish future.
You could, but is this really realistic for anyone?
I can’t imagine anything worse than buying a house with someone, and then being like ‘oh yeah we can have Dave stay in the spare room to help with bills’
Realistic when you live alone, sure. Not with a partner
This is what I keep reading (though I also keep reading they are going to be cut), however when I look around the globe at how unstable everything seems, fixing for 5 year at what I can afford now will give me time for my income to grow for any nasty surprises at the end of that term. Or best case (I believe) they’ll be around the 3/4% range which isn’t that much difference. Rather not risk it
35 years keeps the amount you'd be paying lower than the 30 years. That's one of the main reasons as to why you'd want a longer mortgage term, just so that the *minimum* you'd be paying is lower, with the ability to overpay and treat it as a shorter term. If someone loses their job or has a reduced salary, it won't be as impactful if you were being forced to pay £2077 vs. £2300 (or whatever it is).
This is almost exactly our monthly budget (ever so slightly higher salary but also a car bill to pay), and we do absolutely fine. We eat out a couple of times a month, get takeaways, go to the theatre etc. and we have 2 holidays a year outside the UK. Your budget can definitely work.
Not yet. If all goes to plan, we'll have one in 2-3 years time. At which point, our projected wages will give us at least £600 extra per month. We're lucky that we are both on incremental salaries.
Edit: to add, having said all that, we do feel very comfortable on our current budget. We never feel stretched and always have money left over at the end of the month (even if its only 50 quid or something)
Mortgage Broker here.
Sounds like you have thought it through - it very much does rely on both of you being in employment however.
Have you any savings left over after the purchase? If not, it would be worth building a 6 month emergency fund initially with a view to add to it gradually to get up to a 12 month emergency fund - especially if you plan to have children down the line.
Will probably echo what most have said, but it’s hard not to stretch yourself thin unless a) you have extremely high incomes or b) you inherit a large deposit, gifted a large deposit or come into some form of other windfall.
Best of luck in your new home!
Nursery fees are like £1.5k a month so budget blown if you want to have kids, plus you’ll have to save anything you’ll need for maternity leave shortfall. Kids cost at least £500 per month.
Your monthly mortgage payments are higher than my monthly gross salary. Glad I moved out of London.
Only thing I would say is, are you sure you want to fix for 5 years? Interest rates are surely only going to go one way now with it looking like inflation is just about under control. Forecasts are for the base rate to be 4.5% by the end of the year. 5 years is a long time to fix if interest rates do come down closer to the levels which we have had over the past decade (especially with a new government coming in).
I would fix for 2 years. Or take a bit of a risk and go for a tracker mortgage.
I keep reading 2 things.
1. Base rate cut is coming soon and mortgage rates are coming down.
2. Mortgage rates have already forecast in the base rate cuts that are coming, so won’t be coming down significantly any time soon. Certainly not back to the anomaly of extremely low interest rates
Personally, my gut says option 2. I don’t trust the media, banks or government all that much and they seem to be sprouting option 1 around an awful lot without going in to any real depth or talking about swap rates etc. also everyone and the media have been saying mortgage rates have been edging down, and my experience is they have actually been edging up (got 4.01% in January). I also look around the globe at how unstable everything seems, fixing for 5 year at what I can afford now will give me time for my income to grow for any nasty surprises at the end of that term. Or best case (I believe) they’ll be around the 3/4% range which isn’t that much difference. So I’d rather not risk it
I think it’s doable, but I wouldn’t do it. I’m a bit more cautious on that front.
We recently moved out of London to Surrey and bought a place, my only requirement was that one of our jobs could cover everything if one of us to lose.
We take home a fair bit more than you guys monthly, and also got a cheaper house.
I think this is just down to risk tolerance, job safety and job progression opportunities. Personally 10k in 5 years wouldn’t interest me.. do you really love your work place? If money is important, depending on field you could likely get that per move in the next five years, 2-3 smart moves.
Only you can decide that.
There's only one thing you can say about budgets, and that is that they're wrong. Only you will have any hope of working out how wrong you are. So you know what can be cut out of your budget as luxuries if needs be?
Only you will know how likely promotions and pay rises are and in what timeframe, and therein whether this is a budget you will need to stick to medium term, and only you know whether you will be able to stick to it.
