Mortgage salary multipliers

HouseMan

pathtofreedom wrote: »

Not sure why you think this I'm 8 years into owning my first house, and if I hadn't over paid loads over the years I'd still be in negative equity with a northern rock mortgage at 6.5% I couldn't escape from. Look on the boards there are lots of stories of people who haven't been lucky enough to overpay and remortgage still away from nram.

You might plan to over pay now and remortgage when the 10 year fix runs out, but unless you can predict the global financial markets, how the government will change the laws, that you won't be made redundant, or get sick, or divorced, or married, or have kids and they get sick, or a million other things that happen to people every day, you might well get to the end of a 10 year fix then rates jump to a rate you can't afford and you can't just sell as you'd need a loan to pay back the outstanding mortgage due to the negative equity.

Just as it might not happen to you, it has happened to millions hence why these affordability rules have come in not only to protect the banks but the people as well. Ok yes they still need some work as some people still can't remortgage to a lower rate / payment even though they are paying more now as they can't meet the new rules but you're not special. If you can OP that much that fast just spend another year or two saving to get a place you can afford.

Losing a job would be a problem, but it's a problem with almost any mortgage. Obviously, have some emergency money in the bank will help with short term unemployment, but in the long term, it would be difficult.

If you have a 10 year fixed mortgage and it isn't working out, you'll know long before the 10 years is up, which will give you a chance to sell etc. Negative equity wouldn't be good. Fortunately, it's not a problem around here.

fred246

I borrowed 6x salary in 2001. I took a 5 year fixed rate and overpayed so I was safe at the end of first 5 years. It's now paid off. It's OK for frugal people with a secure job who are financially astute. Multipliers do not take into consideration different people's lifestyles.

HouseMan

Thank you for you replies, you've answered all of my questions. I've had a look at smaller/cheaper properties but none of them would be a long term solution.

I think I will probably build a workshop/shed in the garden of my current house. This will essentially give me an extra room, but without the expense of moving. It will probably add some value to the property too, so I should get some of the cost back when I move.