Mortgage Affordability

bamgbost

Been renting for ages now... prob 10years (since uni!)

Now we have saved and been fortunate enough to be gifted some money too.

As I have been doing some googling and mortgage calcs... I see that monthly repayments seem higher than I thought. in fact, more per month than our current rent.

Now i understand, that at least a mortgage is not dead money and all that. and I am still keen to get one.

But just wondered, what is the guideline for affordable repayments. is there a % figure for household income as a guide...?
(With all the potential rate increases, etc. one doesn't wanna over commit on the mortgage)

also why is there this "assumption" that a mortgage would be less than rent. its what is always pantered about whilst renting.

goodwithsaving

bamgbost wrote: »

Been renting for ages now... prob 10years (since uni!)

Now we have saved and been fortunate enough to be gifted some money too.

As I have been doing some googling and mortgage calcs... I see that monthly repayments seem higher than I thought. in fact, more per month than our current rent.

Now i understand, that at least a mortgage is not dead money and all that. and I am still keen to get one.

But just wondered, what is the guideline for affordable repayments. is there a % figure for household income as a guide...?
(With all the potential rate increases, etc. one doesn't[STRIKE] wanna [/STRIKE] want to over commit on the mortgage)

also why is there this "assumption" that a mortgage would be less than rent. its what is always pantered about whilst renting.

Mortgage affordability checks will take into account a benchmark of if you could afford the mortgage if rates increased (I think it's around 5% but one of the brokers on here could confirm this).

To rent this house would cost me approximately £900-1000 per month. My mortgage is half this amount per month. It depends on equity and your loan repayments. If you have a low deposit or are borrowing a large amount then of course your repayments will be higher. If you purchase a flat there are also ground rent and service charges to include.

There are maintenance considerations when owning that you wouldn't perhaps get if renting. That said, imagine paying rent out of a pension. Owning provides more stability in the majority of situations. Given the volatility currently however, I wouldn't even be considering it if I had anything less than a 15% deposit.

Thrugelmir

bamgbost wrote: »

also why is there this "assumption" that a mortgage would be less than rent. its what is always pantered about whilst renting.

Maintenance costs, insurance costs etc are borne by the landlord. Property ownership includes replacement boilers, windows, carpets, kitchens, bathrooms , roofs all to be factored in over time.