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How much house would you buy?
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Mortgage: Personally I am happy to take the max available - generally 5x salary. Mortgages are affordable right now as we are in an era of record low interest rates.
Property: Depends on the size of the deposit.1 -
As you can see from answers seems to vary greatly....
As said by getmoreforless says not linear since as salary goes up the calculations change since the 'basics' can stay the same thus leaving more as a % to spend on accommodation. Also the obvious caveat that it will vary greatly from person to person even if they are on the same salary what they are a) willing and b) able to spend.
But for whats its worth property is 6.5x combined salary, mortgage 5.1x and mortgage payments 30% (30 year term).0 -
We're looking to buy with mortgage payments around 20% of our post-tax income. Relating mortgage to income makes sense, because your income has to service the mortgage, but looking at house prices as a multiple of salary seems like comparing apples and oranges. As a percentage of net wealth, or portfolio position, makes more sense to me.
As I see it there are three relevant questions:- Is your mortgage affordable?
- Are you over-exposed to movements in house prices?
- How much flexibility do you have if things change? (You lose your job, interest rates soar, etc).
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Our mortgage is about 20% of our take home pay0
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