What percentage of income is OK for mortgage

redrabbit29

I've just used a spreadsheet that I use to budget with to do some calculations.

It showed that we would have a TOTAL of £800 spare per month. That's based on a mortgage of £1200 per month.

That is after ALL bills, and all expenses including cars, contact lenses, etc... EVERYTHING.

That could be for savings or home improvements. Seems OK I think. Enough room to breathe if things go wrong in the housing market.

elfen

You should be OK on that, but I'd still budget so you have an emergency fund and that.

getmore4less

jenner wrote: »

we're going wrong somewhere then, our mortgage is only 560 but ourtake home is 3400. however we pay a total of about 1500 into our joint account so i suppose that makes it a third and you're right, we are struggling with that

Have you tried looking at why?
Post you budget/SOA people can point out where you are going wrong.

You still have the other £1900 what is happening to that

Without the housing(rent/mortgage) £1k spends is enought for 2 people to pay the bills food 1 small holiday 1 car and going out, basic but doable.

getmore4less

SuzySu wrote: »

I think I've read somewhere on here that if your mortgage is more than one third of your net income you are likely to get into difficulties. Of course there are other things to take into account, but it's a ball-park figure.

this only works for low incomes.

Living costs do not have to go up with income

There will be a salary when any above this can go 100% on housing

getmore4less

redrabbit29 wrote: »

I've just used a spreadsheet that I use to budget with to do some calculations.

It showed that we would have a TOTAL of £800 spare per month. That's based on a mortgage of £1200 per month.

That is after ALL bills, and all expenses including cars, contact lenses, etc... EVERYTHING.

That could be for savings or home improvements. Seems OK I think. Enough room to breathe if things go wrong in the housing market.

For a couple thats about right £1k spends.

You need to put some aside for repalcement goods/cars.

£800pm spare builds up that contingency a bit of living and overpaying.

LeeSouthEast

Live by the 60% rule and you won't go far wrong.

60% of your take-home pay should cover all your spending. The other 40% divided between long-term savings, short-term savings, pension and 'fun'.

getmore4less

LeeSouthEast wrote: »

Live by the 60% rule and you won't go far wrong.

60% of your take-home pay should cover all your spending. The other 40% divided between long-term savings, short-term savings, pension and 'fun'.

Not sure how that works

Fun is just spends,
short term savings are just delayed spends
Might not leave a lot for retirement at that old 60% spend rate.

You could use the retirement in 15 year plan
30% spend, 30% house, 30% retirement investments

The 30% spends includes keeping on top of replacements and house running costs
The 30% saving provide the 30% income after 15 yers so you can retire
(As long as investments do 5% ish over inflation)
The 30% in housing pays for the house.

So for someone with £3k income.
£1k spends
15 year £1k mortgage
15 year £1k savings to produce over £250k in todays money

Retire live of the £1k income(inflated)

Just don't have KIDS.

chambta

Generally speaking and from my experience people/families will tend to struggle if the mortgage payment is more than 1/3 of net take home pay.

I pay £500 on my mortgage at present with a pre-tax salary last tax year of £35k.

Fire_Fox

jenner wrote: »

we're going wrong somewhere then, our mortgage is only 560 but ourtake home is 3400. however we pay a total of about 1500 into our joint account so i suppose that makes it a third and you're right, we are struggling with that

I'm assuming here that you aren't happy with the way things are as you use the word 'struggling' ... Do you know where the rest of the money is going? Are you servicing a lot of other debts such as credit cards and car finance? The only bills that are (virtually) non-negotiable are mortgage and council tax, everything else can be worked on.

There is an inspirational thread on the DFW board entitled 'Live on £4K for a year' - this covers everything for an entire family after mortgage/ rent and council tax are paid. I'd go through six months of bank statements, complete a Statement of Affairs and post up on the DFW board for comments. They are brutal but huggy too!

puddy

getmore4less wrote: »

Have you tried looking at why?
Post you budget/SOA people can point out where you are going wrong.

You still have the other £1900 what is happening to that

Without the housing(rent/mortgage) £1k spends is enought for 2 people to pay the bills food 1 small holiday 1 car and going out, basic but doable.

its a constant struggle, i monitor money very closely, always reviewing, checking and planning.

partner will NOT discuss money, under any circumstances and spends too much on silly things

we both have loans, they total about 450pcm, his travel costs pm are 400

i have asked that we put money in savings, i put 320pm away, i asked that he does 360pm but i dont think he does it.

we have rowed constantly over it since we moved in together 4 months ago. this weekend was particularly bad. the statistics i believe state that most people split up over money, not infidelity and i can believe it.

our 1500 just about goes on the items above, mortgage 560, water about 25, bt internet, phone is about 35, electricity and gas 70 together, pets 280, rainy day 150, ctax 150, food about 250 i think but this is where we overspend but i keep finding im dipping into the pets and rainy day account to cover spends. (this is from memory i cant remember exactly the amounts for the bills)
internet he has to have the expensive one for unlimited downloads, bills is the dd they have told us they are taking, we have bt anytime as i work from home...oh and tv licence
the pet account is because the cat has expensive medication and their food and cat litter costs a lot too