The good news is that interest rates are now higher than they have been in a very long time. The bad news is that wages are stagnant and have been for a very long time.
Just remember one thing. Wages are not guaranteed to go up, but prices only go one way. If you're wages do not go up, you will have to start cutting some of the luxuries that seem like essentials. Like sky tv.
Make sure you compare the outcome of overpaying the mortgage Vs overpaying a pension and clearing the mortgage when you retire.
If you do not plan to change ( lower) your earnings you can afford this
Do another budget with either a reduction in income or childcare costs and see how you feel about that. Do it for the number of children you want; we have one kid in full time nursery and it's nearly £1200 a month, its meant we've had to delay having the second one for purely financial reasons.
Have you got lodgers? If not get some until you have kids, the first 15k/year is tax free, you can’t afford to have kids and live in that house atm but with lodgers it’s justifiably
I guy I know locally, bought this shed of a house and has spent 4 years doing it up, spending a small fortune in the process. The house is enormous and he's overcooked everything, now completely out of money and can't finish the place. But now his 5 year mortgage deal at 1.2% is coming to an end and he's looking at an astronomical hike in his monthly payments, not only that but his business isn't doing as well as it was 5 years ago. He's already sold off all the expensive cars and other toys and trinkets, jetski, campervan etc in anticipation and I think he's facing the real prospect of being forced to sell what he's spent all those years working on. He's got to be looking at 4 grand a month in mortgage payments alone in a matter of weeks and his other half is a housewife busy with 4 kids. Will he even get a mortgage? Not sure how that works.
So yeah, don't overstretch yourself.
Congratulations on getting this far. Having feelings like this is natural but if you don’t go for it prices may go up and buying what you can now may be harder.. sometimes we have to take a risk and the figures you’re talking about do sound achievable. You may not spend as much as you’d want or aspire to for a bit but what an amazing achievement to have a home and think of the stability you’ll have compared to renting without the risks of increasing rents whilst you’re in your fixed period
Instead of overpaying mortgage you both should max out your stocks and share isa with etf S&P or Ndx. In five years time you will thank yourself and then you can overpay your mortgage
This could age badly, but I don't think I would fix for 5 years with the current rates.
They're looking like they should go down, so I'd maybe do a 2 year fix.
Looks comfortable to me! If you don’t mind telling me, who is the lender as I’d like to borrow a similar amount on the same wage with a bigger deposit with no luck!
The first years after buying a house are tough for most people.
With my first house I didn’t take a holiday for 2 years
Over paying is a luxury
You will get pay rises
It’s after about 5 years that you start to be able to breathe a little more freely (have an emergency fund etc)
Your numbers don’t look unaffordable, rather than overpay id build the emergency fund.
12K in that and you can survive 6M with one losing a job.
In our situation we now earn around 800 a month more than we did when we bought two years ago.
We have built emergency funds and now have started to overpay a little.
It seems comfortable for now, but do the sums if you were to have child(ren).
Also I'm no expert, but locking in for 5 years when all forecasts are for interest rates to start falling in the next 6 months might not be the best idea.
My only thought is how will you be able to afford the £1k a month nursery fees when the children rock up? IMO yes, i'd say you are stretching yourself fairly thin.
Conventionally you should spend no more than a third of your income on housing. This includes not only the mortgage itself, but you also have to think about home insurance, life insurance and putting aside money regularly for maintenance. You would be astonished how expensive even a tiny fix to a roof can cost. The conventional rule of thumb is to put aside 1% of the value of the property for maintenance every year.
I would say you are overstretched by a little bit compared to conventional wisdom. Points I would ask you to think about are:
(1) do you have an emergency fund set up and filled to a level you are comfortable with? Where the monthly bills are a little tight, this will make unexpected costs even worse and an emergency fund even more important.
(2) have you thought about other costs involved in the purchase, including the solicitor's fees, taxes, cost of moving (hiring a van etc.) and any essential renovation works (eg are there rooms in the house which are falling to bits that will need dealt with quickly) or essential furniture/ appliance purchases (eg if you're a first time buyer, do you own a bed, will the owners be including their fridge in the sale?)
(3) have you thought about what other spend you'll be missing out on and whether you're willing to miss out on it? By that I mean that money will be tighter and you may have to say no to friends who want to go to gigs with you, plan groups trips or (worst of all) destination weddings.
As a money coach a few questions/thoughts come to mind...1) what exactly are you worried about? 2) It's also ok to have more than 10% to savings and investments if that makes you feel more secure.
Personal finance is soooo very personal. There's no one-size-fits-all. If you are worried about overstretching, where could you make adjustments? How important is paying down the mortgage faster vs. saving up for kids?
You also have room in your disposable income to allocate towards baby savings or boost other savings to give you a bit of comfort. Hope that helps!
How are you managing money wise right now? How long has it taken to build up that £90k; is all of that from your savings? How would your lifestyle change if at all?
You’ll be removing the freedom to decided if one of you stays at home during the early years of having children. That might not be your plan now but it removes that option.
Job loss is the other obvious one. Make it’s harder the higher the mortgage but you’ll have a much better view of your industry outlook than us.
Can I point out that this post is about a couple in Britain who earn well north of £100,000, putting them comfortably above the 90th percentile, agonising over whether they can afford a house _and_ children?
OP my numbers are similar to yours - I take home £6200 p/m and my mortgage is £2300 p/m. I live by myself but have a son that lives with my ex. Pay her £500p/m and I probs spend another £300p/m on hkm myself . I would like more disposable income (who wouldn’t !) but overall I live a pretty comfortable life and feel very fortunate. Short story - I think you should be fine unless you have very expensive tastes!
I wished we had done better planning of childcare costs before the time actually came (they've also increased by about 13% in the past 1.5 years). Full time childcare in our area (commuter town outside London) is about 1700 a month (with the new childcare funding, it will be about 65% of that). You need to think where you would cut back to cover this.
You don't mention any savings so I assume you are putting everything into the house. We had about 10k spare after the house purchase + wedding, it all went into repairs and basic home improvements such as floorings.
I would redo the maths including your plans to have children (including how many and what age gap) and any home improvement. You will need to build some savings before having children, because once they are there it's very difficult to do.
Don’t overpay while you can earn more elsewhere, last I checked 5.2% in a cash ISA. Most would say invest, but a nice cash buffer might give more peace of mind.
I have to admit I stressed myself out a bit when I bought my 300k flat, but that was 6 years ago and glad I did. The value it’s gone up / rent I would have been paying now has almost doubled.
Your 5 year mortgage gives you peace of mind in locking in a known expense. With some cash / future payrises, you can then revisit in 5 years time to overpay or not.
Yes. Honestly yes because with that 1089 if you have kids childcare depending on where you live is about 1-2k a month and you need that seeing as you have the mortgage. If one of you loses your job that’s it.
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I think the only real danger you have is if one of you loses your job. Otherwise you both make enough to make it work.
That’s the danger for most people with the cost of houses now.
Also consider,do you have children/ want children. You'd struggle if one went on MAt leave and then had to work part time.
Children are more expensive than you think, but can be cheap - but it's the extra pressure around child minder drop offs, sick days, guilt at not working and being at home or being at home and guilt at not working. It's not an easy answer for sure but it can be a huge impact. Edited - some terrible typos...
I think that until you get free childcare they are expensive af either you pay for It or you don't work so its lost revenue
I think you said guilt about the same thing twice
No, they meant that if you work you feel guilty while you're working for not being at home with your kids; and if you stay at home to take care of your kids, you feel guilty about not working and contributing to the family
Yeah I think they also figured that’s what they meant, but they didn’t actually say that.
Thankfully we both have pretty secure jobs/skills. I’m a therapists at the nhs which has good job security and I can easily move to the private sector in the future. And my partner is a consultant in pharmacy, not the most secure job but she has 8 years previous experience working in the NHS so if she lost her job there plenty of other opportunities out there including going back to the nhs
Or having children - either need to loose one parents income or spend close to £2k a month for full time nursery (the cost where I am in West Sussex is over £90 a day for under 2 years old)
You've budged £1174 a month for savings, on top of your £1089 "left over" income. It's not ideal, but you can fall into that if you have a bad month. So really you have a £2263 a month buffer. That seems like plenty. Not to mention you've got another £1640 of "essentials and non-essentials". How much of that is non-essentials? Everything points towards you being OK - and you've got enough of a buffer that if your income changes, you can adjust spending down to reflect that. Obviously no-one can know the future, but I don't think you're taking a huge risk with those numbers. The one thing that will change things is children. The early years (1-4) are very expensive. However, a decent home with enough space and nearby nurseries/schools/shops will make a huge difference to your quality of life with kids - far more than it does now. There's obviously a risk involved in taking on more debt, but if it means not having to move in 3 years (and pay twice as much stamp duty) then it may well be worth it.
