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mortgages, how much to borrow??!!

(37 Posts)
spykid Tue 11-Jan-05 09:59:47

Need some advice guys.
We are thinking of moving house and the one we have fallen in love with means us taking on a large mortgage which would mean we would have to borrow our 'maximum' amount.
Really need some advice, has anyone else mortgaged to the hilt for their dream house and is it worth it?
What do people pay in mortgage payment compared to their monthly income? Thanks

Mothernature Tue 11-Jan-05 10:13:19

Dont do it....only borrow what you can afford, mortgage rates go up as well as down..see an independent mortgage advisor, they will inform you of the most suitable for you...at a rate you will be able to afford, if you love the property so much, inform the agent, this will 'register your interest' check out the mortgage situation first then consider an offer within your financial capabilities....good luck..

spykid Tue 11-Jan-05 10:15:36

Thanks Mothernature, I know your advice makes sense. Have fallen in love with this property and could get the mortgage but it would be the 'max' we could have, just terrified it is too big a commitment!!

Twiglett Tue 11-Jan-05 10:16:37

My gut instinct says to borrow the maximum amount you can .. only providing you could still aford the mortgage payments should the interest rates go up to 8% (you can find ready reckoner calculators on lots of mortgage sites where you can adjust the interest rate) .. if you can afford it at that level for a few months then it should be OK ...

I DO NOT BELIEVE interest rates will go that high .. but I'm a bit belt and braces

Also if this is your dream house and you will live there at least a decade then I think its worth it

(our current mortgage takes up about 40% of take-home pay ... and is over what we should have .. it was taken out on joint salaries and I don't work any more )

CountessDracula Tue 11-Jan-05 10:17:45

I think it kind of depends on how old you are and at what stage of your career (if you work)

for eg when dh and I bought our first house we mortgaged up to the max and beyond because he was a newly qualified lawyer and we knew that his (and my) income was going to increase exponentially, so in a few years time the mortgage would appear small.

colette Tue 11-Jan-05 10:18:48

Different lenders have different maximum amounts, for some it may be as much as 5 x income !!
I used to deal with mortgage arrears which has made me more wary of borrowing the maximum .
I would say write down all your outgoings realistically(everything) take into account any interest rate changes on your mortgage and any other borrowing, make sure you have savings to cover at least 3 mnths outgoings and then decide.
It is a huge decision but if this really is your dream house and you are happy you can manage it go for it..

CountessDracula Tue 11-Jan-05 10:19:22

blimey twiglett 40% is a lot! Mind you if I gave up work I think we would be in the same situation

spykid Tue 11-Jan-05 10:20:36

Twiglett, I think this is THE house. You know, the one you can see your self in with your grand kids too! Think I could stay there and not ever want to move.

We would be taking the mortgage out with me only working 2 days a week, so i suppose I always have the option of full time work(aarrrgghh) if things were difficult

Twiglett Tue 11-Jan-05 10:21:17

just worked it out its 43% of our take home pay ..(it used to be 17% though)

we do live in London CD .. bloody expensive down here

and we have the house I want to grow old in

Twiglett Tue 11-Jan-05 10:21:55

.. and I will work again .. though not till both kids at school and I'll need to re-train so probably be earning in another 7 years or so

CountessDracula Tue 11-Jan-05 10:22:17

So do I twiglett - where are you?

spykid Tue 11-Jan-05 10:22:24

Colette, who lends 5x?
Every one we have spoken to has gone back to the 3x main breadwinner and 1x other....

Twiglett Tue 11-Jan-05 10:23:10

didn't realise you could borrow 5x .. I wouldn't borrow more than 2.5 x joint salary TBH

Twiglett Tue 11-Jan-05 10:23:39

Dulwich .. where are you CD?

spykid Tue 11-Jan-05 10:24:11

I know Twiglett, just thinking would be working more hours eventually.....

colette Tue 11-Jan-05 10:26:36

I may be out of date (having benn off work for the last 18mnths) but I think it was hsbc and it is related to the amount of deposit you have. My sister and I borrowed way above our incomes in the 80s because we put down 25% . I would not reccomend it.
I would always make sure you have some sort of cover9insurance or your own savings ) for the unexpected.

CountessDracula Tue 11-Jan-05 10:27:45

East Sheen v near Mortlake station

spykid Tue 11-Jan-05 10:28:41

Thanks Colette. I think most lenders are reducing what they will allow you to have to reduce the risks od negative equity.
That doesnt help you if you know you won't be moving from there though!

Twiglett Tue 11-Jan-05 10:32:36

CD and you don't have a 40% of take-home mortgage .. that's impressive

(like that area .. used to live in Putney )

CountessDracula Tue 11-Jan-05 10:32:53

Also, spykid, do you have a spare room you could rent out if times got tough? That is always a nice fall-back

CountessDracula Tue 11-Jan-05 10:34:26

LOL twiglett we moved here from Putney last year!
We both work full time in the City so that's how. Am about to go p/t so I guess it will soon be creeping up. Is currently 25% (but the nanny takes up another 25 I should think aarrgghhh)

CountessDracula Tue 11-Jan-05 10:34:46

Where did you live in Putney?

spykid Tue 11-Jan-05 10:35:41

NoCD, it does have planning permission to add an extra 2 bedroom though , so i know there is a lot of potential in the proprty...that doesn't really make that much difference though i gues.

Twiglett Tue 11-Jan-05 10:36:32

So Spykid .. its 3x salary and you can afford the payments .. plus you have the option to work more if absolutely necessary

Personally I would ask myself can you afford them at 7 or 8% interest rate

and if one of you gets made redundant do you have enough savings to cover 6 months of mortgage payments

Plus factor in the stamp duty / moving costs other monthly bills (council tax / gas/ leccy etc) and if you can afford it and want to grow old there . .go for it

Twiglett Tue 11-Jan-05 10:40:02

Well I say Putney .. it was more East Putney / Southfields border that I used to live .. but I used to work on Putney Bridge Road .. there was a large marketing agency there called FKB Carlson .. was my first job in London (aahhh halcyon days )

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