Although your mortgage payment will generally be the largest bill you pay each month, it is important to make sure that is easily affordable. It may be tempting to fiddle your expenditure so that it looks as though you can afford the repayments, but this can lead to losing your home in the future, especially if interest rates increase.
Start by writing a list of all your expenses, which should also include the one-off expenses which may only occur once or twice a year. This may include car insurance or the cost of your annual car service, which you should split into 12 monthly payments. If you think you will want a holiday, or decorate your home, factor in the costs over 12 months. Although saving may seem unnecessary right now, try to allocate a small amount each month to cover emergencies.
If you have added up every conceivable expense in your household, compare it to your income. Hopefully, it should leave you with some disposable income once everything is paid. If you don’t have any income left each month, or are in deficit, consider looking at cheaper properties which may be more affordable.
If you have found a house which you like, and find that after producing an accurate budget you still have plenty of cash left over each month, you could consider paying extra on your mortgage payments each month. This would help you to pay off the debt much faster. A CeMAP mortgage adviser can help you to decide the best course of action.
