So, we've just found a house we want to make an offer on, only to discover this morning that the lender we had our decision in principle with is no longer offering the fixed rate we had budgeted for. We'll be seeking fresh advice.
People of Mumsnet, my question is - what percentage of your income are you paying on your mortgage?
(I know that it's about affordability too, but that's not what I'm wondering - I'm wondering if I'm being too cautious when it comes to how much we can afford in practice, in the long term. We don't have debts, only nursery fees.)
I spend around 40% of my take-home pay (after deductions, pension etc) on the mortgage each month. Another 40% goes on bills like council tax and utilities plus groceries and incidentals and the rest gets saved. However, I'm only 4 or 5 years off being mortgage-free. When I first bought the house 21 years ago the mortgage would have been more like 50% of my take-home and my savings % would have been a lot lower.
I've roughly worked it out at about 40%. Isn't the general rule it should be a third? We can live with 40% short term as we expect our earnings to increase in a few years. It's not too bad, like you no debts but childcare costs. If it wasn't for the childcare costs it would be fine!
Childcare isn't for ever. As your children get older, start school etc. the costs gradually go down and your disposable income goes up. I know I certainly drew heavily on my savings in the early years to make ends meet. Factor everything into your calculations when working out what budget you can afford.
BTW... percentages are not as important as the amount of money you have left at the end. If someone's income is £800 a month and they have £400 left to pay for bills, groceries, council tax etc after meeting the mortgage payment it could be tight. If their income is £3000 a month and they're left with £1500 after 50% of the money has gone on the mortgage, it might not be so difficult.