% of income on Mortgage

studentguy

Hi Folks,

I'm a bit nervous, I'm a FTB and I'm trying to work out what I can afford. What % of income do you spend on Mortgage, Bills and have left over?

Shall I base my calculations based on 6% interest? It's hard to work out what you can afford when you're dealing with uncertainty (which I will mitigate somewhat with a 5 year fixed rate)

Is the general rule of thumb of 33% on Mortgage, 33% on Bills and 33% left over a fair one? I've heard others say that Mortgage + Bills should be no more than 50% of your total income.

Thanks

HappyMJ

studentguy wrote: »

Hi Folks,

I'm a bit nervous, I'm a FTB and I'm trying to work out what I can afford. What % of income do you spend on Mortgage, Bills and have left over?

Shall I base my calculations based on 6% interest? It's hard to work out what you can afford when you're dealing with uncertainty (which I will mitigate somewhat with a 5 year fixed rate)

Is the general rule of thumb of 33% on Mortgage, 33% on Bills and 33% left over a fair one? I've heard others say that Mortgage + Bills should be no more than 50% of your total income.

Thanks

There is no general rule of thumb.

I pay 100% of my income on rent and bills and have nothing left over. I need to spend my savings on non-essentials.

If you're in London then spending 50% of your take home pay on housing costs, rent or mortgage, is quite normal. The other half would go on bills...

If you're getting a 5 year fixed rate then you don't need to budget for rates of 6% as your rate is fixed. If rates rise beyond your ability to pay you could consider selling in 5 years when you go on the standard variable rate. You may have got a pay rise and can afford higher rates anyway.

looknohands

As FTB our take home pay is £4,000 per month and our mortgage is £649 per month, so around 16%.

We went for a small mortgage on a small property (2 bedroom), so we can build up some money in the property but still live comfortably, we can overpay upto 10% but then if we want we can not overpay and go on holiday, buy a new car, invest it etc...

Depends on the stage of your life you're at, we wont have children for a few more years and wanted to be sure we had money to enjoy ourselves before then so didn't tie into a big mortgage with a short term (which we could have afforded).

If you have kids and need a big place you'll probably spend a bigger portion of your income on a bigger mortgage.

chelseablue

We take home £4,000 a month and our mortgage is £722 so about 18%


We can normally save about £1,200 a month

andrewmp

I'd say up to about 1/3rd at 6%, fag packet stuff though.

studentguy

looknohands wrote: »

As FTB our take home pay is £4,000 per month and our mortgage is £649 per month, so around 16%.

We went for a small mortgage on a small property (2 bedroom), so we can build up some money in the property but still live comfortably, we can overpay upto 10% but then if we want we can not overpay and go on holiday, buy a new car, invest it etc...

Depends on the stage of your life you're at, we wont have children for a few more years and wanted to be sure we had money to enjoy ourselves before then so didn't tie into a big mortgage with a short term (which we could have afforded).

If you have kids and need a big place you'll probably spend a bigger portion of your income on a bigger mortgage.

My thinking is getting the balance right. I want to get a house I could see myself in long term just in case we can't move for whatever reason, like negative equity etc - but I don't want to commit too much % on the mortgage so we can live relatively comfortably and have extra money to take up the slack should we end up out of fixed term, on SVR and the interest rates are higher.

looknohands

I understand that, as FTB it's tricky to stretch to that longer term home, we looked into that.
We looked at a few places we considered 'longer term' but I'd say they were at the bottom end of what we really wanted it to be.

So instead we were happier to buy a smaller house to get on the ladder with a smaller mortgage on a 2 year fix, which enables us to save, overpay and also enjoy ourselves.

Our house is very much a FTB home, should be easy to sell again (obviously I don't have a crystal ball) but with any small profit, the repayments and our savings over the two years we will be in a good position to buy the longer term home we really wanted to begin with.

ThePants999

Depending on what exactly you call "bills", we're at ~35% mortgage, ~50% bills, 15% left over.

Ganga

studentguy,why not do a spreadsheet with all of your outgoings against your income and see what is left,this will give you an idea of what you can pay each month for your morgage.Do not forget to include things like TV licence,dental costs etc and always leave yourself an amount to put aside for repairs/renewals that would not be covered by your house insurance.