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    • Accountant_Kerry
    • By Accountant_Kerry 10th Feb 19, 4:06 PM
    • 343Posts
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    Accountant_Kerry
    How much would you borrow?
    • #1
    • 10th Feb 19, 4:06 PM
    How much would you borrow? 10th Feb 19 at 4:06 PM
    Hi all,
    I am looking at moving in the medium term.

    My question is really regardless of what the bank will lend you mortgage wise how much does everyone feel is a comfortable amount to have as a mortgage either in income multiples or in respect of mortgage payments as a percentage of income?

    I am a bit nervous using some of the mortgage calculators on how much is the max mortgage companies may lend me, just because they 'will' doesn't mean you 'should', right?
Page 1
    • getmore4less
    • By getmore4less 10th Feb 19, 4:16 PM
    • 35,450 Posts
    • 21,675 Thanks
    getmore4less
    • #2
    • 10th Feb 19, 4:16 PM
    • #2
    • 10th Feb 19, 4:16 PM
    What can you afford

    Income multiple and %of take home are personal.
    • Accountant_Kerry
    • By Accountant_Kerry 10th Feb 19, 4:18 PM
    • 343 Posts
    • 476 Thanks
    Accountant_Kerry
    • #3
    • 10th Feb 19, 4:18 PM
    • #3
    • 10th Feb 19, 4:18 PM
    What can you afford

    Income multiple and %of take home are personal.
    Originally posted by getmore4less
    Agreed I guess I am looking for general views on what people feel comfortable with.
    I would be nervous of being 1/4 of a million pounds in debt for example just as it seems a massive amount
    • getmore4less
    • By getmore4less 10th Feb 19, 4:31 PM
    • 35,450 Posts
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    getmore4less
    • #4
    • 10th Feb 19, 4:31 PM
    • #4
    • 10th Feb 19, 4:31 PM
    250k is easy for someone on 60k spending 20k on living, a bit harder if they are spending 40k on living.

    There is no average person.
    Last edited by getmore4less; 11-02-2019 at 9:05 AM.
    • miss undastood
    • By miss undastood 10th Feb 19, 5:56 PM
    • 154 Posts
    • 365 Thanks
    miss undastood
    • #5
    • 10th Feb 19, 5:56 PM
    • #5
    • 10th Feb 19, 5:56 PM
    We took out 308k in 2013 and it scared me
    70% ltv and about 5x our joint income (the online calculators wouldn’t give us what we needed to borrow)

    Went and spoke to the mortgage advisor and showed we could afford it, did a full i&e with them (and we have no other debt)

    9 months after completing I went on maternity leave though (oops)

    5 years later we owe 225k (50% of purchase price possibly now 40% ltv) which is 4 x our salary when we took out the mortgage. Income is similar now (I work PT and dh has had a payrise)

    Technically your pay rises with inflation but the value of the mortgage doesn’t. So if you can afford it now in theory it becomes more affordable over time.
    • enthusiasticsaver
    • By enthusiasticsaver 10th Feb 19, 9:50 PM
    • 8,346 Posts
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    enthusiasticsaver
    • #6
    • 10th Feb 19, 9:50 PM
    • #6
    • 10th Feb 19, 9:50 PM
    It is different for everyone but personally I would not feel happy with a monthly repayment of any more than 30% of monthly income. Bear in mind interest rates could rise so that needs to be costed in just in case.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • 20vt-rs
    • By 20vt-rs 11th Feb 19, 8:29 AM
    • 599 Posts
    • 94 Thanks
    20vt-rs
    • #7
    • 11th Feb 19, 8:29 AM
    • #7
    • 11th Feb 19, 8:29 AM
    Its a difficult one because everyone person / couple have different lifestyles, how many kids, times they eat out, go on holiday etc... There is a rule of thumb I read somewhere that it should be between 25-35%, but again that's just a guide.

    For reference, my mortgage min payment is 21% of my salary, it's dropped since I took it out due around 14 years ago to rate changes (I started at 5.79% and that was a good deal at the time!), now it's at 1.94% making the min payment 21% of salary, my salary has also increased but on the other hand my wife is now part time and we have a little one, so things change.

    Whilst we have no other debt, I am making hay whilst interest rates are low and paying off 47% of my salary to the mortgage (via over-payment), with the goal to clear it asap. if you can fix your rate for a longer term this gives you peace of mind.

    I think you need to look at all variables, not the percentages and work out whats affordable, what may seem a struggle now will get easier, I know if has for us and others on here whop say the same.

    Funnily enough we are also looking at moving, so I get your concerns over affordability, especially when maxing out potential borrowing & time. Good luck!
    • DrSpendLittle
    • By DrSpendLittle 11th Feb 19, 9:42 AM
    • 570 Posts
    • 1,841 Thanks
    DrSpendLittle
    • #8
    • 11th Feb 19, 9:42 AM
    • #8
    • 11th Feb 19, 9:42 AM
    Just going through these thoughts right now, so a timely post!

