does a sensible mortgage get a sensible priced house ?

JonnyBravo

Cleaver wrote: »

Ahhh, I can see this getting towards my most favourite all-time debate on these boards: the average national wage.

"It's 12k in my town. I know this because I do".

"38.9k across the country. I worked it out by asking everyone and dividing it by the number of people I asked."

"I tend to use the (pr + 1 − 1)/2 / g(k) = 2k + [(3/2)k] equation when looking at average salary. When p = call centre wages and g = average London wage. It's really the only viable option."

Come on Cleaver don't be too tough on the thread.

A bit like some of the "feral yoof" of today, this thread never stood a chance.

It was brought into the world by geoffky and labelled with a "sensible" monicker.

An oxymoron if ever there was one.

Degenerate

Graham_Devon wrote: »

No they are not. Only in London and surrounding areas.

I think you will find the higher wage and higher house price areas correlate rather well.

Degenerate

Cleaver wrote: »

Ahhh, I can see this getting towards my most favourite all-time debate on these boards: the average national wage.

"It's 12k in my town. I know this because I do".

My figure was taken directly from chucky's ONS statistics link.

lostinrates

Conrad wrote: »

In the past contributing to a pension was more widespread. Now people use that money to invest in bricks and mortar.

Did I hear on Money box that paying a minimum of 3% pension contribution was going to become mandatory??

will this chnge things again?

It is my query that: if we are going to make any serious inroad towards better self provision in pension years are we going to have to continue looking at the levels of expenditure people are paying at the earlier stages of their working lives? Of course its most sensible to start a pension very young, but thats also when rents/mortage payments hit hardest.

MrDT

Cleaver wrote: »

Ahhh, I can see this getting towards my most favourite all-time debate on these boards: the average national wage.

Fair do's this has been done to death in the past, but chuckys spreadsheet could well see an end to that kind of rubbish. The spreadsheet breaks the figures down by local council town/region, gives median and mean averages, along with quartile cutoff points, you can also drill down further and see the figures for male/female and full/part time workers. Pretty tough to argue with.

In my area the median full time male is on 20k, and median part time female 8.5k (thinking behind chosing these figures is that dad full time and mum part time is a likely situation for most ftb here, not being sexist, that's just how it is). So 3.5x joint earnings is 99.75k, let's say 100k mortgage, along with a 20% deposit gets you a 125k house. A 125k house won't be nasty, we're in 3 bed semi with a garden and a drive territory. So yeah, a sensible mortgage gets you a sensible house in my area

If we look at the figures as 2.5x top earner and 1x lower earner, that's a 58.5k mortgage. You'd need 20k saved as a deposit to put down your 25% and buy a two bed terrace in town with no parking or garden for 80k, not great, but some would prefer this to renting I guess.

Really2

I heared most banks see 3.5X joint as a sensible maximum now, would that be true?

If so yes a sensible mortgage would get you a more than sensible house.

silvercar

I don't see the need for a sensible average FTB to have an average house, as a FTB your needs would be smaller and you could buy a starter home/ property. Then you work hard get more experiance move up the career ladder and move to a sensible average house.

By which time you have either a larger deposit saved or some equity in your home.

chucky

MrDT wrote: »

In my area the median full time male is on 20k, and median part time female 8.5k (thinking behind chosing these figures is that dad full time and mum part time is a likely situation for most ftb here, not being sexist, that's just how it is). So 3.5x joint earnings is 99.75k, let's say 100k mortgage, along with a 20% deposit gets you a 125k house. A 125k house won't be nasty, we're in 3 bed semi with a garden and a drive territory. So yeah, a sensible mortgage gets you a sensible house in my area

If we look at the figures as 2.5x top earner and 1x lower earner, that's a 58.5k mortgage. You'd need 20k saved as a deposit to put down your 25% and buy a two bed terrace in town with no parking or garden for 80k, not great, but some would prefer this to renting I guess.

many won't believe it but i buying is probably affordable in most areas at the moment.
getting the finance is the problem factor.

by buyers not being able to get the finance the prices are driven lower to meet the available finance.

in my opinion and people won't believe it or accept it but buying will never be affordable for everyone. if your salary doesn't meet these numbers you're maybe in this category.

ps. the spreadsheet was posted by Mitcha before me

chucky

silvercar wrote: »

I don't see the need for a sensible average FTB to have an average house, as a FTB your needs would be smaller and you could buy a starter home/ property. Then you work hard get more experiance move up the career ladder and move to a sensible average house.

By which time you have either a larger deposit saved or some equity in your home.

for some people that isn't good enough and it's their right to own a home.

beer_tins

Can I also ask what a sensible income multiple is, anyway?

It's a fairly blunt instrument anyway. Years ago, people spent a much higher proportion of their income on food. Car ownership was also proportionally much more expensive. This meant that the money left over for a mortgage was much lower and a low income multiple was appropriate. And that is before we even consider the huge interest rates during those years.

Nowadays, people have much more disposable income (before housing costs),so a higher multiple seems reasonable. How much more is a matter for debate, certainly the 8x multiples were way too high.

Ideally, affordability (disposable income) would be considered for mortgage approvals. A young childless couple on a joint income of £50k with no car can afford a much bigger mortgage than a married couple with 2 kids and only one parent earning £50k.

I don't claim to have the answer to what the multiple should be, or even what the average wage is (many different answers available!), but we shouldn't use what "used to be" a sensible multiple as the guide for today's market; lifestyles and the economy have changed drastically since then.