How much is too much?

Stinkybell

My fianc! and I are looking to buy our first home together soon. We currently spend 26% of our take home pay on rent; 7% on a car loan, and save at least 22% towards our deposit. We still have 2 years left on the loan, but our deposit is several times larger than the value remaining at the moment so we could pay it off if needed. We think that we can commit up to 60% of our take home pay towards the mortgage but is this too much? We think the minimum we will need to pay will be around 50% for the sorts of properties we're looking at. Are we being realistic?

doire_2

Just save what you can. Prices are falling at the moment. Its a buyers market. Good luck

chucky

doire wrote: »

Just save what you can. Prices are falling at the moment. Its a buyers market. Good luck

yes that right prices are falling EVERYWHERE...

do you even know where this person lives?

desperate to convince people are you... not much...

JonnyBravo

You are already committing 48% of your pay to property (rent+deposit).
When you consider you'll have the extras of home owning, (youll want to paint it, get buildings insurance etc) and I'd say as a ball park figure you want to stay at that level or go down... not go up to 60%.
Run up a dummy monthly budget and see how you get on.

Cleaver

Stinkybell wrote: »

We think that we can commit up to 60% of our take home pay towards the mortgage but is this too much? We think the minimum we will need to pay will be around 50% for the sorts of properties we're looking at. Are we being realistic?

A good question, and I think it depends on a lot of circumstances such as your tolerance to risk and how much you want to stretch yourself, how secure your jobs and / or income is, whether you have family who could support you if things went really wrong, whether you have kids, what your actual income / mortgage payments are (rather than a percentage) etc.

We bought our house in 2004 and our mortgage was around 25% of our net pay. This felt about right, but then I'm a bit risk averse when it comes to these things and we have no children.

My personal view is that I wouldn't be comfortable with 50% or 60% of my income going on my mortgage. That's just me though.

LilacPixie

Personally I feel uncomfortable with any more then 35% of take home as a mortgage payment. My reasoning is maintanence, utilities, insurances, food and just general living.

in your senario you would be 67% on mortgage and car loan leaving only 33% for everything else which sounds tight but only you can say if you can pay everything else, have some emergency savings and still live on that 33%

robin_banks

Where you are in the world makes a big difference, as does the type of property you want to buy.
You talk in %ge's but not cash amounts.

If in London you'll most likely need help from BOMAD.

Radiantsoul

I think you might be better off posting in the house buying forum. This forum is more about speculation on house prices.

doire_2

chucky wrote: »

yes that right prices are falling EVERYWHERE...

do you even know where this person lives?

desperate to convince people are you... not much...

Calm down or you'll give yourself an ulcer. :rotfl:

daveyjp

"We think that we can commit up to 60% of our take home pay towards the mortgage "

In the brave new world this isn't a figure you will be in control of - the mortgage company will decide what they think you can afford and lend accordingly.

For the next three months increase your savings by another 12% of salary so that 60% of your income is committed to spend before you start living and see if you can manage.

Stinkybell

Yes we're in London, and Yes, BoMaD are helping us out with some of the deposit (less than half, and nothing towards fees and min £10k stamp duty etc), but No, prices are not falling around here! Most of the mortgages we've looked at are 40-45% but we're capable of paying more and would rather get a bigger mortgage now than have to move on quickly. Both jobs are very secure, both of us have had big promotions in the last 12 months and to be honest have a very comfy lifestyle even whilst saving.