Approved for More Than I Think We Should Borrow, and My Wife Says That Means We Can

A reader writes:

My wife and I are first-time buyers. We have been renting for six years and saving hard, and last month we got pre-approved for a mortgage. The approval came back higher than either of us expected, and that is where the trouble started.

There are two houses we like. The first is a two-bedroom townhouse in a gated scheme, well kept, not far from my job. It is comfortably inside what I think we can manage, and would leave us something every month for savings and emergencies. The second is a three-bedroom detached house with a proper yard, in a better school area, about twenty minutes further. It would take almost the full amount the bank approved, and our deposit.

My wife loves the second house. She says we are planning for children, we will not want to move again in five years, and if the bank thinks we can afford it then we can. She is a teacher and she is expecting a step up in salary in a couple of years. She also says I am always too cautious and that is why we rented so long.

I work in sales and my income goes up and down with commission. Some months are very good, some are thin. When I do the budget with the full mortgage on the bigger house, there is almost nothing left after the payment, the insurance, the maintenance fees and the bills. If I have one bad quarter, or if one of us gets sick, I don’t know what we would do. I don’t want to start married life in a nice house and be frightened every month.

We have not stopped talking, but every conversation ends with her saying “you just don’t have faith” and me going quiet. Who is right?

— Dwayne, Spanish Town

Our response

Dwayne, you are both partly right, which is why this is hard. Your wife is right that buying a house you will outgrow quickly has its own costs, and that some reasonable optimism about the future is healthy. You are right that the amount a lender will approve is not the same as the amount it is wise to borrow. A pre-approval tells you the most a lender is prepared to risk based on their criteria. It does not know your commission pattern, your plans for children or how you both sleep at night.

Test the budget against a bad year, not a good one

Sit down together and build two budgets for each house. One using your average income. One using what you would earn in a lean few months, based on your actual history. Include the mortgage payment, property tax, insurance, maintenance fees, utilities, transport to work and school, and a monthly amount for repairs and savings. Then ask: could we keep up with this house if my commission was low for six months? What if a baby arrived and one of us took time off?

Ask your lender or a financial adviser to explain what would happen to your payments if interest rates changed, and what options exist if your income dropped.

Look for middle ground

• Is there a three-bedroom house in a similar area at a lower price, perhaps one needing cosmetic work?
• Could you buy the townhouse now, save hard and move up when her salary increases?
• Could you agree an emergency fund target that must be in place before you sign for the bigger house?
• Could you offer less on the detached house and walk away if the seller will not move?

About faith

It may help to talk gently about what faith means here. Faith is not the same as assuming every future good thing will arrive on time. Jesus Himself spoke about counting the cost before building, and Proverbs warns that the borrower is servant to the lender (Proverbs 22:7). Caution can be an act of faith too: trusting God enough to live within the margin He has already given. At the same time, your wife may be hearing “no” to her hopes for a family home. Tell her you share that hope, and that you want to reach it in a way that will not frighten you both every month.

Try to decide as a team, with the numbers in front of you, and perhaps with a trusted older couple or a counsellor to help you listen. The house you choose will matter. The way you choose it will matter longer.

This article is general information only and is not financial, legal, tax or other professional advice. Please speak to a qualified professional about your own circumstances.

Reader letters may be edited for length and clarity, and names and identifying details are changed.

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