Mortgage rates going up

PaulF81

Just out of interest, what does everyone think is a suitable salary multiple (single and joint) with current uncertainty going forward? I personally reckon 3 times joint, 3.5 single should do it.

Emy1501

PaulF81 wrote: »

Just out of interest, what does everyone think is a suitable salary multiple (single and joint) with current uncertainty going forward? I personally reckon 3 times joint, 3.5 single should do it.

With no other debts 3.5x joint or single is probably reasonable. Mortgages now a days take into account lifestyles now though so any regular commitments will have to be considered.

crash123

wotsthat wrote: »

I might be as I can't find the docs. I started looking for a house in 1992 just as the UK left the ERM. I completed in mid-1993 - I was on a Halifax fix at less than SVR - I fairly sure it was sub 7% and it fell rapidly from there.

The point still stands. When you were on 10% did you build your finances around being able to withstand an increase in of 5% to 15%. That's what is being suggested by GD.

It's far too cautious. I would never have purchased my first house using this method when I had no problems whatsoever in financing it.

I'm applying some hindsight bias but I wish I'd borrowed more and moved up the ladder more quickly.

You were lucky you bought in the last house price correction.
A 1% increase on the amount you borrowed in 1993 is not as much as if you had to borrow to buy the same house today.

Thrugelmir

wotsthat wrote: »

The point still stands. When you were on 10% did you build your finances around being able to withstand an increase in of 5% to 15%. That's what is being suggested by GD.

We could only borrow 2.75 times joint income from the Cheltenham & Gloucester (still a building society then). So that was the limiting factor at the time.

Meant our finances were not at full stretch at any time.

Bought the house in 1991 for £161k

Sold it in 2005 for £365k.

That's where today's problems lie.

shortchanged_2

Thrugelmir wrote: »

We could only borrow 2.75 times joint income from the Cheltenham & Gloucester (still a building society then). So that was the limiting factor at the time.

Meant our finances were not at full stretch at any time.

Bought the house in 1991 for £161k

Sold it in 2005 for £365k.

That's where today's problems lie.

This is what many property bulls fail to either understand or more likely ignore.

The bigger the mortgage debt, the more hurtful interest rate increases are.
That is why I am a strong advocate for strict income multiple mortgages so people don't get these massive mortgages in the first place.

It is basic, simple economics. If you have someone who earns say £25,000 a year and they have either a £87K (3.5 times) mortgage or a £125k (5 times) mortgage then the smaller mortgage is going to be much more managable and more affordable if interest rates rise.

kaya64

we are already struggling to pay our mortgage, if ours goes up anymore we will sell it or let get reposessed and live in my son's motorhome .

Thrugelmir

PaulF81 wrote: »

Just out of interest, what does everyone think is a suitable salary multiple (single and joint) with current uncertainty going forward? I personally reckon 3 times joint, 3.5 single should do it.

Not so simple as you suggest. Everybody needs a base income to live.
To pay for heat and light, food and run a car.

Above a level. Then there's more disposable income. Where people have a choice. Buy a house, pursue an expensive hobby, gamble on the horses etc.

ILW

kaya64 wrote: »

we are already struggling to pay our mortgage, if ours goes up anymore we will sell it or let get reposessed and live in my son's motorhome .

You should not be struggling, rates have been incredibly low for the last 3 years. What did you do with all that extra cash?

suburbanwifey

ILW wrote: »

You should not be struggling, rates have been incredibly low for the last 3 years. What did you do with all that extra cash?

Maybe they bought at the peak, a bigger mortgage than their wage really allowed. A lot over the last 5 years bought houses way too expensive as they shot through the roof remember.

ess0two

ILW wrote: »

You should not be struggling, rates have been incredibly low for the last 3 years. What did you do with all that extra cash?

You dont half make some assumptions,what extra cash.