The 3.5 x Salary ideal - ever realistic again?

WTF?_2

dannyboycey wrote: »

3.5 x joint, or slightly higher for an individual. Yes, it's completely realistic, as once you can only borrow 3.5, prices will fall in line as a result of affordability. In fact, you'll struggle to get much more than this now.

Actually, the traditional standard is up to 3.5x single salary.
For couples; 2.5x joint OR 3.5x single + second salary.

And of course, 90% LTV max.

There simply isn't enough money in private hands around to support higher prices than this, if that's all lenders will give. The market will have to fall back in line.

lostinrates

pollyanna24 wrote: »

Does this mean x3.5 one person's salary? Not sure if this will ever happen. I know the ideal is for wifey to stay at home and not have to work, but it's not the way of the world these days.

For the one bed flats maybe for one person, maybe it should be x3.5 of one person's salary.

I sort of agree with you, BUT, I am a wife who has been stay at home, not by choice, but because I have had to move with DHs job to a country where I don't speak the language (and therefore was pretty unemployable) then back again, then out again, I came back to UK a few months before him (which stretched out to 9 months) to try and look for work but my cv is full of holes (plus other issues). I am a graduate with experience of running my own business and I was recently turned down for a part time warehouse job in our local factory so its not as if I'm holding out for a job relevant to my experiences etc. Just because its the way of the world now doesn't make it right, reasonable or in all circumstances feasable.

pickles110564

!!!!!!? wrote: »

Actually, the traditional standard is up to 3.5x single salary.
For couples; 2.5x joint OR 3.5x single + second salary.

And of course, 90% LTV max.

There simply isn't enough money in private hands around to support higher prices than this, if that's all lenders will give. The market will have to fall back in line.

!!!!!!? your are right.
We must get back to this level so that we get the stability back into the housing market and people still can have a life after they pay for their mortgage every month.

sreppaw

We are 26&25, our outstanding mortgage (100k) is 1.6x our joint income (3.3x mine) on a 2 bed semi (good garden, garage, double drive, >2000sqft plot, double glazing, GSH, redbrick).
Hopefully pay off the mortgage early (12k in overpayments last year :beer: (17k off capital)), then upgrade and keep the same out goings.

Except I expect soon to be wifey will have a career break in the next few years... But I'll be able to service a mortgage of <3x my income. But until then we are saving as much as we can.:eek:

ginvzt

Well, i am nowhere near London, but our mortgage last year when we took it was about 1.5x joint salary, or roughly 3x either of our salaries. We did have a decent deposit. And my OH was still complaining that mortgage is too high!!!!!! Even though our mortgage payments were lower than the rent would have been...

dannyboycey

Only last year some lenders were offering 7 or 8 times salary!

PasturesNew

ringo_24601 wrote: »

I bought my first home 18 months ago and live in hertfordshire/close to london.. our mortgage is 3x our joint income

It is possible!

It is possible now for some people in some areas.

But not for the majority in the majority of areas.

If it's not achievable for a substantial part of society, then the prices have to come down.

There's always one clever !!!!!! who earnt enough. One clever !!!!!! isn't enough to make a marketplace.

[Deleted User]

It does seem a bit crazy that to buy our little terrace house (in a nice area of Borehamwood - not far from Watford like someone mentioned) we needed to earn 60k between us. Small house in a nice area - just like my mum and dad always told me.

Thankfully, my progression at work has been good and i am due a 10-15% raise at my next wage review in September. My OH is quite likely to be popping out a kid in the next 2 years but thankfully, she's NHS and has great maternity benefits. By then, the mortgage should be roughly 2.5x our joint income (she's also recently been promoted)

We know she can't give up work completely. I'm going to work my hardest to up my income by as much as I can.

So, yes, it's possible if you're earning a reasonable salary - but you won't get the quality of life that someone who bought a house 5 years ago would get.

EdInvestor

!!!!!!? wrote: »

Actually, the traditional standard is up to 3.5x single salary.
For couples; 2.5x joint OR 3.5x single + second salary.

This would be during the time of double digit interest rates though so not really relevant.

Nationwide has average house price @178,555 which would need a mortgage of 160,755 with 90% LTV.

That's 3.2X the joint average wage of 25k.

Obviously house prices vary enormously over different regions, but as an average this does not appear to be wildly out of line - @6% an I/O mortgage would be well under 25% of the couple's gross pay.

pollyanna24

ringo_24601 wrote: »

It does seem a bit crazy that to buy our little terrace house (in a nice area of Borehamwood - not far from Watford like someone mentioned) we needed to earn 60k between us. Small house in a nice area - just like my mum and dad always told me.

Thankfully, my progression at work has been good and i am due a 10-15% raise at my next wage review in September. My OH is quite likely to be popping out a kid in the next 2 years but thankfully, she's NHS and has great maternity benefits. By then, the mortgage should be roughly 2.5x our joint income (she's also recently been promoted)

We know she can't give up work completely. I'm going to work my hardest to up my income by as much as I can.

So, yes, it's possible if you're earning a reasonable salary - but you won't get the quality of life that someone who bought a house 5 years ago would get.

Cor, ain't it spooky when someone lives near you on these boards. I looked at several houses in Borehamwood, but bf was adamant he didn't want to live there. Think I did because my mum would be able to get a bus straight there from where she lives (thinking about it, maybe that's why bf didn't want to live there) and I liked the idea of seeing Stacey Slater driving about. Heehee.

I don't know. I still think it's unreasonable of people to expect to get the house they end up in (I'm thinking a decent 3 bed house here, not a mansion - maybe my expectations are too low) for x3.5 one salary. If people saved up a decent deposit in the first place, they may be better off. We had £30K before we bought our house.

Where we live, houses are expensive. They are a lot cheaper in most other parts of the country, so people don't need to earn £60K to get a house.

I wouldn't say I'm a "clever !!!!!!" who earns enough as someone else mentioned on this thread. I'm a legal sec in London and bf installs furniture for a living, so we're not brain surgeons!

EDIT: However, I do appreciate that house prices have got a little bit out of hand, and should stop going higher and drop somewhat.