Mortgage as a % of household income

village_life

I've seen some historical stats on the web that say a range of morgage to income is from 16-24%.....

seems a bit unrealistic to me given the way house prices have shot up versus earnings in the recent past

is there any rule of thumb for mortgage cost as a % of gross or net household income?

getmore4less

NO.

Peoples income and outgoings are too different.


Do it on your own affordability

CloudCuckooLand

A third is often bandied about...(33%)

village_life

thats what i am trying to measure

when we first moved to our home it was based upon ~50% of household income as it was just my salary, subsequently my wife got a job that would have taken it down to 33% of household income, however holidays, home improvements and other commitments meant it was always at the 50% level

subsequently ive got a much better paid job and we have no credit commitments now, so our current mortgage (due to end a fix at the end of feb) is ~25% of household income....

as such we are contemplating moving to a "life home".... we'd be talking about ~50% of our household income again.... however our household income is £+4k per month, so £2k on a mortgage still leaves us with some affordability as all the other expenses dont go up at the same rate (e.g. TV license, Gym memberships, car fuel etc wont change)

beecher2

Only you can judge. You've got a much higher household income than average, so more leeway than most. Only you can judge how likely it is for your outgoings to increase due to children/interest rate increases etc, or for your income to decrease due to loss of job, cut in pay.

getmore4less

village_life wrote: »

thats what i am trying to measure

... snip irelivent stuff.....

our household income is £+4k per month, so £2k on a mortgage still leaves us with some affordability as all the other expenses dont go up at the same rate (e.g. TV license, Gym memberships, car fuel etc wont change)

Start from the other way round

Make a list of essential spends take those out of the income

The rest is house or discretionary spends

Set a time scale to be mortgage free,

lets say over 15years @ 5%

Each 10k of mortgage costs £80pm

Trade off the spends aginst mortgage you decide.

So if you gym is £80pm that £10k less mortgage simple