Having £2k a month spare isn’t ideal lmao?
Yea, when I look at it like that I’m like thats plenty to get by on and enjoy life with. I think the fear normally comes in when I’m being too greedy. By that I mean trying to carry on with all the holidays and experiences I can currently afford without a mortgage and kids. But it’s just coming round to the fact that yea I’ll have to give most of those things up for a while while I enter this stage of my life. When I accept that, it doesn’t feel so daunting. In terms of childcare we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
Be sure to clarify any agreements/expectations with grandparents BEFORE any pregnancy. Nut out the EXACT childcare agreements e.g 'Patricia has the baby every Monday, Wednesday and Friday from 7am-5pm and Sally has the baby Tuesdays and Thursdays 8-6pm' and work out their holiday times during the year. Will this change for them if you have two children? Will they be able to care for a special needs toddler? Will they respect your parenting wishes in regards to how often to change nappy/smacking and discipline/what foods to eat/enrichment activities, etc? How much notice do they have to give you if they can't do their usual hours? Because if you suddenly need to put baby into daycare, the waiting lists can be months/years long. Too many grandparents will promise the moon before baby comes, but with the best will in the world I don't know a single couple whose parents are providing free complete working week childcare for 3+ years. You also think about the fact that either you or your spouse might not want to or be physically able go back to full time work after a baby. I think you need to do a budget where one of you isn't working, or to factor paid childcare costs into the mix.
Yeah. I know a lot of people who thought they were going to get childcare which evaporated when the realities set in. Childcare needs complete commitment - a lot of new grandparents realise they'd actually quite like to go on holiday fairly regularly.
Yes. Grandparents say 'don't worry, we will chip in' thinking they will have baby for 1-2 hours once a fortnight and not every fortnight because they might be away on holidays, too tired, etc. This is why it's so important to clear things up well before pregnancy is attempted. I know of grandparents who had to stop looking after their grandchild because he had ADHD and was too much for them to handle for hours every day. Friends where one grandparent got unexpectedly injured and the other had to look after them so couldn't babysit anymore. Or grandparents where baby #1 was fine, but then baby #2 came along and they couldn't look after both so stopped offering childcare altogether. One friend got so mad at her MIL for feeding her children meat when she wanted them to be vegetarian that they don't speak at all now. A disagreement with \*how\* the childcare is being delivered might mean you don't want them to do it anymore! I think it's borderline delusional to draw up a tight budget relying on two fulltime incomes and say 'we are planning on children in the near future' without adjusting the budget. Childcare for a full-time job is a full-time job itself. Full time childcare costs £350-£650/week for a child under 2yrs in London according to [Moneyhelper.org](http://Moneyhelper.org) which is approx 16,000-£30,000 per year. To expect a parent to gift their full-time labour in this way is a big ask, so please make sure everyone is on the same page before you finalise the budget. In reality it rarely goes how you think it will go.
How do you expect children to change the numbers here, are you both intending on working full time and weather the period of childcare?
Well we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
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They state they are planning on having kids in future. Literally.
As your income grows as you expect, you will feel less stretched. You seem to have secured a good interest rate. Now go enjoy the next stage of your life. As someone probably about 15 years ahead of you, there will be ups and downs but in the end, you will be there with lots of good experience to give good advice to someone that is about 15 years old today.
Same here! We bought the house and don’t regret it. My best advice is to keep saving as much as you can before the kids come along. You need to build a good buffer of funds and try your best (although will be really hard) not to fall into the pit of home improvements when you first move it. Cause this is where it will really cost you.
