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Predicting Mortgage Expense in the future.

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i am always baffled when i hear my parents talk about when they bought their house for £30k 15-20 years ago, and more recently, my in-laws have just finished paying off their mortgage which was £70 per month.... but once upon a time that was ALL of one of their incomes...

sounds bizarre.... which makes me wonder, is there any way of determining what our mortgage will be in 15-20 years time relative to our earnings?

for example, our mortgage is £170,000 with monthly payments of £994 - this is approximately 1/3 of our monthly take home salary (i.e. £3,000)

so in 15 years, what would be our mortgage relative to our salaries.... obviously this would have to be based on a number of assumptions, for example static inflation, interest rate and wage increase %'s

i am just curious, would anyone be able to work this out so.... more for curiousity than wanting to get anything significant from the exercise!

Comments

  • jaype
    jaype Posts: 349 Forumite
    Depends on the rate of inflation. In the past it was 15% so obviously pay went up rapidly, reducing quickly the % of mortgage to earnings ratio. Now we are in low inflation so I would budget for that mortgage staying a big percentage of your income for quite some time to come, as a rough indicator :(
  • absolutebounder
    absolutebounder Posts: 20,305 Forumite
    M=(A X S)squared - (A X hp) + VC all divided by t
    Where
    M= Mortgage amount
    A - income multiple
    S = salary
    HP = house price
    t= time in years
    VC = Variable constant which can be anything you want to make the figures look good
    Who I am is not important. What I do is.
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