How did the 3x or 4x income level get chosen?

lana22

Martinslovechild wrote: »

Random Thoughts...

1. The more money banks lend, the more profit they make. It's not in their interest to lend smaller multiples.

2. Why is a mortgage duration typically 25 years? Surely, a better question for lenders to ask is 'What can you afford each month? We'll work out the mortgage duration based on that figure'.

3. Why do most lenders follow so-called 'standard' multiples rather than personalised quotations based on affordability? A large number of people exist who have no children, no other debts and a mortgage deposit saved up. Surely, it's a fairer system not treating everybody as being equal.

4. Why must we pay an arrangement fee? What's normally involved in 'arranging' a mortgage other than entering our details into a computer - something which most of us do already on the internet during our application.

5. Why do most mortgages allow overpayments of up to only 10% per annum? Are the banks afraid that everybody will revolt and suddenly repay their debt?

We did get asked such questions (halifax), including our commuting costs, food bill, number of cars, number of children, etc. But like I said before, those questions posed to a 23 year old couple are going to get very different answers than the same questions asked of the couple when they are in their late 40s, when the mortgage term is coming to an end!

Martinslovechild

lana22 wrote: »

I agree with the above. If I earn £1000 a month, and £500 goes on a mortgage, leaving me £500 to do everything else including paying bills, then it's harder than earning £4000 a month and having £2000 a month left over.

Absolutely correct, and I wonder how many people at school ask the question of how much salary they can expect to earn in a certain industry or type of job?

For instance, a lot of students study certain subjects because they enjoy the subject matter, but only to later discover that even if they make their way to the very top of that trade could they then look forward to earning something like £18,000 p.a. - in other words, much less than the UK average for something that they really enjoy doing.

Had they asked the question at school, would they have changed from a career choice of, say, secretarial work or hairdressing to I.T., Project Management, Accountancy or Law?

This is of course a completely personal choice because many individuals do have enjoyable jobs and certainly don't resent the fact that they earn less than other people but I sometimes wonder if a lesson on salary would effectively shape the decisions of certain individuals or not.

I for one certainly don't recall having a conversation like this with either a teacher, parent or friend at school.

As somebody once said to me, "There's always got to be bin men and shelf stackers", and I certainly wouldn't want to take anything away from these people as they do a fantastic job, but I wonder if they would have done something else career-wise if they'd maybe had a conversation like this at an earlier age.

Food for thought perhaps.

lostinrates

Martinslovechild wrote: »

Absolutely correct, and I wonder how many people at school ask the question of how much salary they can expect to earn in a certain industry or type of job?

For instance, a lot of students study certain subjects because they enjoy the subject matter, but only to later discover that even if they make their way to the very top of that trade could they then look forward to earning something like £18,000 p.a. - in other words, much less than the UK average for something that they really enjoy doing.

Had they asked the question at school, would they have changed from a career choice of, say, secretarial work or hairdressing to I.T., Project Management, Accountancy or Law?

This is of course a completely personal choice because many individuals do have enjoyable jobs and certainly don't resent the fact that they earn less than other people but I sometimes wonder if a lesson on salary would effectively shape the decisions of certain individuals or not.

I for one certainly don't recall having a conversation like this with either a teacher, parent or friend at school.

As somebody said to me once "There's always got to be bin men and shelf stackers", but I certainly wouldn't want to take anything away from these people as they do a fantastic job, but I wonder if they would have done something else careerwise if they'd had a conversation like this at an earlier age.

Food for thought perhaps.

I'd just like to point out that my father's secretary would NOT be eligable for this scheme on her salary..she's a single mum if that's relevant. Good secretaries in London can, and freequently do, earn a very good fair wage.

lana22

Martinslovechild wrote: »

Absolutely correct, and I wonder how many people at school ask the question of how much salary they can expect to earn in a certain industry or type of job?

For instance, a lot of students study certain subjects because they enjoy the subject matter, but only to later discover that even if they make their way to the very top of that trade could they then look forward to earning something like £18,000 p.a. - in other words, much less than the UK average for something that they really enjoy doing.

Had they asked the question at school, would they have changed from a career choice of, say, secretarial work or hairdressing to I.T., Project Management, Accountancy or Law?

This is of course a completely personal choice because many individuals do have enjoyable jobs and certainly don't resent the fact that they earn less than other people but I sometimes wonder if a lesson on salary would effectively shape the decisions of certain individuals or not.

I for one certainly don't recall having a conversation like this with either a teacher, parent or friend at school.

As somebody once said to me, "There's always got to be bin men and shelf stackers", and I certainly wouldn't want to take anything away from these people as they do a fantastic job, but I wonder if they would have done something else career-wise if they'd maybe had a conversation like this at an earlier age.

Food for thought perhaps.

I agree, but I DID have this conversation at school, and was told I would earn a fortune as a doctor. (She quickly told me I wasn't intelligent enough to be one, and that I should aim my sights lower). Now luckily this didn't alter my desire to do it, but, funnily enough, it turns out I'm not earning a fortune! (I know my wages will be good in years to come, but they don't tell you about this middle bit!) So they really need up to date info.
My boyfriend got told that he had "too much about him" to be a police officer, and that he could "earn more" elsewhere! Now this is probably on the list of the most ridiculous and infuriating comments I have ever heard in my life, especially about a profession that has offered him good pay, job security, excitement, excellent training, etc etc.
It's a good job neither of us listened to our careers adviser! (It was the same one, by the way).

lana22

lostinrates wrote: »

I'd just like to point out that my father's secretary would NOT be eligable for this scheme on her salary..she's a single mum if that's relevant. Good secretaries in London can, and freequently do, earn a very good fair wage.