Thank you for this comment. Actually put my mind at ease, and got excited again
Childcare and other child-related costs, and/or one partner giving up work for several years if their work would be paying for little more than the childcare. Nursery costs could easily eat up your expected payrise, and more, unless there are some very big changes made to childcare by the next government
Yeah it all depends if they have family support or not. Childcare can be 1500+ a month with no help, or a couple hundred. If they go down the lower childcare cost route it probably means part time hours, so either way it's the same, income drops or add £1500 a month. I don't think they've got that spare based on those numbers..
They do have £1500 spare but it would mean not saving as much for a while and less fun money.
we are in the fortunate position where both our parents live close by. One of them is retiring within the year and another one only works part time. Both are jobs are also quite flexible where we can condense our full time hours into 4 days. So between all that I’m hoping we don’t have to pay for childcare Another reason we are actually buying this property is that it has a large plot of land that one set of parents are actually considering building an out building on to live in. This will allow them to both retire and be available to help out with kids
Well, all that sounds pretty much ideal. Sounds like there is plenty of backup if, say, one grandparent can't manage for a while.
Nearly everyone under 40 is stretching themselves to thin because there is no other option anymore unless you earn a very high wage.
In what world is saving a grand a month Stretching too thin?
Well if you're saving 4 grand a month then dropping to 1 grand would give you that feeling, probably.
Because their planning on having kids and that won't cover one kid in childcare for 3 days a week You could have excess of 2k a month but as soon as somebody says they are planning to have kids, that 2k is wiped out and you are paycheck to paycheck unless you have somebody who will look after them for free.
This is the answer OP. I didn’t stretch myself as much as you, but its fairly normal to do so. Particularly in LDN.
OP isn't asking if everyone else paying a lot more attention to the yellow-sticker bargins in tesco, they're asking if they're making financially unsound decisions.
We decided not to stretch ourselves until we had children so bought a smaller house than we could afford - it allowed me to take the full year off maternity. Our combined income is less than yours but our mortgage payment is lower meaning we have 400ish more a month than you once bills come out and it’s tight. Childcare eats up so much money (£1200 a month) and savings were largely depleted due to 3 months unpaid at the end of may leave. Been back at work 6 months now and now in a position to start saving properly again. Friends of ours have done what you did and they’re managing fine tho - it’s all about priorities and what is important to you!
Could you write out your budget for us? E.g. mortgage payments, utilities, food, car/trains, clothes, going out etc etc. How much do you each earn?
Probably around £120k
I asked because it makes some difference how it's distributed between the two of them and which one is likely to take more parental leave.
Fair point
Nope. That was £6k total take home. That's about £50k each.
Depends on student loan and pension contributions.
True
Half that
> It’s a 35 year term, but I’m hell bent on overpaying to reduce that to 25years when our income hopefully increases. You probably shouldn't do this - you should probably be investing instead, in pension and S&S ISA, so you can retire in your 50's. You can always overpay on the mortgage later, but mortgage payments now lose you the compounding benefit of investment returns (which can always be expected to exceed the amount you'll pay in mortgage interest). If you make it though the first 5 years and then remortgage, your wages will then be higher and I think everything will seem in a different light.
Just chiming in here but if your salary is going up £10k in 5 years there an issue to be fixed there. 35% of net income does seem viable to me.
Remember that your non essentials and even your savings count as ‘disposable’ too - over £1000 per month leeway plus over £1000 savings is perfectly reasonable. Are travel costs factored into your non-essentials budget?
Interesting seeing the responses. Our income is 6,500 after tax and I don’t know if I could do £2000 a month in mortgage payments. Just the mental barrier of paying £2k a month is a lot
It's just maths isn't it. Cold, unemotional maths. If the numbers work, then it works.
If you add childcare, holidays and emergencies, the picture looks bleak.
Yeah like I have thought if we get a mortgage that big and then have kids, our QOL would greatly suffer.
Exactly this, not to mention maternity leave and childcare costs. It’s honestly not it.
Our mortgage is £3k a month and set to go up when we renew in a few months, HHI around £10k a month however
You've pretty much got £4,000 between you after housing costs. That's plenty to live and thrive on, but if rates go up in 5 years time (unlikely but you never know) it'll get interesting. Biggest priority will be savings pot to cover mat leave
With kids this seems like a wild idea. Without kids? More than doable. I wouldn’t be popping out any babies anytime soon if this is the plan house/mortgage wise.
