What percentage of your income was on monthly mortgage (FTBs)?

khgibb

Interested to know what you guys think would be a sensible max for percentage of income to go out on your mortgage when you first buy a house?

I'm stressing a bit about what might happen if we start a family in the next few years and I'm not able to return to work (due to possible health complications we already know about). That would mean we'd need to cope on just one salary.

My husband and have been very lucky and through saving and family help have saved £140k. Figuring on 20k for fees, we have a deposit of 120k. We live in the south east where houses are stupidly expensive, and over the past 8 months of looking we've come to terms with the fact that a typical 3 bed terraced or semi goes for 370-400k at the bottom end. At the moment this would mean around a 70% LTV ratio and borrowing around 3 times our combined salaries (which total together around 90k gross annually). That would be fine now as our rent is approx the same that the mortgage payments would be, but I worry about how we'd cope if our circumstances change in the next few years.

Any thoughts?

Ciderarmy1987

My advise would to be to make a spreadsheet to map out of of your current costs. Remember to include yearly costs such as MOT & car service, house repairs etc.

We have done this for what we spend now, and then again with us cutting back on everything that wasn't essential. Thus giving us a max and min to be left over each month.

This should give you a pretty good idea of how much money flexability you have for things to change in the in the future.

Hope that helps

khgibb

Thanks - we're trying to do that at the moment based on our current expenditure (which I'm sure we could cut down a bit if we needed to). So far on the list are

Mortgage
Council Tax
Water
Gas+elec
House + contents insurance
Food
Petrol
Car breakdown
Car tax
Car insurance
Mobiles
Sky
TV license

But no idea how much is reasonable to allow for things like house and car repairs etc. Any suggestions?

On the maths front, for two salaries the mortgage on today's rates would be about 26% of our combined net salaries, but if we were to end up on one salary we'd be 50%. Plus there is the fact that we can get a 3% interest rate at the moment, so if rates rise back up to 6% then things would change significantly.

Oh, and my husband says I worry too much!

Ciderarmy1987

What about things like going to the cinema or eating out etc.

For car cost try to add together costs for insurance, service, mot and any repairs and then divide that by 12. Try to then make sure you save this amount each month

Then do the same kind of thing for house repairs. harder to do but we have put down £150 a month in our budget

I think that is just wise to know that you have got excess each month, the amount you need will be unique to you and how catious you are

giddypenguin

What about holidays, clothes, savings, socialising?

Southend1

khgibb wrote: »

Interested to know what you guys think would be a sensible max for percentage of income to go out on your mortgage when you first buy a house?

I'm stressing a bit about what might happen if we start a family in the next few years and I'm not able to return to work (due to possible health complications we already know about). That would mean we'd need to cope on just one salary.

My husband and have been very lucky and through saving and family help have saved £140k. Figuring on 20k for fees, we have a deposit of 120k. We live in the south east where houses are stupidly expensive, and over the past 8 months of looking we've come to terms with the fact that a typical 3 bed terraced or semi goes for 370-400k at the bottom end. At the moment this would mean around a 70% LTV ratio and borrowing around 3 times our combined salaries (which total together around 90k gross annually). That would be fine now as our rent is approx the same that the mortgage payments would be, but I worry about how we'd cope if our circumstances change in the next few years.

Any thoughts?

My mortgage payment is about 35% of my take home salary. But I currently overpay so am paying 43%.

My 3 bed terrace in the south east cost me £160k in 2011. If I was you I'd relook at the areas you are house hunting in and look to buy something cheaper mortgage free or nearly mortgage free as you already have a huge deposit.

Southend1

Ps my salary is less than a third of yours and I am single so only one tax allowance. I really would consider trying to be mortgage free ASAP in your position and live life to the full. Several holidays a year, early retirement etc

HAMISH_MCTAVISH

khgibb wrote: »

Interested to know what you guys think would be a sensible max for percentage of income to go out on your mortgage when you first buy a house?

When we bought our first house just over a couple of decades ago as dual income borrowers, mortgage interest promptly went up to double digits, and almost 100% of one income was needed to pay the mortgage, whilst bills and basics took up the rest of the other income. We couldn't afford to heat the house properly, nor redecorate, nor buy furniture for many years. Hand-me-downs from family was what we started with. Some of our friends were even worse off, and had to live with no heating, no phone, and had milk crates and cardboard boxes as their only furniture for years.

When we bought a second house in 2007, with a mortgage at 3.5 times joint income, it was far, far, far easier and took up a much smaller percentage of income. That mortgage is now down to just over 1 times joint income as we've taken advantage of low rates to overpay, and saved a fortune versus what renting would have cost since then.

Oh, and my husband says I worry too much!

He's right.

You'll have it much easier than previous generations, I wouldn't worry at all.

khgibb

Southend1 wrote: »

My mortgage payment is about 35% of my take home salary. But I currently overpay so am paying 43%.

My 3 bed terrace in the south east cost me £160k in 2011. If I was you I'd relook at the areas you are house hunting in and look to buy something cheaper mortgage free or nearly mortgage free as you already have a huge deposit.

Thanks, but that wasn't my question. Sadly there is no way we could find anything reasonable for that cost in a location that would allow us to both work in our chosen careers. And we'd rather enjoy our jobs and live somewhere we feel happy and can raise a family.

khgibb

HAMISH_MCTAVISH wrote: »

When we bought our first house just over a couple of decades ago as dual income borrowers, mortgage interest promptly went up to double digits, and almost 100% of one income was needed to pay the mortgage, whilst bills and basics took up the rest of the other income. We couldn't afford to heat the house properly, nor redecorate, nor buy furniture for many years. Hand-me-downs from family was what we started with. Some of our friends were even worse off, and had to live with no heating, no phone, and had milk crates and cardboard boxes as their only furniture for years.

When we bought a second house in 2007, with a mortgage at 3.5 times joint income, it was far, far, far easier and took up a much smaller percentage of income. That mortgage is now down to just over 1 times joint income as we've taken advantage of low rates to overpay, and saved a fortune versus what renting would have cost since then.

He's right.

You'll have it much easier than previous generations, I wouldn't worry at all.

The generation thing is interesting. My parents lived in a time where you could get on the property ladder early when earning modest amounts and were able to upgrade as time went on. We lived on hand me downs and didn't own anything branded and it was all fine. But it is really tough for most people to even save for a deposit these days unless they have help from their family, and its terrifying to think how much we've spent on rent over the past decade paying someone else's mortgage.

khgibb

giddypenguin wrote: »

What about holidays, clothes, savings, socialising?

We have created a full budget for our outgoings within our current lifestyle which includes lots of extras like these, but we specifically want to work out the absolute minimum we could live on for a defined period of time if I wasn't working or one of us was made redundant. i.e. if we had to give up luxuries for a while.

Hopefully it won't come to that of course, but I'd feel more comfortable taking on a mortgage knowing what we might need to do if our income changed. And partly because I'm a born worrier!