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Rent/Mortgage - What % of take home income do you spend?

(78 Posts)
escape Thu 01-Aug-13 22:45:59

I am driving myself crazy deciding weather to rent a house that would cost £400 pcm more than I pay currently.
I believe can afford it, and for various reasons it will make me so mch more happier ( lifestyle/sanity!)

Can I ask what % of your households take home income do you spend on rent or mortgage - I want to know if I am being frivolous even contemplating this... TIA.

Sleepyhoglet Thu 01-Aug-13 23:14:58

Would it be better to save that 400pcm to put towards house deposit. That is a good amount to save.

My partner and I have a joint income of £4000 after tax. We spend £800 a month on mortgage so that is about 20% I think.

Sleepyhoglet Thu 01-Aug-13 23:15:33

What is so much better about the more expensive house?

escape Thu 01-Aug-13 23:21:45

I am in such a pickle - but no debt, I guess it's a positive pickle smile
I am self employed, but only have just over years accounts, I can't get a mortgage this year , at least - even though I have a deposit.
400 is a lot of money to put away savings wise, I agree - but the houses are incomparable.
I work from home, am the breadwinner/sole earner and don't even have a suitable workspace - have been doing this for 3 years,
Time to stop being a martyr and get a house that is suitable for all of us. Generally too small ( 3 bed new build end terrace type - bedrooms just big enough for bed type house...)
Thanks for sharing - my % would be much higher than yours.

Cindy34 Thu 01-Aug-13 23:22:52

About 30%.

20%.

Sleepyhoglet Thu 01-Aug-13 23:32:59

Yeah, room for family is important. Do you love this particular house or want something with similar spec? Might be worth putting out feelers to letting agents to get the best house available for price. Remember you can put an offer in and don't necessarily need to pay the full advertised rent.

Will bills and council house be significantly higher/ garden more work?

Sounds like you are keen. I a, just reserved becauase 400 seems a big jump.

messybedhead Thu 01-Aug-13 23:34:01

40%

MrsBungle Thu 01-Aug-13 23:41:25

29%

PogoBob Germany Thu 01-Aug-13 23:44:01

27%, it was 14% up until 9 months ago but had to move from 2 (well 1.5 really) bed house and buy this 3 bed to fit DC2 in.

ogredownstairs Thu 01-Aug-13 23:46:36

what sleepyhoglet says. Although I'm not sure thinking in % terms is all that helpful - i.e 50% of a millionaire's income still leaves plenty to live on, and 15% can be huge for someone on a very low income.

I think life's too short to be squeezed in somewhere too small if you can afford more space - overcrowding can be very stressful. If you've budgeted and are pretty sure it's affordable I'd go with it

LazyMonkeyButler Thu 01-Aug-13 23:50:59

Of our total monthly income, including tax credits and all - about 15%.

But then we are lucky enough to be with a housing association in "affordable housing". To live in the town I was born & grew up in otherwise, we would be looking at about 40-50%.

BackforGood Thu 01-Aug-13 23:54:36

Mine's about 20% but we are coming to the end of our mortgage (ie, bought into the housing market a long time ago), and we are probably both at the top of our earning capacity. When we started out it was considerably different.
That said, a % measurement isn't necessarily helpful - it's more about 'how much you have left to spend' after paying the rent and the council tax, utilities, and other essentials.
I think it depends how realistic it is that you will be able to buy, say in a year or 18months - if that's going to happen then I think I'd 'cope' and save the money... £400 more than you are paying sounds massive... but if you are realistically not going to be able to buy a house for 8 - 10 years, then I'd move and have the space when your family needs it.
Being overcrowded is not great for harmonious relationships.

noisytoys Fri 02-Aug-13 05:48:26

33% but we are due to end a high fix rate soon so it will go down to 25%. Can't wait.

ChickenLickenSticken Fri 02-Aug-13 06:57:46

Eek. Ours is 50% of my net income. DH has just gone self-employed so what he earns is anyone's guess!!

CockyFox Fri 02-Aug-13 07:04:31

40% hopefully I will be back at work before mortgage rates go up or we will be fucked though.

CoTananat Fri 02-Aug-13 07:07:10

40%

Chubfuddler Fri 02-Aug-13 07:10:58

25% (I rent)

JollyHolidayGiant Fri 02-Aug-13 07:23:03

20% at the moment but our income is about to drop so this will jump a little to 22.5%.

I didn't count child benefit as an income although I possibly should have.

LittleBearPad Fri 02-Aug-13 07:33:17

36% but will be much less once I go back to work after maternity leave.

RedHelenB Fri 02-Aug-13 07:40:28

Saving the £400 for a year would give you over £4000 & seems way more sensible to get a mortgage if you can. Or maybe keep looking for a better but cheaper rental option.

bigkidsdidit Fri 02-Aug-13 07:42:20

25%

Ours rent is 21%. But we currently spend another 25% paying off debt. When that's gone, I'm torn between saving for a deposit, and spending more on living in a nicer area! If you can afford the £400, go for it. Good luck smile

20% for the actual mortgage payment but on top of that we overpay by a little each month.

