Opinions on our mortgage amount per month

pinkjobo

I am having a hard time getting round our possible mortgage increase. Having nothing to compare this too, (as you don't tend to ask people how much they pay per month!) does £1100 a month for 25 years make you stand back in horror?

Here are some details I am 34 and husband is 35.
Selling our house for £290k
Buying for £375
Mortgage will be £190k
Joint income is £56k
Car Loan £390 a month

What do you think, honestly? Are we being stupid having a £1100 a month mortgage? Is there such a thing as an average amount?

We have done an affordability calculation and they would lend us more so we are not at the maximum, (but quite close)

Woby_Tide

only you know what you can afford and what you spend already. On paper you will have a £1.5k commitment whilst car loan remains, I guess that leaves around £1.7k per month between you for all other costs and bills on a £56k salary. Is £1.7k enough to cover council tax, gas/elec/water, buildings/contents/car/mortgage/life/CI insurance, food, personal expenses(clothes/going out/holidays). If it is then it's your choice. Also factor in maintenance of property and potential interest rate rises.


Edit: calculator played up

meanmachine_2

Affordability's OK, unless you want to have kids. Then you're in trouble.

Best make sure one of you gets the snip then.

pinkjobo

already got 2 kids!!!!

silvercar

As the years go by the true value of your mortgage will be eaten away by inflation and house price rises and £190k won't seem so big.

We are trying to move at the moment. If all goes well we will have a much bigger mortgage than that; hopefully it won't seem so big in years to come. We were thinking are we better off being mortgage free soon or should we do the move we want and take a huge mortgage? We decided to go for it.

My only doubt would be if one of you was thinking of stopping work to have a family/ go travelling or similar, with one income you would have problems. If you both intend to continue earning you should be OK.

meanmachine_2

silvercar wrote:

As the years go by the true value of your mortgage will be eaten away by inflation and house price rises and £190k won't seem so big.

*clunk*

And this is why house prices are far too high.

I'm afraid interest rates are low because wage inflation is so much lower than before.

That means a 190K debt is going to still be huge in 5, 10, 15 years' time.

I'm lucky if I get a 3% raise each year. I know many industries where salaries have fallen in recent times.

Don't compare the turbulent 70s and 80s to today. I think that's where Britain is going to come a cropper.

clarew

We similarly have a £185k mortgage, and i only work part time as have 2 kids 4yrs and 2yrs. Times are tight, mortgage £1k a month-takes my salary, and we are left with £1,600 to cover all bills/expenses/decorating house etc. Sounds like a lot but in london money doesn't go far with 4 of us.

However the way i look at it is, to rent a 3bed house in our area cost at least £1k amonth, and hopefully i can increase my work as the kids get bigger. We just always ensure we remortgage to fixed rates amounts so we know our outgoings won't increase.
Enjoy your new home.

funkyBase

Quick question. I heard a rule of thumb for a mortgage is about a third of what you earn. I was assuming a third after tax. So if you earn £2100 after tax a month then a mortgage of about £700 should keep you on the straight and narrow.

Just trying to work this out as I'll be getting a mortgage by myself, just want to know what you think. I heard the third figure quoted by banks. Just wanting to know what other people think.

tomstickland

does £1100 a month for 25 years make you stand back in horror?

Yes, it's a lot of money per month. Personally I wouldn't want to pay that much per month.

meanmachine_2

funkyBase wrote:

Quick question. I heard a rule of thumb for a mortgage is about a third of what you earn. I was assuming a third after tax. So if you earn £2100 after tax a month then a mortgage of about £700 should keep you on the straight and narrow.

Just trying to work this out as I'll be getting a mortgage by myself, just want to know what you think. I heard the third figure quoted by banks. Just wanting to know what other people think.

It's difficult to give an average like that.

Most people who have bought in recent years have been saddled with massive "mega mortgages" - which are balanced out by those who bought 20 odd years ago and for whom mortgage payments are tiny.

I read in one report that Britons are prepared to pay 40% of their take home on housing. Crazy, compared to other countries, and potentially very damaging to the economy.

That's why house price "booms" tend to end in busts.

Gorgeous_George

House prices are a function of housing demand and interest rates.

Renting removes the risk - you pay the market rate.

Owning - the risks are yours to enjoy! Suppose bird flu wiped out 10% of population. Housing market would become flooded and prices would crash. What if interest rates go up by 2% for a sustained period? Repossessions rocket, housing market gets flooded etc.

With the options to either bank £185K and move to renting or stay put and pay mortgage debt quicker it has to be your call. Personally, I like my affordable mortgage and foreign holidays. I'm early 40s and I don't want to be too rich when I die.

Life is for living.

House prices will not rise forever - it's like pyramid selling and the bubble will burst at some time and it will hurt.



GG