What is a "sensible" monthly mortgage % of income?

crazycatlady1984

Hi Yakubu,

I think that seems reasonable, but I am also looking for a bit of advise on that too actually, as have just bought a new house

Mortage (including building/contents insurance and mortgage protection) will be 58% of my after tax monthly income.

Is a joint mortgage with my partner, but he is self employed so hve worked it out that my monthly wage will cover all of the above plus bills, (which include £50 pension sontrivbution and £40 regular savings between us) council tax, food (beans on toast!) and my travel costs to work......but nothing else. Therefore, everything my partner earns over and above this is what we have to live on.

On the assumption that my partner earns the equivalent of minimum wage (hoping will be much more! but to take account of any quiet periods, etc etc, and to err on the side of caution) out mortgage (including the above insurance/protection) would be 38% of our take home pay.

Any opinions on whether or not that sounds realistic/do-able would be very appreciated as moving next month and mortgagepayments will then kick in!

mr_fishbulb

Currently 25% of my takehome pay on rent and bills.

This would go up to 50% when I buy.

hazyjo

Hubby and I more or less earn the same. It pretty much works out that we pay just over one salary into an account to cover all bills and mortgage. The rest is for spending I suppose the mortgage must be high 30-odd% of take home pay (is there an easy calculation rather than guessing with a calculator? My maths ain't what it used to be lol). We don't have kids though, and still have lots to spend each month.

Jx

spadoosh

monthly mortgage

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x 100
monthly income




Jointly it is 21.2% would have v. good disposable income when partners debts are paid off. Just bought the house, FTB.

SandC

Depends how much you are left with to live on after other essentials such as council tax, bills, travel expenses etc.

As a poster above said - 30% of £1500 leaves you with £1050 to cover everything else but 30% of £3000 leaves you with £2100. Size and type of property of course makes a difference in bills and council tax but in my experience it's a bit like the single person household versus the couple household - it doesn't cost a couple much more to live than a single.

neverdespairgirl

A lot depends, I think, on both the level of income and personal circumstances.

Take a couple with 3 children earning £50k between them. They both have costs to get to and from work, and childcare expenses, as well as feeding and clothing 5 people.

They could afford a much smaller % of their take-home pay than a single person earning £50k, whose other expenses would be much lower.

Giddytimes

When I've finished paying off everything I owe I intend to start splitting my net income into 1/3's.

1/3 Mortgage
1/3 Savings
1/3 to live on (including bills)

Brallaqueen

I nought on my own which obviously had an impact. My mortgage is roughly 40% of my take home pay not including bills etc. If I include my income from the rented room it is 30% on the nose

Engeroosi

21.2%. we live comfortably

DizzyDasher

Yakubu22 wrote: »

Thanks all.

Our joint net (after tax) income is £3400pm and were considering a purchase price which would equate to £715 pm mortgage. So roughly around 20% of our joint income. But with bills/tax/insurances our total house related outgoings would be just under £1100.
This doesnt include stuff like petrol/food/socialising.

Does this seem reasonable to others? If we have kids in the near future then things would be a lot more tighter.

This sounds very manageable: that is well below the levels that people usually suggest as "doable", which means you should also be able to survive some of the curve balls that life will throw at you - but things I would think about to make sure you are comfortable are:

- Existing Debt: do you also need to set aside income for credit card repayments, loans etc? If so I would be tempted to treat this like a tax (i.e. take repayments off your post-tax income) and see if things still look OK.
- Pension and/or retirement savings: do you have these in hand (e.g. occupational pension, ISAs?) - if not then you need to allow in your budget for some kind of savings for old age. How much depends on your age and how long you are happy to work for (maybe happy to is the wrong phrase!!) - if you are still pre-kids sounds like you have time, but it would ideally be good to get some savings under your belt before kids arrive.
- Childcare: If you do plan to have kids the main cost I believe (I'm sure parents on the board will correct me if I'm wrong!) is childcare/loss of earnings when they are little. How would you deal with this? Might be worth doing a mini-budget for how you would cope if you had a baby now (e.g. living on one income, or paying for child care, or whatever you would do), and see if it still works. There was an article in the Graun last week where somebody reckoned they spent about £1k on baby stuff for their first baby (and then you need to add in income/childcare impact) - but they had quite a few hand me downs and loans so it depends on whether you already have friends with older kids who can lend you lots of stuff - if not it could be a bit more!
- Changes in mortgage rates: What kind of mortgage are you looking at? If it is variable rate, then personally I wouldn't expect rates to increase much in the near term (next couple of years) - but that's just an opinion so you need to budget to make sure you can at least handle a return to more "historically normal" levels.
- Changes in income: Can you expect any income increases or promotions? Again, if you are quite young (sounds like you are!) then maybe you can - and this could help reduce worries about future interest rate rises, for example. Other things that might make you more confident of surviving e.g. redundancy is if the place has a spare room that you could rent out if things got tight (though I appreciate this doesn't really combine well with the baby thing if you are doing that!) But this can be tax free income, and depending on where the house is you might be able to find a lodger who only wanted to be there during the week, giving you the house to yourself during weekends! Of course you could also temporarily stop saving if you had something like a redundancy.
- Insurance: you say you have included insurance in your figures: I guess that is at least buildings, contents and car if you have a car. Might be worth thinking about life insurance too if you are taking out a joint mortgage. There is probably a board for that somewhere!

Anyway, that is what I would be thinking about. In the end life can sometimes smack you around the face in ways that you couldn't or didn't plan for, and if you waited to be rock-solid bombproof for all possible events you'd be waiting for ever - but I still think it's worth thinking about these scenarios, looking at the ones that would put you into trouble (there will always be some), and thinking about how likely they are. Only you can decide how much "risk" you want to take. The fact you are even here asking the question suggests you probably like to avoid risk I guess, or at least be prepared for the worst case scenario!

Good luck whatever you decide! Sounds to me like you should be fine, but it's worth running through all the main possibilities for the next few years and figuring out how you would cope.