    We're looking to move soon and are currently weighing up our options.

    We've see a few houses that would require use to have a mortgage payment of 29% of our net joint monthly income. We'd look to take it on a 5 year fix at (fingers crossed) around 1.99% with a LTV of 72.6%.

    We each get a 2.9% annual payrise and we'd have no other consumer debt when we move.

    Bit nervous of the income:repayment ratio. We're able to service our current mortgage with just one salary so have been very comfortable for quite some time.

    What works for one won't work for the other.

    Good posts from others above!
    Debt Free Date: 29th March 2019 | Original Debt: 13,985.17 | Current Savings: 964
    • Thrugelmir
    • By Thrugelmir 11th Feb 19, 12:11 PM
    • 62,823 Posts
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    Thrugelmir
    • #9
    • 11th Feb 19, 12:11 PM
    • #9
    • 11th Feb 19, 12:11 PM
    Agreed I guess I am looking for general views on what people feel comfortable with.
    I would be nervous of being 1/4 of a million pounds in debt for example just as it seems a massive amount
    Originally posted by Accountant_Kerry
    Then overpay the mortgage. Rather than spend money on takeaway coffees for example. Take control of your own destiny.
    "The most dangerous thing is to buy something at the peak of its popularity. At that point, all favourable facts and opinions are already factored into its price and no new buyers are left to emerge." - Howard Marks
    • foxy-stoat
    • By foxy-stoat 11th Feb 19, 12:58 PM
    • 3,975 Posts
    • 2,310 Thanks
    foxy-stoat
    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.
    • user1168934
    • By user1168934 11th Feb 19, 3:09 PM
    • 358 Posts
    • 224 Thanks
    user1168934
    I am looking to move in the near future. I asked my mortgage broker exactly that a few weeks ago and his reply was that most people keep the monthly payments below 30% of their income and it works for them. Personally I like to keep it below 20%.

    The last time I bought I borrowed less than 3 times my income. This time I am hoping not to go above 3.5 times. Admittedly my place is a lot smaller than some friends' but then my mortgage payments are so reasonable I have never had to remember when they go out of my account.


    You could take a longer term for mortgage to keep monthly payments low and make overpayments as and when you can. This has worked well for me in the past.


    In terms of LTV, keep as high equity as you can. IMO at least have 25-30% equity if you can. You might have to compromise on the size or location but the everyday peace of mind of not having to worry about any payments is well worth it.


    I guess you will have to make up your own mind and see what you are comfortable with.
    Last edited by user1168934; 11-02-2019 at 3:19 PM.
    Save 12k in 2015 #193 (target 12,000) : 12,690 (105.75%)
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    • foxy-stoat
    • By foxy-stoat 11th Feb 19, 3:18 PM
    • 3,975 Posts
    • 2,310 Thanks
    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
    • By MovingForwards 11th Feb 19, 3:20 PM
    • 765 Posts
    • 919 Thanks
    MovingForwards
    I would borrow 80k max, looking to try and borrow 70k.

    Do not like the idea of being mortgaged to the hilt.
    • kingstreet
    • By kingstreet 11th Feb 19, 3:35 PM
    • 34,978 Posts
    • 19,045 Thanks
    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.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • Accountant_Kerry
    • By Accountant_Kerry 12th Feb 19, 1:27 PM
    • 343 Posts
    • 476 Thanks
    Accountant_Kerry
    Then overpay the mortgage. Rather than spend money on takeaway coffees for example. Take control of your own destiny.
    Originally posted by Thrugelmir
    That does presume you get takeaway coffees which I personally don't
    • downhillfast
    • By downhillfast 12th Feb 19, 2:13 PM
    • 949 Posts
    • 676 Thanks
    downhillfast
    We took a 95% mortgage a couple of years ago for approx 348K at 3.89%! 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
    • By Accountant_Kerry 12th Feb 19, 2:34 PM
    • 343 Posts
    • 476 Thanks
    Accountant_Kerry
    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.
    Originally posted by kingstreet
    Good principle, kind of like a reverse mortgage calculator
    • getmore4less
    • By getmore4less 13th Feb 19, 6:58 AM
    • 35,450 Posts
    • 21,675 Thanks
    getmore4less
    That does presume you get takeaway coffees which I personally don't
    Originally posted by Accountant_Kerry
    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
    • By SG27 13th Feb 19, 11:33 AM
    • 2,642 Posts
    • 1,858 Thanks
    SG27
    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.
    Originally posted by foxy-stoat
    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...
    Last edited by SG27; 13-02-2019 at 11:37 AM.
    • SG27
    • By SG27 13th Feb 19, 11:36 AM
    • 2,642 Posts
    • 1,858 Thanks
    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.
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