Mortgage advice - help!!!

[anna's mum]

I'm wondering if anyone can help - we are in the middle of getting approved for a loan which at the maximum repayments will take 11/14 of my husband's wage, & I only get a part-time wage. Is this standard?? I don't mind budgeting to make our own home possible, but I was wondering if we should settle for the townhouse with which would take 9/14 of my husband's wages & leave us a bit more money, or push ahead for the house (if we can find one) that is at our maximum repayments. That's the maximum I've decided we can afford (11/14), not the maximum the stupid bank was willing to lend us!!!

Any ideas - I would be very very very grateful :)

[Harry&Max's Mummy]

Hi
Just also take into consideration you may be able to budget and live now but remember to think down the track with rate rises etc Thats what we had to think of also. Good luck its very exciting looking for a new house

[DjF]

Sweetheart - it may not be what your heart is set on - but do not under any circumstances set yourself up so short. If the bank decides to up your interest rate - you are almost Up-Sht-Creek - take the town house.

Smaller kids under 5 do not need a massive back yard - yes - you may want it and it feels good to have all that freedom, but sometimes you really have to look hard at these things when it comes to finances - no reposessing from the bank.. In 5 years time, when you have paid a bit off - see if you can use that existing property as equity and get a loan for a house then.

Unless you are going back to work full time - dont place too much importance and love on the very first place you buy - we are looking at a suburb on the water - but the reality is we will only be able to comfortably afford somewhere about 5 suburbs away - under the flight path!
D

[Elfin]

I really really really agree with DJF. I think her advice is spot on, don't over commit yourself you just never know what expenditure might come up or if interest rates rise and even petrol is going up again. Banks are sometimes very free with lending money but you don't want to be a slave to house, you want to have bit of money to do some fun things with the kids and have ocassional luxuries. So long as the kids have a small outdoor area that should be enough with parks too.

Good luck with your decision.:)

[Fairyfloss]

I ma sorry about being so pesismitic, but 11/14 that is 78% of his income, what will happen if he gets sick or unable to work for even a short while, even if he gets paid by say work cover, this is too high of a percentage for his pension to cover. when I was buying my house(which is my first too), we decided that we will go considerably below what the bank was offering us, that way, if we were good and had saved extra money then we could pay lumsums into the loan and bring down the term or get some equity in our home then we could refinance and perhaps look for something a bit bigger couple of years down the track.

also remember, a bigger house has higher ongoing expenses, like council rates, which is higher for a more expensive home. stick with your guns :yelclap: your have the right kind of attitude, and Good luck.

[melbourneprincess]

Hi

I have to say, I also agree with the pp's. I would go with something less expensive/more affordable, to begin with; build up some equity and then upgrade later on. This is exactly where we are at - we presently live in a house that is easily affordable for us (although not our dream house), and later, when I go back to work, we'll upgrade to something better.

You really need to work with a worst-case scenario in mind when you are looking at getting a loan - because a mortgage is such a long-term thing, you have to think about possibilities like interest rate rises much further down the track, and how you would cope with these on one f/t and one p/t wage.

I think I read somewhere that 30% of your income is a reasonable figure to spend on a mortgage, so maybe this is what you should be aiming for.

You'll get there faster if you do things bit by bit - if you get in too deep to start with, you might lose everything - not worth it!!

Good luck, I am sure you will do what's most comfortable for you. :thumbsup:

[rynosmum]

Agreed as well.

Sit down together and review all of your spending for the past 3 months then come up with a realistic weekly budget. See a Financial Advisor or Accountant if you want to ensure that you have everything covered. Don't do it with your bank because banks are notorious for offering to lend 'just' more than you can afford - they own your mortgage so are covered whether you can cover the payments or not :(

From this, you should be able to determine what your highest limit to spend is.

A house (due to land value) will most likely appreciate faster and higher than a townhouse so you should keep this in mind. Don't commit to buying something unless you are truly ready. The market isn't going to boom again for at least the next couple of years so the heat has been turned down substantially.

Also, if you do end up committing to something quite high, ensure that DH takes out income protection insurance - it will cover him if he gets sick, but not if he loses his job.

Best of luck with whatever decision you make.:D

[melbryan]

Imagine how your husband must feel and if he got sick. I do a few extra days to help my husband out as hubbys' must feel the pressure and if they were to get sick (heaven forbid) or need time off for some reason where do you find yourself. Our system is next year if we can't survive with him full time and me two days I will increase to 3 days mid year. I feel like I don't mind working a little extra so I can get to see my husband and he can say good night to our son.
Many of my friends husbands work night shift and they find it really hard ( marriage wise and help wise) so I feel I am lucky in that respect.
Good luck with your decision.
Mel

[madvoice]

I would have to agree with the others. Don't set yourself up for possible problems later on.

[Chickadee]

I would agree with the advice of planning around 30% of your income for mortgage repayments. And also take into account any other debts you have or may encounter - car loans, overdrafts, etc. Also if interest rates change your payments may go up. Personally I would aim for a total debt load of no more than 50% of after-tax income. Anything more than that gets stressful.

Some mortgages let you make extra payments annually, or to temporarily bump up your payment levels. If you have one of those then definitely set your payment level at what will be manageable in the next year or two, and then put any extra aside into a high iinterest saviings account for emergencies or to dump onto your loan as an extra payment.

[anna's mum]

Thanks for all your advice, guys - I guess it is just a question of risk when house values go up more than townhouse; plus debt percentages (ours are still not looking that good)

We're still thinking but have definitely decided against the townhouse with the stairs :fingerscrossed: