FTB Advice needed - Proportion of income spent on Mortgage Payment?

Debbie1980

Hi

I am well aware that everyone is different, with different commitments, priorities, circumstance etc but I would appreciate some advice and thoughts.


My husband and I are FTB. We started looking for a house this time last year, but then stopped (waiting for house prices and mortgage rates to drop, and got married :j) and have recently started looking for a house again.

I am interested to know what people think to the amount we believe we can pay off a mortgage each month, and whether anyone is in a similar finanical situation and what they are doing, or if there are people out there who believe they could pay more off their mortgage and what the current percentage of their income being spent on the mortgage is, and also people who are struggling to meet their mortgage payments and what % of income it is.


Our situation is:
FTB
% deposit: 25
Type of house: One that we do not intend to move from
Any debts being paid off monthly: Our student loans
% of monthly income we intend to spend on a mortgage each month (after tax, NI, pension and student loan): 32%

We are most interested in Fixed Rate mortgages, ideally 5 years.

Many thanks

beecher

It depends on your wages really. If you're both on minimum wage then that's a very different prospect than if you're both on £40k.

Also rates are historically low which skews the calculation.

I'd work out what the percentage of income would be if rates are 7-8%. Also work out what it'd be if you were on maternity leave. Work out how much you'd be able to save on top of the mortgage and see if you're comfortable with that.

Debbie1980

Thanks Beecher

I can expand a bit on my calculations....We currently bring home just over £3k a month, and are both due pay rises at the end of this month which will probably bring our total to £3150 take home

I worked out what all our monthly outgoing are/would be, all our annual outgoings eg car insurances and worked out what that also is monthly (so we could put aside for them each month, if that makes sense) plus a bit for Miscalleneous, and then savings are probably going to be 20-25% a month.

Re Maternity leave, one of the reasons we were thinking of a 5 year fixed (minimum) is that during this time we plan to have our first and possibly second child. Based on what we would be taking home then I worked out we could afford everything each month BUT we would not be saving anything during this time.

How does this sound???

beecher

It sounds like you're well organised and going into it with your eyes open, a good deposit, and savings to back you up. You should get a decent 5 year deal on 75% LTV - I'd keep an eye on what the 10 year deals are like too and see how they weigh up.

Debbie1980

Thank you, I have spent many a happy hour with my calculator!

Yes, the ideal would be a 10 year but I'm still finding the interest rates on them a bit high at the moment for us. The house we have our eye on is out of our price range at the moment and since we need to have a 25% deposit to get the better rate deals, we will have to keep saving a few more months whle hoping firstly the price of the house also comes down, and also the 10 year deals improve.

beecher

Sounds like you're in an ideal position - best of luck