My Brother-in-law's Mum describes herself as a "secretary" but is actually a PA to some top boss of one of the big four.....and earns a very good wage indeed.

lostinrates

lana22 wrote: »

I agree, but I DID have this conversation at school, and was told I would earn a fortune as a doctor. (She quickly told me I wasn't intelligent enough to be one, and that I should aim my sights lower). Now luckily this didn't alter my desire to do it, but, funnily enough, it turns out I'm not earning a fortune! (I know my wages will be good in years to come, but they don't tell you about this middle bit!) So they really need up to date info.
My boyfriend got told that he had "too much about him" to be a police officer, and that he could "earn more" elsewhere! Now this is probably on the list of the most ridiculous and infuriating comments I have ever heard in my life, especially about a profession that has offered him good pay, job security, excitement, excellent training, etc etc.
It's a good job neither of us listened to our careers adviser! (It was the same one, by the way).

There is also no rule that you cannot change your mind later. DH was reasonably successful in his first career but the income was...variable to say the least. He enroled on a law conversion course the day before he asked me to marry him.

I hasten to add my acceptance was not on the basis he changed career.

Martinslovechild

lana22 wrote: »

I agree, but I DID have this conversation at school, and was told I would earn a fortune as a doctor.

Interesting. Maybe things have changed now at school/college.

lana22 wrote: »

It's a good job neither of us listened to our careers adviser! (It was the same one, by the way).

Sounds like mine! I remember telling my careers adviser that I wanted to be a musician and she just looked me in the eyes and said "Is there anything else you're good at?" to which I replied "Well hang on, we haven't really explored my options for being a musician yet have we?".

She thought about this for a moment and then replied "Well, I don't have any information on being a musician - you'll have to do your own research. Now - is there anything else you're good at?".

It was at this point that I decided that I'd just learned one of life's lessons - if you really want to do something, don't rely on other people to guide you. In my own experience, I've found that the majority of people tend to talk you out of doing something rather than encourage you to have a go.

Unfortunately, TV seems to be nurturing children with lots of the wrong kind of advice as it transpires that the majority of children want to leave school only to become celebrities, according to a recent poll. Very worthwhile indeed.

lana22

Martinslovechild wrote: »

Interesting. Maybe things have changed now at school/college.


Sounds like mine! I remember telling my careers adviser that I wanted to be a musician and she just looked me in the eyes and said "Is there anything else you're good at?" to which I replied "Well hang on, we haven't really explored my options for being a musician yet have we?".

She thought about this for a moment and then replied "Well, I don't have any information on being a musician - you'll have to do your own research. Now - is there anything else you're good at?".

It was at this point that I decided that I'd just learned one of life's lessons - if you really want to do something, don't rely on other people to guide you. In my own experience, I've found that the majority of people tend to talk you out of doing something rather than encourage you to have a go.

Unfortunately, TV seems to be nurturing children with lots of the wrong kind of advice as it transpires that the majority of children want to leave school only to become celebrities, according to a recent poll. Very worthwhile indeed.

It might have just been our school that they told us about salaries! Lots of people ended up deciding they wanted to be vets. As far as I know, there are no vets from our school year:rolleyes:
My family, my teachers, my friends... literally everyone tried to talk me out of being a doctor, but it actually made me more determined (I was a contrary teenager). When I rang up my Dad after a night shift crying cos I couldn't get up the stairs to bed cos I was so tired - guess what his helpful response was? "I told you not to do medicine!":rolleyes:

But in general a lot more financial advice needs to be given in schools, especially regarding debt and loans, and budgeting. I maintain that my boyfriend would be in serious trouble financially if he didn't have me to sort him out - his parents never explained anything about finances, probably because they don't really get it themselves.

PS did you become a musician?

Martinslovechild

lana22 wrote: »

It might have just been our school that they told us about salaries! Lots of people ended up deciding they wanted to be vets. As far as I know, there are no vets from our school year:rolleyes:

There's always the dream and the reality, I guess.

lana22 wrote: »

My family, my teachers, my friends... literally everyone tried to talk me out of being a doctor, but it actually made me more determined (I was a contrary teenager). When I rang up my Dad after a night shift crying cos I couldn't get up the stairs to bed cos I was so tired - guess what his helpful response was? "I told you not to do medicine!":rolleyes:

Yes, my Dad said something similar to me once, to which I likely had a similar reaction to yours!!

lana22 wrote: »

But in general a lot more financial advice needs to be given in schools, especially regarding debt and loans, and budgeting. I maintain that my boyfriend would be in serious trouble financially if he didn't have me to sort him out - his parents never explained anything about finances, probably because they don't really get it themselves.

I can't agree more. Rachel Lacey, the editor of Moneywise magazine, has lobbied government to this effect and attempted to get as many people to sign up as possible. I've always felt that having Personal Finance as a small 'add-on' to Mathematics is really not giving it enough priority. After all, when we start work, the first thing we're asked for are our banking details. We suddenly have to learn about credit cards, mortgages, APRs, signing cheques etc..

lana22 wrote: »

PS did you become a musician?

I played in bands for many years and attempted to get a record deal. We actually got very close to a deal with an American label, but after ten years of trying (and not succeeding), I immersed myself into my career which fortunately paid off. I still play the guitar and love music just as much as I've always done.

Pobby

lostinrates wrote: »

You know, its weird. I've just remembered I had a friend of a friend at uni whinging onto me for hours, one of those evenings when I remebered why I avoided the student bar. He had come to vist my friend for a weekend and was going on and on about how much he earned but that as a contractor with a yearly contract could not get a mortgage and so was saving to buy outright, in N. wales IIRC, and thought he could do that within 5 years at that time. (Goodness what a borring night that was) I guess that was around 1999/200ish. I wonder is he discovered self cert....I'll never know.

Seriously, I think you could still get a place to live in N. wales for not much more than 10 grand then.