The 3.5 x Salary ideal - ever realistic again?

before_hollywood

3 years ago i got offered 60k on a wage that was take home £680pm :eek:

guess what, it was northern rock lol

IveSeenTheLight

slipthru wrote: »

If the banks will only lend 3.5x salary then i can't see how house prices can stay way overpriced.

This could be true but I see this multiple being a joint income.
In the past there was one breadwinner for the family, now there are two.
I think the prices will reflect 3.5x joint salary.
With the UK average wage being circa 25K, this would mean an average house price of 175K.

Sure single people will be able to buy, but it wont be family homes unless you have a very large deposit or co-share.

IveSeenTheLight

PasturesNew wrote: »

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.

Where do you get the facts for your reasoning?
Most of the articles and facts I have read show that London and the South East are the worst overpriceig with the mjority of the country not falling into the same brackets

IveSeenTheLight

PasturesNew wrote: »

If you don't have a degree, you can work your socks off all your life to achieve a wage of £15-16k (that's doing well in many areas, say an Office Manager or similar). Whereas those with a degree are most likely to start their working lives on that sum (or be there within 1-2 years).

There are many professions that dont have a degree and earn much more than 15-16K. Plumbers, Joiners etc.

I don't have a degree but have built up an extensive work knowledge resulting in that I have been very highly paid.
Conversly I know people with degrees who are not working and others who earn less than myself.

Some of my bosses have not had degrees and they earn far more than me.

There will be lots of jobs that are paid below 15-16k, but to generalise as those with and without degrees is simply wrong.

I know many companies who have moved away from the degree requirement because having a degree is so wide spread and prefer people with more work experience

baileysbattlebus

I just had a look at Nationwide to see what we could borrow based on affordability and worked out 4.16 x joint income, I put in some credit card debts

I also put in my daughter and her partners details, they bought 2 years ago with Nationwide and they would lend them 4.25 joint income if they were
debt free, which is about the same as when they bought anyway.

Halifax would be 4.5 x joint

Lloyds 4 x joint

A & L 4 x joint

Abbey 4.25 x joint

They didn't actually say anything about income multiples but came up with a maximum lending figure based on the salaries I put in.

I guess these figures would be with some kind of deposit - though I didn't investigate.

Lotus-eater

Lotus-eater wrote: »

Nationwide's website says they will still offer me 4 and a half times my wage? We seem (imho) to have reached about the bottom of the mortgage fall off. What happens from now I can't predict, I honestly can't, I can see it both getting worse and better.

What I should have said here, is although Nationwide will lend me 4 and a half times my wage, if you take that money and add 10% to it, see what sort of a house you can get for that. Not a lot tbh........ 6 months ago you could get nothing.

IveSeenTheLight

Lotus-eater wrote: »

What I should have said here, is although Nationwide will lend me 4 and a half times my wage, if you take that money and add 10% to it, see what sort of a house you can get for that. Not a lot tbh........ 6 months ago you could get nothing.

Baileysbattlebus said that the multiples were joint income.

What would you get if you re-work your figures as a joint income multiple?

Generali

PasturesNew wrote: »

I was earning £50k for project management right before the dot com bubble burst. So, back in 2001-2002.

Then it all kind of died.... where I was living was too far away to commute to/from the jobs any more (like I had been doing). Jobs died, wages halved almost overnight... it seems to have picked up again in the last 2-3 years, which is why I thought it might be a good time for me to relocate/do the job I love again.

I've been mainly applying for jobs at £45-100k so far. But if you're not getting them it doesn't matter HOW much they pay does it. Might as well be thruppence

Hey PasturesNew - Have you considered offering your skills for nothing to a start-up company or to a charity in return for a reference to kick-start your CV?

Re the actual topic, I'm not sure there was ever anything majical about 3.5 x salary - it was that complicated modelling is very difficult on a calculator.

Someone on a higher salary is likely to spend a lower proportion of their income on necessities and so can carry on paying a mortgage by taking a hit on their lifestyle for example, as a result you might consider you could lend more to that person prudently. Someone on a small wage with a lot of kids probably pays out almost all their salary on essentials so you may want to lend that person a lower multiple or insist they take out a fixed rate loan.

Lotus-eater

IveSeenTheLight wrote: »

Baileysbattlebus said that the multiples were joint income.

What would you get if you re-work your figures as a joint income multiple?

We are in a strange situation, so it would be impossible to include my oh's income atm.
Besides what about when she has a child, unless we get maternity pay from her work (we won't) then we would have to budget for my pay alone. Also (as we found out) childcare is so expensive and limiting, it makes going back to work for a mother a hell of a lot of hard work for almost no gain. Unless you have a very well paid job of course.

This doesn't actually mirror our situation now, but 5 years ago it did.

baileysbattlebus

Lotus-eater wrote: »

We are in a strange situation, so it would be impossible to include my oh's income atm.
Besides what about when she has a child, unless we get maternity pay from her work (we won't) then we would have to budget for my pay alone. Also (as we found out) childcare is so expensive and limiting, it makes going back to work for a mother a hell of a lot of hard work for almost no gain. Unless you have a very well paid job of course.

This doesn't actually mirror our situation now, but 5 years ago it did.

Have you investigated Tax Credits regarding childcare? They will pay upto about 70% of childcare costs. It is income based ofcourse the more you earn the less you get. But it could help if you both don't high salaries