# How much could we afford to spend on property



## Cait (28 Jun 2010)

Hi 

Just thought I would ask AAM for advice. We live in a 2 bed ex-corpo style house in D7, we would like to move as expecting our second child. Unfortunately we bought close to the peak and I estimate the house with cost 320k would be lucky to fetch 200k
However due to inheritance we are very lucky to have 100k in cash 
my question is really what can we afford without having to take a higher mortgage. I was looking at houses in the (well on the websites at least) 395K bracket but I'm thinking really can we afford that, Im thinking 320 is closer the mark. 

Many thanks for taking the time to look at this

Age: 32
Spouse’s/Partner's age: 35

Annual gross income from employment or profession: 40k

 Annual gross income of spouse: 45k

Type of employment: e.g. Civil Servant, self-employed : private sector

In general are you:
(a) spending more than you earn, or
(b) saving? Saving...breaking even as I will be on maternity leave soon

Rough estimate of value of home: 200k or less
Amount outstanding on your mortgage: 250k
*What interest rate are you paying? Tracker Mortgage: 1.95%*

Other borrowings – car loans/personal loans etc: none

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments: 170K savings
Do you have a pension scheme? yes

Do you own any investment or other property?  

Ages of children: 2 years and one one the way 
Childare costs ito the future will be approx 300 per week (taking into account maternity leave and older child going to kindergarden )

Life insurance: yes

Thanks a million


----------



## legallady (28 Jun 2010)

Cait,as you are lucky enough to have a tracker mortgage,you should think very carefully before giving it up.could you us the inheritance to extend your house?we live in an ex corpo in D8 and we are going to extend rather than sell and lose the tracker.it should accomodate us (and hopefully a child or two)over the coming years.the remaining funds could be put on deposit and fund perhaps a year off work with the kids etc in the future


----------



## fizzelina (29 Jun 2010)

House and Home mag recently had a feature on a D7 Corpo house which was extended (architect drew up plans) with great success and extra space. It looked fantastic and met all the needs of the growing family. If I was you I would not necessarily move, the tracker is valuable over the long term as rates will rise, and if you like the neighbourhood and the location suits you then perhaps discuss with an architect what your options would be for extending?


----------



## sadie (29 Jun 2010)

What part of D7 - is it a bad area as well as being a small house? Is that the problem.


You could sell your house and rent in a nicer area, that's another idea.


----------



## Cait (29 Jun 2010)

Hi All

Thanks for the ideas. The house is fine but it has no back garden to speak off location is good in terms of amenities and its a fairly quiet  generally, but its not exactly the leafy suberb I thought I would be living in at this stage in my life . Its a corner house so extn would have to be to the side and I'd be reluctant to throw another 100K (maybe extreme but rough idea if we did big job) at the house unless I was sure we had no other option. I suppose I forgot about the added expense of the new mortgage rate if we were to buy again. Maybe hanging on for a few years is the best bet , the only issue with that is the house we could upgrade to would be more expensive then if things recover. There is no problem living in the present house with 2 small kids, I don't think space would be a problem and there is a lovely park nearby
The renting option is something I never thought about either. Wouldn't that be a more epensive option ? Maybe its worth looking into, I'd really have to get into the nity gritty of my finances to work all that out. I know we are not really in a bad situation compared to many people but in fairness we never bought anything or lived beyond our means and we have no loans (well except the massive mortgage ). I suppose the reality is in my option anyway houses are still over priced. Im only looking to move to a fairly ordinary 3 bed house with a bit of room to extend in a nice quiet area (oh the suburban dream!). Maybe I need to get a second job (I know Im lucky to have any job at all) 

thanks

Cait


----------



## fizzelina (29 Jun 2010)

Cait - well done on being responsible with money and having only a mortgage now, it's great and it's because you bought what you could afford  Let's say you got 200k for the house and repaid the mortgage using 50k of your savings. It would still leave you with 50k for a deposit on the next house and combined income of 85k so there is very much a chance that you could get a new mortgage on a bigger place if you so wished. Especially with no other loans. You should contact a broker. Good Luck. ps I know you lose the tracker and they are like gold dust etc but maybe you wouldn't mind that, only you can decide.


----------



## legallady (29 Jun 2010)

OP has actually 170k to spend (100k inheritance and 70k savings). I'm sure you'd get more than 200k for a house in D7


----------



## Cait (2 Jul 2010)

Hi

Thankyou all for the responses
Legallady from looking at myhome houses of my type are being quoted at between 180k to 240k so Im guessing you would be able to offer a bit lower then the website quote if the house wasn't selling. I'd nearly be happy if  I knew I could get 200. The extension idea really doesn't appeal to me because it would be throwing another say 100k into a property which I really don't want to live in long term, and the main reason is (silly as it sounds) no back garden and that would up with the total spend on it to 420 which would never be recovered 
fizzelina You have made a good point I'll certainly contact broker to see what the options are
For the moment it appears we will be doing nothing as everything is still too uncertain. I wish everyone who bought a first time property in the last 6 years could get 20% of their mortage written off  and let the bank absorb the loss, that would suit us anyway


----------

