#1 We found a house we like within our village and had an offer accepted. Our is up for sale but with no offers in the 3 weeks it's been available.
#2 My company opened up the latest sharesave scheme.
New House?
The house we're looking to purchase is on the market for £500k.
We had an offer of £490k accepted.
We expect our house to sell for £350k.
We have £188k equity in our house, and as you know 0 savings.
Mortgage broker has provided us with these options...
Ok, so on the basis of purchasing at £490,000 you could borrow £360,000 with one lender over a 40 year mortgage term, the rates are as follows;
- 2 year fixed @ 1.64% = £1026.04 a month
- 3 year fixed @ 1.94% = £1081.83 a month
- 5 year fixed @ 2.29% = £1149.07 a month
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Or if you are happy to pay a little more each month and stick with a 35 year term, there is a better 2 year fixed rate available as follows;
- 2 year fixed @ 1.49% = £1103.54 a month
Alternatively, if you wanted to raise a little extra funds and still stay under 75% LTV, you could borrow an extra £7,500 over a maximum of 35 years
- 2 year fixed @ 1.49% = £1126.47 a month
- 3 year fixed @ 2.09% = £1237.78 a month
- 5 year fixed @ 2.29% = £1276.24 a month
I don't want to increase to a 40 year term, so ruling those out.
The house we're buying is going to need to attention, so the additional £7.5k of provider 3 looks interesting. Couple with the fact that for a 2 year fix it's only £23 more expensive and would provide us with a £7.5k windfall I think we're leaning towards that one.
Now, that would increase our monthly mortgage payments from the current £797 to £1,126, an increase of £329. Funnily enough almost exactly the same amount as I was paying back my student loan!
Sharesave Scheme
The priority is the new house, fingers crossed.
However, we also do not want to miss out on the opportunity that the Sharesave scheme provides.
It's 3 years.
The price offered is fixed now and is fixed at 20% below todays market rate. The fix option price is £69.
The limits for entering the scheme are min £10 and max £500.
Cash can be withdrawn and the scheme exited at any point. Payment holidays can be also be taken.
I have missed out on previous scheme which saw a lot of people earn very well in my company, and was determined not to miss out next time the opportunity arose.
However, we do not have much money left each month.
So working on assumption we take the above mortgage and our monthly repayments are increased to £1,126 we would be left with £229 per month. Some of this could go towards the sharesave scheme.
However, council tax, electricity and water are all likely to increase.
Increasing all of these by 10% leaves us with £200 per month.
The elephant in the room is obviously that we've not actually managed to stick to our budget yet and will be buying a house which needs attention.
So on the assumption that the £7.5k can both act as our emergency savings and cover improvements to the house I think we could afford £100 leaving £100 as cover for any overspend.
The guiding principle being that we have shown over the years that when we need to save we can make it work - hence we are in a position to buy a house worth half a million pound - but that when we have a bit of safety then we overspend.
Hopefully we'll get the new house and will learn to live with less money and stick to budget!
Either way it will be exciting.
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