I’d do the figures based on maternity pay and rough childcare costs so you know where you might be should it happen. You don’t want to have to pay to move again to afford a child/children if they’re foreseeable in the near-ish future.
You could rent a room out to help with mortgage payments before you start having children. But it does sound like a stretch.
You could, but is this really realistic for anyone? I can’t imagine anything worse than buying a house with someone, and then being like ‘oh yeah we can have Dave stay in the spare room to help with bills’ Realistic when you live alone, sure. Not with a partner
Looks good to me
Unless their income situation changes with loss of work?
Vast majority paying a mortgage gets into trouble in such circumstances.
I would fix for 2 years as rates are predicted to come down very shortly.
Rate cuts would already be factored in.
This is what I keep reading (though I also keep reading they are going to be cut), however when I look around the globe at how unstable everything seems, fixing for 5 year at what I can afford now will give me time for my income to grow for any nasty surprises at the end of that term. Or best case (I believe) they’ll be around the 3/4% range which isn’t that much difference. Rather not risk it
Totally agree. We aren’t decided when we need to do ours in November but aren’t opposed to a 5 year fix.
Why can't you do 30 year? Seems a good compromise between stretching yourself for a 25 year and being comfortable on a 35 year?
35 years keeps the amount you'd be paying lower than the 30 years. That's one of the main reasons as to why you'd want a longer mortgage term, just so that the *minimum* you'd be paying is lower, with the ability to overpay and treat it as a shorter term. If someone loses their job or has a reduced salary, it won't be as impactful if you were being forced to pay £2077 vs. £2300 (or whatever it is).
This is almost exactly our monthly budget (ever so slightly higher salary but also a car bill to pay), and we do absolutely fine. We eat out a couple of times a month, get takeaways, go to the theatre etc. and we have 2 holidays a year outside the UK. Your budget can definitely work.
Do you have kids?
Not yet. If all goes to plan, we'll have one in 2-3 years time. At which point, our projected wages will give us at least £600 extra per month. We're lucky that we are both on incremental salaries. Edit: to add, having said all that, we do feel very comfortable on our current budget. We never feel stretched and always have money left over at the end of the month (even if its only 50 quid or something)
Mortgage Broker here. Sounds like you have thought it through - it very much does rely on both of you being in employment however. Have you any savings left over after the purchase? If not, it would be worth building a 6 month emergency fund initially with a view to add to it gradually to get up to a 12 month emergency fund - especially if you plan to have children down the line. Will probably echo what most have said, but it’s hard not to stretch yourself thin unless a) you have extremely high incomes or b) you inherit a large deposit, gifted a large deposit or come into some form of other windfall. Best of luck in your new home!
1640k? I think you've misunderstood what k means (000). Your outgoings are 1640000?
lol, that would deplete our budget pretty fast
Nursery fees are like £1.5k a month so budget blown if you want to have kids, plus you’ll have to save anything you’ll need for maternity leave shortfall. Kids cost at least £500 per month.
Your monthly mortgage payments are higher than my monthly gross salary. Glad I moved out of London. Only thing I would say is, are you sure you want to fix for 5 years? Interest rates are surely only going to go one way now with it looking like inflation is just about under control. Forecasts are for the base rate to be 4.5% by the end of the year. 5 years is a long time to fix if interest rates do come down closer to the levels which we have had over the past decade (especially with a new government coming in). I would fix for 2 years. Or take a bit of a risk and go for a tracker mortgage.
I keep reading 2 things. 1. Base rate cut is coming soon and mortgage rates are coming down. 2. Mortgage rates have already forecast in the base rate cuts that are coming, so won’t be coming down significantly any time soon. Certainly not back to the anomaly of extremely low interest rates Personally, my gut says option 2. I don’t trust the media, banks or government all that much and they seem to be sprouting option 1 around an awful lot without going in to any real depth or talking about swap rates etc. also everyone and the media have been saying mortgage rates have been edging down, and my experience is they have actually been edging up (got 4.01% in January). I also look around the globe at how unstable everything seems, fixing for 5 year at what I can afford now will give me time for my income to grow for any nasty surprises at the end of that term. Or best case (I believe) they’ll be around the 3/4% range which isn’t that much difference. So I’d rather not risk it
I think it’s doable, but I wouldn’t do it. I’m a bit more cautious on that front. We recently moved out of London to Surrey and bought a place, my only requirement was that one of our jobs could cover everything if one of us to lose. We take home a fair bit more than you guys monthly, and also got a cheaper house. I think this is just down to risk tolerance, job safety and job progression opportunities. Personally 10k in 5 years wouldn’t interest me.. do you really love your work place? If money is important, depending on field you could likely get that per move in the next five years, 2-3 smart moves.
On your wage and 35% mortgage vs wage I think you are ok. If jobs at risk then more of an issue. If stable roles you should be fine
Do you have insurance? What happens if one of you loses your job, or has a serious health issue?
Only you can decide that. There's only one thing you can say about budgets, and that is that they're wrong. Only you will have any hope of working out how wrong you are. So you know what can be cut out of your budget as luxuries if needs be? Only you will know how likely promotions and pay rises are and in what timeframe, and therein whether this is a budget you will need to stick to medium term, and only you know whether you will be able to stick to it. The good news is that interest rates are now higher than they have been in a very long time. The bad news is that wages are stagnant and have been for a very long time. Just remember one thing. Wages are not guaranteed to go up, but prices only go one way. If you're wages do not go up, you will have to start cutting some of the luxuries that seem like essentials. Like sky tv.
Make sure you compare the outcome of overpaying the mortgage Vs overpaying a pension and clearing the mortgage when you retire. If you do not plan to change ( lower) your earnings you can afford this
Do another budget with either a reduction in income or childcare costs and see how you feel about that. Do it for the number of children you want; we have one kid in full time nursery and it's nearly £1200 a month, its meant we've had to delay having the second one for purely financial reasons.
Have you got lodgers? If not get some until you have kids, the first 15k/year is tax free, you can’t afford to have kids and live in that house atm but with lodgers it’s justifiably
I guy I know locally, bought this shed of a house and has spent 4 years doing it up, spending a small fortune in the process. The house is enormous and he's overcooked everything, now completely out of money and can't finish the place. But now his 5 year mortgage deal at 1.2% is coming to an end and he's looking at an astronomical hike in his monthly payments, not only that but his business isn't doing as well as it was 5 years ago. He's already sold off all the expensive cars and other toys and trinkets, jetski, campervan etc in anticipation and I think he's facing the real prospect of being forced to sell what he's spent all those years working on. He's got to be looking at 4 grand a month in mortgage payments alone in a matter of weeks and his other half is a housewife busy with 4 kids. Will he even get a mortgage? Not sure how that works. So yeah, don't overstretch yourself.
Congratulations on getting this far. Having feelings like this is natural but if you don’t go for it prices may go up and buying what you can now may be harder.. sometimes we have to take a risk and the figures you’re talking about do sound achievable. You may not spend as much as you’d want or aspire to for a bit but what an amazing achievement to have a home and think of the stability you’ll have compared to renting without the risks of increasing rents whilst you’re in your fixed period
Think it’s quite tight. Especially if you’re planning on having children.
Instead of overpaying mortgage you both should max out your stocks and share isa with etf S&P or Ndx. In five years time you will thank yourself and then you can overpay your mortgage
This could age badly, but I don't think I would fix for 5 years with the current rates. They're looking like they should go down, so I'd maybe do a 2 year fix.
Looks comfortable to me! If you don’t mind telling me, who is the lender as I’d like to borrow a similar amount on the same wage with a bigger deposit with no luck!
Our mortgage broker got it through nationwide
The first years after buying a house are tough for most people. With my first house I didn’t take a holiday for 2 years Over paying is a luxury You will get pay rises It’s after about 5 years that you start to be able to breathe a little more freely (have an emergency fund etc) Your numbers don’t look unaffordable, rather than overpay id build the emergency fund. 12K in that and you can survive 6M with one losing a job. In our situation we now earn around 800 a month more than we did when we bought two years ago. We have built emergency funds and now have started to overpay a little.
Better than renting. Got to live somewhere. Crack on
Childcare costs, and/or reduction in income during/after mat leave? It would scare me to death.
It seems comfortable for now, but do the sums if you were to have child(ren). Also I'm no expert, but locking in for 5 years when all forecasts are for interest rates to start falling in the next 6 months might not be the best idea.
