How much is too much?

Cleaver

Stinkybell wrote: »

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.

What is your take home pay, what is your partner's take home pay and what would your mortgage payment be on your current workings? What interest rates are you working on?

FTBFun

Stinkybell wrote: »

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.

Firstly good luck - I bought in London nearly 3 months ago so know what you're going through.

As well as looking as what you can pay currently, you may also want to factor what could happen in a few years down the line when interest rates inevitably increase. Personally I factored in a "worse case" scenario of my mortgage interest rate doubling and whether I could afford that before working out how much to borrow.

Personally I don't think a % of your take home pay is necessarily a big factor - if you're on a good enough income it may be that your % of take home pay is still going to be quite substantial. Personally though I would keep it under 50% at least but you could be riskier people than that.

BTW I would consider reposting this in the "House Buying" forum as this one is more for arguments.

PasturesNew

Don't get up the duff for 5-6 years either, that'll muck up your plans.

MacsReturns

You 'think' you can afford 60% of your income on a mortgage - whilst interest rates are at an unprecedented low.

Sounds too close to the wire for my taste, and I wouldn't dream of stretching that far (then again you couldn't get me to live in London even if you dragged me down there bound hand and foot in iron chains, prodding my behind with a red-hot poker... but maybe that's just me )

Seriously, though, should one of you lose a job, you'd be right up the proverbial waterway bereft of a paddling implement, and I can't see interest rates remaining so low for any timescale that is significant compared to a mortgage term. You need a serious risk assessment if you intend to plunge in so deep, imho :beer:

Loughton_Monkey

MacsReturns wrote: »

You 'think' you can afford 60% of your income on a mortgage - whilst interest rates are at an unprecedented low.

I agree with this. There is also the fact that no-one will give you a mortgage in which the repayments are 60% of joint income.

Mortgage rates of 12% to 18% interest were not uncommon in the 70's when I first bought. THere is no guarantee that this won't happen again.

In another recent thread, I seemed to get slagged off about relating my view, but I will repeat it (and this is not aimed at you, OP, I'm just making the comment): My first house was a s*h*i*t hole and we bought without a stick of furniture. But it was what we could afford and nothing like a house we would see ourselves in for any length of time. We have noticed a very distinct change with the current (40 year on) generation of FTB who seem to want a 'decent' 3-bed, in a 'decent' area, and to fill it with the best IKEA has to offer.

Everyone who had done that in 'my day' would have had to wait so long, they would probably not have made it until 40. So no different to now, really. I am proud, now to live in a very nice house, thankyou very much, but I only did that by getting onto the ladder early and 'slumming it' for a few years, and not moaning about it.

nightwatchman

Loughton_Monkey wrote: »

My first house was a s*h*i*t hole and we bought without a stick of furniture. But it was what we could afford and nothing like a house we would see ourselves in for any length of time. We have noticed a very distinct change with the current (40 year on) generation of FTB who seem to want a 'decent' 3-bed, in a 'decent' area, and to fill it with the best IKEA has to offer.

The problem is that the unlike 40 years ago the FTB today is in his late 30’s & has already a sprog or two.
So for me, (and many others like me) the a s*h*i*t hole which would do me nice 10 years ago is out of a question today.

mbga9pgf

I am not expecting IRs to go up significantly for the next 5 years; that doesnt mean I am not planning for them to go up. Factor in rates hitting 8% - how would you cope? If you cant afford rates that high, save up until you have a deposit big enough to get a favourable mortgage rate. It took my wife and I 4 years to save a 30% deposit, and despite buying, we are still making serious overpayments on the mortgage, instead of banking on rates staying low. Once we have the mortgage down to under 3.5X single salary, then will be the time to chill out and enjoy the income.

Why did you buy a car on finance? If you ever work out the total repayment, you will cringe. I would focus on repaying this loan pronto as a priority before getting a big loan. The lack of loan payments will make a big difference when interest rates go up and whether you are able to pay increased repayments.

I would wait anyway. Why would anyone buy with prices falling for the forseeable?

kriss_boy

Obviously it depends on how much you earn.

My girlfriend and I have an after tax monthly income of approx £2600 though Ive just put our overpayments up so we will now be paying £820 on our mortgage!!!

Not sure if we will be able to sustain that but even if we just do it for 3 or 4 months it all adds up.

ukcarper

nightwatchman wrote: »

The problem is that the unlike 40 years ago the FTB today is in his late 30’s & has already a sprog or two.
So for me, (and many others like me) the a s*h*i*t hole which would do me nice 10 years ago is out of a question today.

That is a problem though it has very little to do with rising house prices if I had waited until I was 37 and had my kids first I would not be in the house I am now. Things have change from the 70s people got married younger and normally lived at home with their parents until they bought. Most people where earning near to their maximum earnings when they were 22 and not just starting to work. So comparing now to the pass is not that relevant.

getmore4less

%ages are the wrong way to look at it because they mean different things to different people depending on income level.

Do a proper budget and see what there is available for housing.

when comparing the ownership against renting compare 100% interest only against rent, that a reasonable comparitor to start with but does exclude the extra costs of ownership.