Advice on mortgage 4.5-5 times salary

Freckles84

Hi, we are in the process of selling our flat and want to buy a house. My husband's salary is £36,000 p.a., we will have a deposit of £45,000 and would like to be able to offer up to a maximum of £220,000 on a house (so a max mortgage of £175,000). Hopefully it will be less than that though. We have no other credit commitments. We have an independent mortgage advisor who is looking into possible mortgages for us just now, (5 year fixed) but I would just like to know is a 4.5-5 times salary mortgage sensible? It means our next home can be our forever home instead of having to sell and move on in 5-10 years time. Would really appreciate any advice. Hope I've given enough info.
Thanks

Tebheag

Hi

Have you checked what the mortgage payments will be and what they could be if interest rates where to go ? then done a SOA to see what your monthly spends are best way to see how much you can afford.
Good Luck

ruggedtoast

I wouldnt go above 4.5 times to be honest.

Freckles84

Thanks for the replies. We already have a budget worked out with our monthly incomings and outgoings and I've adjusted it to allow us to spend up to £800 a month on mortgage repayments, which is approx 35% of our monthly income. We're hoping to be able to get a good rate on a 5 year fixed rate mortgage, by which time my husband is hoping to have received a pay rise. Thanks.

maninthestreet

What interest rate is on offer for this 5 year fixed rate mortage? Unless it's 2.7% p.a or less, it will cost more than £800 per month for a £175,000 25 year repayment mortgage.

Freckles84

Sorry I forgot to say it'll be a 30-32 year mortgage not 25 year. When I put the figures into a mortgage searcher tool online it did seem to suggest that it would be possible to secure a mortgage for that amount for around £800 per month, but I am still waiting to hear back from our mortgage advisor later today, so yeah you're right it may not even be possible, but what I would like to know is if a lender is prepared to give us it is it a good idea anyway? Thanks

DannyboyMidlands

To me a £175k mortgage on a £36k salary sounds like a silly amount of borrowing. Especially as you'll be paying 35% (!!!) of your income on the mortgage payment alone and even this has been "fudged" with the 30 year term. Remember that general inflation is running at 5% pa so all your other outgoings will continue to increase.

If I were you I'd buy something cheaper, enjoy life and not be such a slave to the mortgage. This forever home could become a millstone around your neck.

Freckles84

OK. Thanks for the advice. Would a £155,000 mortgage on his £36,000 salary be equally as irresponsible? That extra £11,000 would really help us afford something we could stay in for a long time. House prices are high here. And is 35% income to mortgage payments especially high? I'ts manageable for us as long as we make sacrifices in other areas. Even if our mortgage payments are less we hoped to overpay to make it up to £800.

DannyboyMidlands

In my opinion £155k is still pretty huge. I wouldn't want to go much above 3x income. My current mortgage is less than 2 times our joint income and takes about 15% of take home pay. We're in the south east.

I guess it's down to priorities. If the house is that important to you then go for it.

amblondon

How long could you cover the mortgage for if your husband is made redundant? That's a key question.

Cheers