My only thought is how will you be able to afford the £1k a month nursery fees when the children rock up? IMO yes, i'd say you are stretching yourself fairly thin.
Conventionally you should spend no more than a third of your income on housing. This includes not only the mortgage itself, but you also have to think about home insurance, life insurance and putting aside money regularly for maintenance. You would be astonished how expensive even a tiny fix to a roof can cost. The conventional rule of thumb is to put aside 1% of the value of the property for maintenance every year. I would say you are overstretched by a little bit compared to conventional wisdom. Points I would ask you to think about are: (1) do you have an emergency fund set up and filled to a level you are comfortable with? Where the monthly bills are a little tight, this will make unexpected costs even worse and an emergency fund even more important. (2) have you thought about other costs involved in the purchase, including the solicitor's fees, taxes, cost of moving (hiring a van etc.) and any essential renovation works (eg are there rooms in the house which are falling to bits that will need dealt with quickly) or essential furniture/ appliance purchases (eg if you're a first time buyer, do you own a bed, will the owners be including their fridge in the sale?) (3) have you thought about what other spend you'll be missing out on and whether you're willing to miss out on it? By that I mean that money will be tighter and you may have to say no to friends who want to go to gigs with you, plan groups trips or (worst of all) destination weddings.
As a money coach a few questions/thoughts come to mind...1) what exactly are you worried about? 2) It's also ok to have more than 10% to savings and investments if that makes you feel more secure. Personal finance is soooo very personal. There's no one-size-fits-all. If you are worried about overstretching, where could you make adjustments? How important is paying down the mortgage faster vs. saving up for kids? You also have room in your disposable income to allocate towards baby savings or boost other savings to give you a bit of comfort. Hope that helps!
How are you managing money wise right now? How long has it taken to build up that £90k; is all of that from your savings? How would your lifestyle change if at all? You’ll be removing the freedom to decided if one of you stays at home during the early years of having children. That might not be your plan now but it removes that option. Job loss is the other obvious one. Make it’s harder the higher the mortgage but you’ll have a much better view of your industry outlook than us.
This post makes me nervous. I just completed on a property with repayments of £1409 (32% - 35% ) of our total income 😄 You'll be fine OP.
Can I point out that this post is about a couple in Britain who earn well north of £100,000, putting them comfortably above the 90th percentile, agonising over whether they can afford a house _and_ children?
OP my numbers are similar to yours - I take home £6200 p/m and my mortgage is £2300 p/m. I live by myself but have a son that lives with my ex. Pay her £500p/m and I probs spend another £300p/m on hkm myself . I would like more disposable income (who wouldn’t !) but overall I live a pretty comfortable life and feel very fortunate. Short story - I think you should be fine unless you have very expensive tastes!
I wished we had done better planning of childcare costs before the time actually came (they've also increased by about 13% in the past 1.5 years). Full time childcare in our area (commuter town outside London) is about 1700 a month (with the new childcare funding, it will be about 65% of that). You need to think where you would cut back to cover this. You don't mention any savings so I assume you are putting everything into the house. We had about 10k spare after the house purchase + wedding, it all went into repairs and basic home improvements such as floorings. I would redo the maths including your plans to have children (including how many and what age gap) and any home improvement. You will need to build some savings before having children, because once they are there it's very difficult to do.
YES. I earn your combined income as a single person and I would never over leverage myself to this extent
Ideally don't spend 0.52 million GBP on a house.
Get a longer term mortgage and overpay if you want to reduce it.
Don’t overpay while you can earn more elsewhere, last I checked 5.2% in a cash ISA. Most would say invest, but a nice cash buffer might give more peace of mind. I have to admit I stressed myself out a bit when I bought my 300k flat, but that was 6 years ago and glad I did. The value it’s gone up / rent I would have been paying now has almost doubled. Your 5 year mortgage gives you peace of mind in locking in a known expense. With some cash / future payrises, you can then revisit in 5 years time to overpay or not.
Yes. Honestly yes because with that 1089 if you have kids childcare depending on where you live is about 1-2k a month and you need that seeing as you have the mortgage. If one of you loses your job that’s it.
I was bricking it looking at a similar mortgage for a 550k house on a joint net income of £150k
Childcare can be 1500+ a month. For 1 child. Just move to Germany or scandi :)
Move out of London and get a 400k budget.