Mortgage payments (proportion of income)

[Deleted User]

Okay, just trying to work things out.

I'm still at the stage of saving up for a deposit (and it will be a while yet). And trying to work out what I'll need more acurately, and what price bracket I would feel comfortable purchasing in (first time buyer).

I'm not sure what proportion of my monthly income I would be comfortable with putting towards mortgage payments every month.

I've had a look on some of the affordability calculators online (just checked Nationwide) and to be honest they seem to be indicating a max property value WAY above what I would feel comfortable with, but still not sure what I WOULD feel comfortable with (if you know what I mean).

Obvaiously the lower the better, but just to get an idea (if you have a mortgage) - (and obvaiously circumstances vary hugely....but just trying to work out ball park figures here...)

1) What proportion of your monthly take home gets paid towards your mortgage?

2) What's the maximum proportion of your monthly take home pay would you be comfortable with?

Thanks in advance,

D9

holly_hobby

Well its a bit of a hard question as to say what you will find comfortable - as different souls have different requirements and spending habits.

But generally, responsible mortgage lending is generally circa 35% of your income. This fig will be amended if for example you have dependants or not (as the case may be !) and other constraints.

How about working backwards, and looking how much disposible/free income you would like remaining from your salary, after the deduction of all your household costs and commitments, which will give you your budget figure - then we can get an idea as to the max purchase price (based on current mortgage rates) that you need to be looking at.

Sorry I can't be more specific, because your attitude to money and how you save/spend it is specific to you (e.g .. I'm a little spendaholic - so I need lots of disp income for lovely shoes and handbags .... !!!)

Hope this helps ( a little !)

Holly x

hcb42

currently, about 22% of our joint income goes on mortgage.

This is about 11% too much, although I am in mid 40s and hubby is 50, and we want to reduce our outgoings. (THankfully we can do that due to built up equity over the years.) If I was starting out, then that 22% would not be enough, to get me the kind of house I would want in desirable area.

JonnyBravo

holly_hobby wrote: »

But generally, responsible mortgage lending is generally circa 35% of your income. This fig will be amended if for example you have dependants or not (as the case may be !) and other constraints.

How about working backwards, and looking how much disposible/free income you would like remaining from your salary, after the deduction of all your household costs and commitments, which will give you your budget figure - then we can get an idea as to the max purchase price (based on current mortgage rates) that you need to be looking at.

Do as holly suggests, much more sensible way of getting to an answer.
Also consider it's much easier to pay a higher percentage on a higher wage of course.

[Deleted User]

Thanks both.

Holly hobby - that seems like a very sensible and logical way of working it out, I will try and work backwards!

Hcb42 - I suspect that 22% might be too low for something descent in a reasonable area near me, but then maybe I will just need to save more for a deposit before stepping on the property ladder (or lower my expectations! Or perhapse a bit of both!)

Lots to think about both - thanks again for your responses

D9

hcb42

Domino9 wrote: »

Hcb42 - I suspect that 22% might be too low for something descent in a reasonable area near me, but then maybe I will just need to save more for a deposit before stepping on the property ladder (or lower my expectations! Or perhapse a bit of both!)

Lots to think about both - thanks again for your responses

D9

or just save up a huge deposit!

[Deleted User]

hcb42 wrote: »

or just save up a huge deposit!

I plan on doing this anyway!

Molehill

We are in the process of applying for ours. It will all be based on my partner income as I am just finishing studying. But we are looking at 38% (34% when her student loan is cleared next year). This will be the same as the rent we have been paying for a couple of years. The most we were willing to pay was around 45% - the max we were told we could borrow would have been around 50%. But surely this relates somewhat to what your income is, the higher the income the more you can spend on your mortgage. We are in London and find that people here seem to spend more on it than elsewhere as well, or maybe it is just FTB that do.

holly_hobby

The 35% figure I quoted, relates to what Lenders precive to be a sum that the applicant should be able to maintain over the long term (and permits them to demonstrate responsible lending during a repossession hearing).

Mge commitment of 45% of salary - you will struggle to find a lender on those high figs (unless there is a scheduled increase to income over the shortterm).

Hope this helps

Holly

[Deleted User]

Well, I've done as Holly Hobby suggested and worked backwards, and I think (once I've got my deposit fully together - still a bit to go!) I'd be able to strike the right balance between paying the bills and enjoying life, and erring on the side of caution, with 25-30% of my take home pay going towards the mortgage, as this would also allow for (some) overpayment if rates remain low, but also movement (when rates rise).

Thanks for all your input