Our mortgage is going up by £700 per month and I'm worried we're making a mistake
My wife and I are about a month into the process of buying a new house and I'm worried that we might be overstretching ourselves as our mortgage will be increasing by around £700 per month.
On average, with our current mortgage and outgoings, we have around £500 left every month that goes into savings so with the mortgage increasing by £700, we will be in a deficit of £200. We both work as EO's in the civil service but are both also due promotions in the next few months. The promotions are not 100% guaranteed but we'd be very surprised if we didn't get them.
If/when we get the promotions our take-home pay will increase by £300 per person. Even if we don't get the promotions anytime soon, our childcare costs will go down by around £300 per month in September and another £100 in January. That will eliminate the £200 deficit but we'll have to tighten up the belts until then. A lot of that £200 is unnecessary spending on eating out or other luxuries.
The new mortgage payment will bring our percentage of take-home pay to 32% so we're at the limit of what is deemed safe but we have around £40k in savings so we have a decent buffer.
We weren't initially going to go for a house that would increase our mortgage so much. The plan was to buy a 3 bed and add a 4th bedroom or any other required renovations in a couple of years when our financial situation is improved. But, we found the perfect house in the perfect location and it's a 4 bed that has been fully renovated so it's like new and no work needs to be done to it. The thought of renovating a house while trying to bring up children really gives me anxiety. Even painting the walls feels like a massive stress!
My thought process is, buy now before house prices and renovation costs increase and we definitely wouldn't be able to afford the house we want. The new house is more than what we can currently afford but it is a known cost and we can work on our finances if our careers don't pan out the way we think they should. We have the savings buffer to get us through any hard times and we are in very stable jobs.
Is this too risky? I'd be interested to hear what other people would do in this situation. We don't have to move but it will be a big quality of life improvement for us and our children.