Mortgage payments as a % of your monthly salary?

WLITC

Any thoughts on what is considered normal or reasonable in terms of what % of your monthly salary (take home) should your mortgage take up? I'm sure I've read somewhere that ideally your rent or mortgage should be more than 1/3rd?

Let_Us_See

Impossible to answer as there are so many variable factors. A single person with no financial dependents might be quite happy at 40%, whereas a married couple with three children could be struggling at 25%. Far better to consider your own income and expenditure and decide what mortgage payment would be achievable and still provide some quality of life..

Sideburno

I heard somewhere no more than 45% of your earnings at MAX, not sure what others think?

StuC75

Its a case of balancing take home pay with what is the actual disposable £'s you have and the lifestyle that you intend to live..

Then you need to take into account how much you earn as that makes such a difference and what you are then left with. e.g. 20% left of 3k is more than 30% left of 1.5k...

The full 'pitch' of the spend 1/3 on rent\mortgage assumes that you then spend 1/3 on cost of living, with the remaining 1/3 being saved for a rainy day.. so its more of something to aspire towards in terms of being comfortable..


Afterall if mortgage costs were to increase, then need somewhere that you could take that difference from..

getmore4less

StuC75 wrote: »

The full 'pitch' of the spend 1/3 on rent\mortgage assumes that you then spend 1/3 on cost of living, with the remaining 1/3 being saved for a rainy day..

Those are the retire in 20 years ratios(needs a 20 year mortgage).

Using % of income for mortgage estimates(without a plan) is just a sign that someone has no idea what they are doing.

Work out your own Budget affordability long term plans.

kingstreet

In my experience, 45% is usually debt to household income ratio, for mortgage and other credit payments added together.

That's certainly the way the HTB-EL calculator works for newbuild cases.

WLITC

getmore4less wrote: »

Using % of income for mortgage estimates(without a plan) is just a sign that someone has no idea what they are doing.

Work out your own Budget affordability long term plans.

LOL, thats exactly the case. I'm still all very new to this. Have never looked into buy before so its a steep learning curve. Its going to be another 24 months before I buy, but I'm just trying to start to get my head around the whole process and see what I can afford, not only in terms of mortgage but bills and other costs on top.

kingstreet wrote: »

In my experience, 45% is usually debt to household income ratio, for mortgage and other credit payments added together.

That's certainly the way the HTB-EL calculator works for newbuild cases.

Well based on my current salary and the size mortgage (factoring in a 20% price increase) I just caculated that my mortgage payment would be about 41% of my take home salary, although that doesn't inc any bills. I have no debt or credit payments and the idea would be to keep it that way.

getmore4less

WLITC wrote: »

LOL, thats exactly the case. I'm still all very new to this. Have never looked into buy before so its a steep learning curve. Its going to be another 24 months before I buy, but I'm just trying to start to get my head around the whole process and see what I can afford, not only in terms of mortgage but bills and other costs on top.


Well based on my current salary and the size mortgage (factoring in a 20% price increase) I just caculated that my mortgage payment would be about 41% of my take home salary, although that doesn't inc any bills. I have no debt or credit payments and the idea would be to keep it that way.

The issue is that just one factor like trying to be debt free by X makes massive difference.

Look at the difference to debt free by 40,50,60, then add I want to retire at X and the numbers get even tighter.

when young thinking I can be debt free/retire at 60 look achievable by the time you are over 50 the though of retireing early say 55 become more attractive.

comeandgo

Is there a mistake in your first post? Your rent or mortgage should be more than a third? We'll I'm way below what I should be, my mortgage is 10% of income.

dano17439

My mortgage including a 41% per month overpayment and all associated insurances (Death/Critical Illness/Income Protection/Family Protection) is 21% of monthly income