VivaLeBeaver Fri 02-Aug-13 08:05:00

5%

About 14% if my maths is not too shocking...

Pascha Fri 02-Aug-13 08:17:41

Approx 35%.

envy of 5%

Notyetthere Fri 02-Aug-13 08:19:56

Take home combined income £3k after tax, 40% towards mortgage payments. Our payments jumped from 30% when we bought our 1st home.

escape Fri 02-Aug-13 08:48:40

I agree that there is no formula - i think I was 'looking' for one!
I have savings fora deposit to buy - obviously that pot can never be too small and savings are a good thing.
Living here has become pretty unbearable for me, I have been actively looking for over a year - they are just SO far and few between what I live in now and the next 'step' up - detached/4 bed etc. This 400 pcm difference is the 'average' price for the upgraded space etc, and I do like this particular house.

Quite vulnerable these past couple of years and am sole earner/breadwinner - and petrified of making the wrong decision!

bigkidsdidit Fri 02-Aug-13 08:52:09

5%! Wow!

FanjoForTheMammaries Fri 02-Aug-13 08:55:30

15%

OneLittleToddleTerror Fri 02-Aug-13 08:56:36

I'm exactly the same as sleephoglet! £4k net and £800 on mortgage. But we were paying £1k a month before at a higher rate.

Damnautocorrect Fri 02-Aug-13 08:58:42

50-75% oh is self employed so it varies

delilahbelle Fri 02-Aug-13 08:59:36

25%, but DH sometimes overpays as well.

HappyAsASandboy Fri 02-Aug-13 09:00:44

I don't think the percentage on rent/mortgage is really a goo guide to affordability. The evening standard had a great article on this on Wednesday; basically saying I you live outside of London, with half the rent, it actually costs you more because of travel. I think it makes more sense to look at the actual figures, or at least the percentage spent on non-discretionary things (rent/mortgage, Childcare, commuting).

For what it's worth, we pay about 20% of our combined net salary as mortgage. Childcare (part time places) is anoth 20% and travel is about 15%. That leaves us with very little at the end of the month once bills, food etc are paid.

McFluffy Fri 02-Aug-13 09:04:50

Message withdrawn at poster's request.

MrsPear Fri 02-Aug-13 09:09:04

50%

No that is not typo - half our income goes on rent. Not entitled to benefits or social housing as DH earns too much. I live in a 3 bed masionette [sp] on a council estate in SE London with 2 children, DH and BIL.

Very envious of the 0 people.

GrumpyKat Fri 02-Aug-13 09:09:32

26% of a normal month (dh is self employed and it's variable). We save for one big holiday a year and live quite well the rest of the time. I wouldn't want to be paying anything higher than that, in fact we have abandoned our plans to move to a 'better area' as we sat down and worked it out and we would basically have to do nothing.

MrsPear Fri 02-Aug-13 09:13:21

Oh and an estate agent said that the formula they use when working out if someone can afford to rent a property is to divide pre tax / NI income by 3 then by 12. So if you earn 26k (which I believe is national average) you would be able to rent a property at 722.22 which would get a studio and if you are lucky a one bed flat round here.

madamginger Fri 02-Aug-13 09:14:24

20% but I only work part time. In a couple of years when ds2 starts school I'll go back to work full time and it will go down

Portofino Fri 02-Aug-13 09:16:53

25%. We rent and are planning to downsize and save money to buy some for retirement.

3boys3dogshelp Fri 02-Aug-13 09:19:51

About 25%, will jump to about 34% while I'm on mat leave - I'm dreading it.

Procrastinating Fri 02-Aug-13 09:20:13

25%. We recently moved, it was about 10% before. I work from home and for me the move up was scary but worth it. We now have plenty of space, a big garden and I have a study.

OneLittleToddleTerror Fri 02-Aug-13 09:23:20

3boys3dogshelp don't worry, maternity leave is temporary. Everyone goes through this. It gets very very tight towards the end!

bunjies Fri 02-Aug-13 09:25:02

I am sole earner and rent is 45% of net income sad.

IdaClair Fri 02-Aug-13 09:33:23

At the moment it is 74% of our earnings as DH is out of work.

VivaLeBeaver Fri 02-Aug-13 09:42:36

5% is nice but we live in a three bed semi as opposed to a bigger house like most of our friends.

I know a 3 bed semi is still nice and bigger than what some people have.

We could move to a bigger property and have more space but I prefer having more disposable income to be honest. And I always worry about redundancies, illness, etc.

specialsubject Fri 02-Aug-13 11:03:51

your landlord should be nervous if the rent is more than 40% or so of your income.

