income to debt ratio

marshall666

My partner and I are buying together. We have seen a place that is amazing but would require close to the maximum amount we were told by an independent advisor that we could be lent.
Looking at the monthly repayments of 6% and 7% mortgages (we will be getting a 90% mortgage) they are close to 50% of our take home pay.
Is this manageable? I have read about lenders not wanting to exceed 28% of gross income - is this figure still relevant? It doesn't seem to make sense given the amount we've been told we can borrow.

Many thanks for your input!

kingstreet

Different lenders use different affordability models and don't often publish what's acceptable and what isn't.

Run your details through different lenders' affordability calculators online and see what you come up with.

Make sure you input details of any dependents and ongoing credit commitments.

kingstreet

I'd also rough-out a budget planner to see what your expenses are likely to be once you've moved. A lender may say it's ok, but only you know whether it will be comfortable for you.

Wh05apk

We are all different, if you both earn £100k, have no life, walk to work, and make your own dinner, then it will be easily affordable, if you re both on minimum wage, like fast cars, have a long commute, and drink and smoke, then you would probably struggle at 2x income.

As Kingstreet says, complete a budget planner (honestly) and see what you can really afford.

DGJsaver

50% of take home pay , in todays climate ? , not something i would do but each to their own!

Wh05apk

DGJsaver wrote: »

50% of take home pay , in todays climate ? , not something i would do but each to their own!

Impossible to judge without knowing more info, 50% of £6,000 pm, would be easy, but living on 50% of £1,000 would be tight.

marshall666

Wh05apk wrote: »

Impossible to judge without knowing more info, 50% of £6,000 pm, would be easy, but living on 50% of £1,000 would be tight.

gross is about 5100 combined, repayments are about 1970 at 7%. (38% of gross)

edit: i end up slightly over 50% take home, she slightly under as the ratio of income is about 1:1.85, but we will split payments 1:2

DGJsaver

yeah , fair point i guess , but even so , to spend 50% of your take home on one outgoing , in most cases , is asking for trouble

Wh05apk

marshall666 wrote: »

gross is about 5100 combined, repayments are about 1970 at 7%. (38% of gross)

edit: i end up slightly over 50% take home, she slightly under as the ratio of income is about 1:1.85, but we will split payments 1:2

so about £2,000pm to live on? unless you have a lavish lifestyle you should be fine (as long as you both keep your jobs)

marshall666

Wh05apk wrote: »

so about £2,000pm to live on? unless you have a lavish lifestyle you should be fine (as long as you both keep your jobs)

I suppose when you put it like that it doesn't seem too bad (lavish lifestyle we have not :-)) . because the %ge is so high compared to what I've been reading as advisable it looks a bit scary.

kingstreet

You're better off using absolute figures, rather than percentages. The basic cost of living for many people is the same, regardless of income. As Wh05 has said, this impacts those on lower incomes more, as basic living costs will form a greater percentage of their net incomes...