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Use our Cost of Living forum to discuss budgeting and energy saving with other users.

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Use our Cost of Living forum to discuss budgeting and energy saving with other users.

Cost of living

what is sensible/acceptable mortgage payments??

36 replies

littlemisslost · 30/01/2011 19:32

I am wondering what % of income people are paying on their mortgages?
We are hoping to move later in the year and get larger mortgage,want to clear some old debts and get a better house. We don't earn big money but Im guessing our take home pay will be between £2700-£3000 month?
what is a managable sensible amount to be paying for a mortgage from that

OP posts:

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littlemisslost · 30/01/2011 20:59

bump

OP posts:

thisisyesterday · 30/01/2011 21:04

ours is about a quarter of our take home pay

reddaisy · 30/01/2011 21:05

It completely depends on your outgoings I suppose.

Northernlurker · 30/01/2011 21:06

Ours is just under 25%. That's perfectly do-able but I know it wuld give some on here the collywobbles just thinking about it.

hogsback · 30/01/2011 21:08

Personally, I would not be happy with repayments more than 30% of take home income.

Hassled · 30/01/2011 21:09

About a quarter here too. I'd hate to be over that threshold - don't see how we'd manage.

pinkhebe · 30/01/2011 21:10

about a quarter

LadyLapsang · 30/01/2011 22:21

Less than 10% but was higher when we were younger.

onimolap · 30/01/2011 22:30

You need to look at what your other outgoings will be, add an "oh f*ck" contingency amount and see what's left over. Then think about possible interest rate rises (if you look over time, 7-8% base rate is much more typical than the current rates) and take it from there.

stressheaderic · 31/01/2011 17:13

Ours is about a fifth of take-home pay. It's manageable. Fixed rate runs out soon so hoping it will drop a bit.

littlemisslost · 31/01/2011 20:43

Hmm, so around £7-800 a month. Thats okay its about as much as I can imagine without feeling scared lol

How do people do it these days without some equity for a deopsit???? to buy an average house at around £160-200,000 without a huge deposit you'd need a very big income!

OP posts:

sleeplessinderbyshire · 01/02/2011 20:21

We moved a year or so ago and ours was about 23% of take home pay and was OK. Then DH lost his job. He has some income now but half of what he earned before and our life has gone from being one with tons and tons of spare cash for fun to one where we are not getting into debt but we no longer have any fun. Be careful (sorry to be voice of doom but when I remember our old mortgage which was less than 10% of take home pay I sometimes wish we still lived in a shoebox)

WikiSpeaks · 01/02/2011 20:35

Our rent is about 28% of take home pay. I wouldn't recommend it, but our jobs are secure, and when we stop paying for extortionate childcare we'll feel rich, rich rich!!!!

I also think percentage can be a bit misleading.

If our takehome pay was 10k and our mortgage was 50% we'd still have 5k to live on.

If our take home pay was 1k then 50% of this would only leave us with £500 which would be a little tricky!

Helzapoppin · 04/02/2011 08:59

Ours is 25% of DH's take home pay, about 15% of our joint pay. Leaves us with 4.5k to live on (although we have about 1000 of childcare expenses/debts to parents).
The previous posters are right that you do need to take into account other factors such as whether you are likely to take maternity leave, how much money you are left to live on (if we were on 200k, 25% of that would still leave us with a fortune) and any other debts to pay off. We borrowed money from our parents to complete our house purchase and so are busy trying to pay that back as well as our mortgage, which adds another £400 a month to our debts (but presumedly FIL won't attempt to repossess our house if we are to hard up to pay for a month!)

TrillianAstra · 04/02/2011 09:04

1/3 of takehome pay sounds like a good rule of thumb but isn't actually very practical.

If you take home 1,800 a month and your mortgage is 1/3 of that then you have 1,200 for everything else.

If you take home 3,000 a month and your mortgage is 1/3 of that then you have 2,000 for everything else.

So all else being equal, the morou earn the higher proportion of earnings you can dedicate to mortgage and still have the same amount of money to spend on everything else.

pozzled · 04/02/2011 09:10

Our take home pay is about the same as the OP and our mortgage is around £1000, so about a third. It's perfectly doable (and we have childcare to pay for and maternity leave coming up).

I'm a bit surprised that people think this is too much, I knew nothing about mortgages when we bought our house, and it was actually a very reasonable price for our area- we couldn't have bought for less.

FakePlasticTrees · 04/02/2011 09:13

Agree with Trillian - it's about what can you live off not what %.

Do you currently have a mortgage? How much are you paying out on that and how much do your other bills come too?

TrillianAstra · 04/02/2011 09:16

The question is also how much will the banks let you have?

waffleanddaub · 04/02/2011 21:10

That's a great way to think about it Trillian

Hatesponge · 04/02/2011 21:18

true, it's not always about %ages. My mortgage is well over 50% of my monthly earnings, however I have no childcare costs and my other living expenses are relatively modest.

When I bought my first house my mortgage was about 25% of my income, however I was earning a lot less then, and childcare costs accounted for another 25%, so in real terms I was much worse off.

I think you need to look at your outgoings aside from mortgage, and see what that leaves of your salary once everything paid out - remembering of course you need to plan for contingencies like interest rate rises, increased living costs and allow some wriggle room for that.

Horton · 04/02/2011 21:32

Our mortgage is about 25% of our joint take home pay. However, this doesn't leave us a huge amount of wiggle room in case of problems and we have smaller savings than I would like - remember all the insurance payments you will need, eg life insurance for both of you and buildings insurance which you won't currently be paying in a rented property. It all adds up. Plus everything that needs doing to the house will come out of your earnings. And interest rates may well be rising soon. You need to be able to get by if your mortgage doubles, IMO, though I may be being overcautious. We could do so, just about, with no extras or fun that costs money whatsoever, but it would be tough.

And we don't have childcare costs, either. I don't think we could afford our mortgage with those.

lalamom · 07/02/2011 23:09

wow

no wonder we use up all our money each month- similar take home to OP but 45% goes straight on rent. I thought that was normal to be honest!

25% sounds really low!!

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Viking75 · 10/02/2011 20:47

we take home £4K/month and our mortgage is £1K, so 25% - which is too much I think...I always dream of what we could do if we had a smaller mortgage!! (we pay childcare + 2 cars on top, so it's always tight)

ilikeyoursleeves · 10/02/2011 20:53

Ours is about 20% I think

traceybath · 10/02/2011 20:55

When we move in the next couple of months
(fingers crossed) it will be about 30%.

But thats on a pretty reasonable income so as others have said - still leaves enough for everything else.

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