We are similar to Viva, ours is a small 3 bed semi that DH bought 10 years ago when single and on £15k less. We're in a rubbish area and the market is very slow, so will be hard to move once we're in a position to.

thehomesecretary Fri 02-Aug-13 12:58:36

DH is sole earner at the moment and our rent is 44% of net income. We seem to manage ok...

LadyLapsang Fri 02-Aug-13 14:19:10

3%, but we have enough savings to pay it off if we wanted - offset is great for us with interest rates so poor. DH would like to pay it off but I want to be able to take money out for a deposit for DS if he would like one.

Having said that, however, when we started out there were some months when we probably paid about 45%, so it can get much better. Also we both work full time now - I didn't anticipate I would return to full time work when DS started uni, but things are so uncertain and the option to increase hours, get promoted etc. may not have come along again so I think it's best to take the opportunities when they come along.

Like Viva, we could have bought a much bigger house but we didn't, partly because we needed to pay school fees. Now the school fees are finished, we feel a lot better off and can save more.

LadyKooKoo Fri 02-Aug-13 14:30:33

It would be 19% but we are overpaying at the moment so 28%.

LazyMonkeyButler Fri 02-Aug-13 14:52:00

Surely it depends on what your monthly income is, as to what % is affordable?

If you had a £500 income then rent of £250 would be too high, as it is fairly impossible to live on £250 a month for everything else.

However, if your income was £10,000 a month then you could probably pay out 60-70% and still afford to live.

It was 25% but I've just stopped work so it's now 40%. It makes me very nervous but none of us were happy with DD in nursery all the time.

GetStuffezd Fri 02-Aug-13 14:55:35

about 30%

YoniBottsBumgina Fri 02-Aug-13 15:15:36

Of my wages, over 100%

Including tax credits, housing benefit, etc it's around 45%.

YoniBottsBumgina Fri 02-Aug-13 15:17:10

If I don't take child benefit into account, it's almost 50%! Surprised so many people pay such a small percentage TBH.

PattyPenguin Fri 02-Aug-13 20:17:54

50%. <moan> Husband made redundant two years ago, still not got another proper job, just bits here and there. One kid at uni, one about to go to FE college, which means will still cost money but not contribute. Am beyond stressed about it all. <moan over>

ReluctantBeing Fri 02-Aug-13 20:18:59

Our rent is a third of our income. We save £30 a month ATM.

Rtfairy Fri 02-Aug-13 20:35:18

About 24% of our joint income which is enough I think

scarlettsmummy2 Fri 02-Aug-13 21:27:06

10%

Runningchick123 Sat 03-Aug-13 07:26:19

26% which is way more than we would like, but we have whatbwe hope is our forever home so it is worth it in the long run.

Mum2Fergus Sat 03-Aug-13 09:44:53

19%

Tasmania Mon 05-Aug-13 00:15:31

Currently renting. About 17%. Will soon be buying though, and it would then go up to 30%...

Mendi Mon 05-Aug-13 07:37:26

OP I am about to move to a rented house where the rent will be 40% of my net income, as opposed to where I live now which is more like 15%. I am really anxious about it but like you, the 2 houses are incomparable and I have to move, so I'm trying to justify it on the basis of all the good reasons and plan to economise where I can.

myron Tue 06-Aug-13 15:23:23

25%

Viviennemary Tue 06-Aug-13 15:31:35

I don't think the percentage thing is a good yardstick. Because if somebody has a higher salary then what they have left after the rent/mortgage has been paid will be more than the person with the lower salary. So they could make cuts if things got tight.

TheSmallPrint Tue 06-Aug-13 15:36:23

about 35%

Tasmania Tue 06-Aug-13 22:07:26

Viviennemary Most people live within their means (to some extent). A wealthier person will often buy/rent a more expensive house/flat, so will have more to pay, and the proportion may remain the same.

Only very, very wealthy (we're talking millions) people won't spend much proportionally because there's a limit as to how much houses can cost, and they may be able to buy them outright...

emma16 Tue 06-Aug-13 22:12:43

15%

peggyundercrackers Tue 06-Aug-13 22:21:22

our mortgage is about 11% of our income

amothersplaceisinthewrong Tue 06-Aug-13 22:22:23

0%, we paid our mortgage off six years ago.

EeyoreIsh Tue 06-Aug-13 22:23:03

25%.

titchy Tue 06-Aug-13 22:39:34

About 60% <gulp>

Neither of our salaries on their own covers the mortgage let alone the bills. Not a good position to be in but we have a lot of equity which we wouldn't have had if we didn't stretch ourselves to extend the house.

We just about manage.

countrymummy13 Wed 07-Aug-13 08:37:46

14%

It was 38% when we were overpaying, but its now much lower than that.
Im now a sahm so we couldn't have sustained such a high amount.

I am looking into an extension so the cushion we built up by overpaying should help with that.

sirensorseagulls Wed 07-Aug-13 15:14:50

Shortly going to be around 20%

mizu Mon 12-Aug-13 20:27:02

Just over 20% but will be more than this if we are able to buy next year

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