Big mortgage - Percentage of Pay
Discussion
Hi All,
We live in a nice house, which is a little bit spacious for our needs, but it misses and lacks many of the things we would like.
With a "life's too short" attitude, we're thinking of taking a pretty big risk and buying a house that solves many of the issues with this current house, and would be a very good financial opportunity though a very expensive one!
The monthly mortgage payments, from my take home pay would be
36%
That seems like a bit of a scary number to me. However, it is isn't out of the realms of affordable.
With the global economy looking far from rosy, I am of course concerned. However, things at work aren't looking too bad and actually there's a possibility of a promotion (although it will be highly contested).
Lots of rambling...
I guess my QUESTION IS...
Is anyone else's mortgage percentage that high as well?
Thanks
We live in a nice house, which is a little bit spacious for our needs, but it misses and lacks many of the things we would like.
With a "life's too short" attitude, we're thinking of taking a pretty big risk and buying a house that solves many of the issues with this current house, and would be a very good financial opportunity though a very expensive one!
The monthly mortgage payments, from my take home pay would be
36%
That seems like a bit of a scary number to me. However, it is isn't out of the realms of affordable.
With the global economy looking far from rosy, I am of course concerned. However, things at work aren't looking too bad and actually there's a possibility of a promotion (although it will be highly contested).
Lots of rambling...
I guess my QUESTION IS...
Is anyone else's mortgage percentage that high as well?
Thanks
I do think that your absolute salary is relevant as well as above a certain level the 'free cash' tends to increase.
My mortgage is about 25% of my take home pay, but it would be more like 30% if interest rates were low but recent historically normal. That doesn't include bonuses which skew the numbers a bit.....but most of the bonus pays for optional things that you don't need to live.
If you believe long term in house prices then investing more is a good thing.
At the end of the day, it is what you are comfortable with. My 'wealth' has certainly increased more because of house prices than anything else (I'm 45), but you could also lose. Although if everything goes down, assuming you don't get into being unable to pay situations, it doesn't matter that much as everything else has gone down too.
My mortgage is about 25% of my take home pay, but it would be more like 30% if interest rates were low but recent historically normal. That doesn't include bonuses which skew the numbers a bit.....but most of the bonus pays for optional things that you don't need to live.
If you believe long term in house prices then investing more is a good thing.
At the end of the day, it is what you are comfortable with. My 'wealth' has certainly increased more because of house prices than anything else (I'm 45), but you could also lose. Although if everything goes down, assuming you don't get into being unable to pay situations, it doesn't matter that much as everything else has gone down too.
Mine is more than that - a touch over 42%. But it’s affordable - I’m not sure that percentages can offer much guidance.
Taking numbers from the air to make the point - 30% of £2,000 take home would leave £1,400 to live on each month. 50% of £5,000 take home leaves £2,500 to live on.
Which is more affordable, all other costs being equal?
It’s not the percentage of your salary which is important. It’s what you have left and your living costs that determine whether you might be stretching too far or not.
Taking numbers from the air to make the point - 30% of £2,000 take home would leave £1,400 to live on each month. 50% of £5,000 take home leaves £2,500 to live on.
Which is more affordable, all other costs being equal?
It’s not the percentage of your salary which is important. It’s what you have left and your living costs that determine whether you might be stretching too far or not.
I was paying £950 mortgage on a £1800 salary. but was (still am) a single bloke with no kids.
It used to boggle my mind thinking that folk had 3 bed semis etc and were paying £250 a month on it and struggled to get by.
A different era of buyer when a postie or fishmonger could buy a decent house,
It used to boggle my mind thinking that folk had 3 bed semis etc and were paying £250 a month on it and struggled to get by.
A different era of buyer when a postie or fishmonger could buy a decent house,
Similar position to us....
Currently have a virtually paid for 2 paid flat with scum bag neighbours upstairs and a healthy savings pot.
Savings are worth nothing these days, so we have sold our place and are very hopefull of getting an offer excepted on a new place tomo....
The new place will be 3 bed Detached and intergral garage......
Will mean our mortgage payment will double, BUT we have been "over" paying the mortgage, but putting the overpayment into a savings account instead of the mortage account and the 2 figures will be very similar.
Win win in my mind.
Things will be sketchy for 6/8 months possibly, but then hopefully the old normal will start to resume......
Currently have a virtually paid for 2 paid flat with scum bag neighbours upstairs and a healthy savings pot.
Savings are worth nothing these days, so we have sold our place and are very hopefull of getting an offer excepted on a new place tomo....
The new place will be 3 bed Detached and intergral garage......
Will mean our mortgage payment will double, BUT we have been "over" paying the mortgage, but putting the overpayment into a savings account instead of the mortage account and the 2 figures will be very similar.
Win win in my mind.
Things will be sketchy for 6/8 months possibly, but then hopefully the old normal will start to resume......
We're putting 36% of our income each month into the mortgage. Some is overpayment. As others have said, what really matters is your other non-optional outgoings balanced with your remaining income in absolute terms. Can you save enough each month to deal with unexpected expenses and lifestyle preferences like cars or holidays?
Ours is currently 28% of my salary after tax, 17% of our combined. However, we did take on the mortgage originally at 36% mine, 29% combined.
As others have said, it's all relative. It sounds like you'll be comfortable, considering you have essentially been paying somewhere in that region already for your flat due to the overpayments.
I plan to set up regular overpayments imminently which will take me back up to 35% but 22% of our combined take home if that makes you feel any better
As others have said, it's all relative. It sounds like you'll be comfortable, considering you have essentially been paying somewhere in that region already for your flat due to the overpayments.
I plan to set up regular overpayments imminently which will take me back up to 35% but 22% of our combined take home if that makes you feel any better
Edited by 95JO on Tuesday 10th November 10:47
CharlesElliott said:
I do think that your absolute salary is relevant as well as above a certain level the 'free cash' tends to increase.
I think this bit is key - the bigger your salary the bigger the %age that can be used to pay off your mortgage. You need a fixed amount of money to pay for your day-to-day living costs and then anything over and above this is what you can afford to pump into the mortgage.
If my net take-home was £1,000pcm then 36% on mortgage would worry me.
If my net take-home was £5,000pcm then 36% would not worry me as much.
Fonzey said:
Mine is 20% of my salary, 15% of combined (unfairly skewed towards me really as missus has recently dropped a day since having baby).
This thread makes me realise just how bad our spending must be, the thought of doubling this commitment is terrifying
I was thinking the same thing!! I tend to think I am quite good but the idea of spending 30% plus on a mortgage is mind bending for me. Maybe I just like the luxury of not penny pinching each month. I have 3 kids too! They are prob 2 mortgages in itself!This thread makes me realise just how bad our spending must be, the thought of doubling this commitment is terrifying
I am a sole earner and mine is actually closer to around 7-10% of take home net pay (Saved a hefty deposit).
Percentage of salary is down to you, as is your spending. You can choose to prioritise a house over (say) cars. Or clothes for your children.... :-).
The more important question is how secure is your salary. If your current employer vanished, do you think you could get the same money (or more) reasonably easily?
It is the unexpected stuff that will get you, not the budgeting.
The more important question is how secure is your salary. If your current employer vanished, do you think you could get the same money (or more) reasonably easily?
It is the unexpected stuff that will get you, not the budgeting.
My half of the mortgage payment works out at about 20% of my take home monthly pay, Sometimes more/sometimes less as i am commission based.
But i put 50% of my take home into the joint account. This covers bills, little ones nursery and then i think we say a few hundred quid every month out of it.
My own car payment is on top of that
But i put 50% of my take home into the joint account. This covers bills, little ones nursery and then i think we say a few hundred quid every month out of it.
My own car payment is on top of that
Countdown said:
I think this bit is key - the bigger your salary the bigger the %age that can be used to pay off your mortgage.
You need a fixed amount of money to pay for your day-to-day living costs and then anything over and above this is what you can afford to pump into the mortgage.
If my net take-home was £1,000pcm then 36% on mortgage would worry me.
If my net take-home was £5,000pcm then 36% would not worry me as much.
The only thing is lifestyle does flex to salary (in general) so whilst c£5k take home to average salary earned might seem like loads but pull down all the higher living costs then net net probably not much in it. You need a fixed amount of money to pay for your day-to-day living costs and then anything over and above this is what you can afford to pump into the mortgage.
If my net take-home was £1,000pcm then 36% on mortgage would worry me.
If my net take-home was £5,000pcm then 36% would not worry me as much.
Sole difference is you can elect to reduce controllable spend.
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