How much would you borrow?

foxy-stoat

If you are on the "spend as you earn" scheme, then a lot of folk will borrow the maximum they are allowed to borrow.

MovingForwards

I would borrow £80k max, looking to try and borrow £70k.

Do not like the idea of being mortgaged to the hilt.

kingstreet

Do a budget and work out your income and outgoings.

Work out from that how much you will feel comfortable paying as a maximum each month.

Get a rate per £1,000 for the product which suits you best.

Divide your comfortable maximum payment by the rate per £1,000.

That's the amount you would feel comfortable borrowing.

For example, on a recent case;-

£1,400 was comfortable monthly maximum

on a 35 year term, the rate per £1,000 for a five year fix was £3.36755

£1,400 divided by £3.36755 is £415k maximum mortgage.

Accountant_Kerry

Thrugelmir wrote: »

Then overpay the mortgage. Rather than spend money on takeaway coffees for example. Take control of your own destiny.

That does presume you get takeaway coffees which I personally don't

downhillfast

We took a 95% mortgage a couple of years ago for approx £348K at 3.89%! :eek: At the time we earned approx £90k a year combined and we were very nervous about a £1700 mortgage payment every month.
Fast forward to now and we've managed to overpay a bit and will be looking to remortgage in January and are hoping for a 80-85% at a rate begining with a 2... but we will overpay each month as we know we can now sustain a £1700 payment.

Accountant_Kerry

kingstreet wrote: »

Do a budget and work out your income and outgoings.

Work out from that how much you will feel comfortable paying as a maximum each month.

Get a rate per £1,000 for the product which suits you best.

Divide your comfortable maximum payment by the rate per £1,000.

That's the amount you would feel comfortable borrowing.

For example, on a recent case;-

£1,400 was comfortable monthly maximum

on a 35 year term, the rate per £1,000 for a five year fix was £3.36755

£1,400 divided by £3.36755 is £415k maximum mortgage.

Good principle, kind of like a reverse mortgage calculator

getmore4less

Accountant_Kerry wrote: »

That does presume you get takeaway coffees which I personally don't

there will be other things....

The budget is about priority plan for your money.

The saying is you can only spend each £ once so decide what you want to spend it on

Stuff or a house.

Basic living costs(before buying/rent) for a couple are still around £1k per month(many do it for less)

what do you want to do with the rest.

some measures are in equivalents, pints of beer, loaves of bread or

you can work it out in how much of a house does something cost)

(say 30y 2.5% mortgage)

fancy car £250pm £63k
fancy holiday £2k £45k
eating out. £100pm £25k
fancy clothes £40pm £10k
tv package £40pm £10k
mobile phone £40pm £10k
...
nicer house

try doing the SOA

http://www.stoozing.com/calculator/soa.php

SG27

foxy-stoat wrote: »

I think you should focus on the LTV % - I would be very uneasy about taking out anything higher than a 90% mortgage in this market regardless of income to repayment percentages.

10% is not enough in a property if the market should take a slight dive for example.

As for how much you should borrow - the lenders normally wont let you borrow what they think is unsustainable - that figure is normally lower than yours.

I sold my house in July to a couple with a 90% mortgage. Looking at whats on the market now they are certainly in negative equity already! I would not want to be in they position. Especially as its a small house with no long term potential...

SG27

My mortgage is 25% of my wife and my take home pay and its the absolute max I would want. I am overpaying currently to keep future payments down once interest rates rise.

charlie792

personally when we remortgaged we borrowed 1.5 times our joint income on the basis that we wanted to be able to afford the mortgage and all bills with a bit left over, manageable on one salary if push came to shove.

At the appointment with the bank we discussed reducing our term and thus upping our monthly payments - I said we wanted to pay £360 max, they said we could afford £2000 :eek: