FTB how much of monthly sal on mortgage?

pinky28

Over the past 12 months we have been postponed for various reasons and now looking for the right house.

We set a budget but salaries have changed in this time and we kept it the same

There's a house we might like that is a LOT more than we wanted to pay £30,000 to be exact. I put the mortgage into a generic comparison calculator and it said at 5% (we were looking at a fix around 5% but it just gave this as an example figure) it would be 24% of our monthly outgoings

also to add our DIP is for a max of £45,000 over what we are looking for at the moment and we DO have 10% deposit of the dearer house

The question is...

What % of your outgoings is your mortgage? Are we being stupid being too conservative with how much we will pay? Or is sticking to our guns sensible? I think what we were looking at is 21% of our outgoings.

Spidernick

At one stage in the early 1990s when interest rates were in double digits I was paying about two thirds of my net salary on my mortgage!

I've no idea what a 'DIP' is but I think you's be fine if that's all you have to worry about.

pinky28

Spidernick wrote: »

I've no idea what a 'DIP' is

Decision in principle. Although all the advisors I have seen call them different things?!

Wow 2/3 of your salary! I'm just so careful with my money. I'm convinced we could get a cheaper rate anyway but we haven't REALLY looked properly as it's taking us so long to find a house so I just use the highest % I see hehe

amnblog

It does not work like that.

It depends on both the lender selected and your entire circumstances.

pinky28

amnblog wrote: »

It does not work like that.

It depends on both the lender selected and your entire circumstances.

Sorry I have no idea what you mean? What does not work like what?

cns06

One of the biggest mistakes we made was not to push ourselves a bit more when we bought our first house 10 years ago. We are still in it now - and tbh we said we would live here for 5 years and then move - but that's been and gone!


Had we known how difficult it would be to get a mortgage now then we would have got something a bit bigger back then when it was a lot easier - even if it was getting a bit "top heavy" for a few years.


I am not saying max yourself out beyond the point of being reasonable - but budget yourself on 8% interest rates and I don't think you will go too far wrong.

pinky28

cns06 wrote: »

One of the biggest mistakes we made was not to push ourselves a bit more when we bought our first house 10 years ago. We are still in it now - and tbh we said we would live here for 5 years and then move - but that's been and gone!


Had we known how difficult it would be to get a mortgage now then we would have got something a bit bigger back then when it was a lot easier - even if it was getting a bit "top heavy" for a few years.


I am not saying max yourself out beyond the point of being reasonable - but budget yourself on 8% interest rates and I don't think you will go too far wrong.

It's still quite a way under what our max we can borrow is. We are still looking at a big house at the price we are currently looking at so it's not like we would be stuck with something unsuitable. Just wondering if we could have something a bit bigger/dearer. I will have another look on 8% and see what that works out. Hopefully should get a pay rise soon so that will help too.

cns06

So long as your long term is already covered, pension, investments, rainy day fund, kids etc then I would always go for what your actually want. So long as you are not living beyond your means and you are still planning for the future and you have planned for rate rises then you are in a good position. I would also pen in a decent overpayment into your numbers - its always a very nice to have given rates are at an all time low. An extra 10-20% is a good starting point for the next 3 years - this may cover off any rate rises.

catoutthebag

Apologies for this, ftb, looking at comparison sites, can't see much in small print. Fixed and variable mortgages throw up discounted initial period for 2 or so years at 2-3somthing % then jumps to a whopping 4-5%....in most cases can you switch after this period?

And currently is fixed or variable best to go for...or just cheapest currently?

getmore4less

% of income/outgoings is one of the poorest measures.

Do a proper budget with ay least 5 preferably 10 year forecastng and work out what you can afford.

pinky28

getmore4less wrote: »

% of income/outgoings is one of the poorest measures.

Do a proper budget with ay least 5 preferably 10 year forecastng and work out what you can afford.

We can definitely afford the lower amount since its what I put aside at a minimum each month. Bare in mind SO puts aside same amount so double that should cover bills.

bills + mortgage = 40-50% of monthly outgoings.

Difficult to do a 5-10 year plan as everything depends on what house we get (e.g children)