Did you borrow the maximum?

(68 Posts)
goldpendant Tue 11-Aug-20 21:40:40

Inspired by another thread here, I'm wondering how many of you have or would borrow the maximum you're allowed for a mortgage?

DH and I are sort of house hunting, we have a very good equity ratio (80%) in current house but the sort of place we'd like to move on to requires a significantly bigger budget, where we'd be borrowing the maximum allowable and have a LTV nearer 45-50%.

Does that feel comfortable and would you do a similar thing for the 'forever home'? We could clear our current mortgage in 6 years but a new one would see us on a much longer term. We are both in secure jobs, for now.

Guess I'm just interested in how common it is to take in the maximum borrowing vs being much more cautious. We can't seem to decide what to do!

OP’s posts: |
JoJoSM2 Tue 11-Aug-20 21:44:14

I only borrowed my max as a first time buyer.

Deciding whether to borrow my max or not would depend on how much disposable income would be left. I’d be reluctant if there was little wiggle room but if it you wouldn’t need to cut back on things much, then you could go for it.

lazyakita Tue 11-Aug-20 21:50:12

I would do it. I regret not borrowing more the last time we bought. Our jobs are about as stable as can be at this time, so I feel it would be OK (we would have a minimum 40% deposit).

SqidgeBum Tue 11-Aug-20 21:51:07

Yes. I was starting out in my career on 24k, DH was on a 'training wage' of 18k, so all they would give us was 170k. We knew the training wage was only for a small time, and my pay would only go up (teacher), and our mortgage payments were 300 a month LESS than the rent we had been paying. We 100% knew we could pay it every month. We can actually now pay it just on DHs wage easily.

Its all about knowing your income and being realistic. Pushing it to the max of what you can pay monthly is just irresponsible, especially as circumstances can easily change (kids come along and you have to pay childcare, you take maternity leave, one of you gets sick or made redundant for a bit).

Lazypuppy Tue 11-Aug-20 21:54:14

Yep we borrowed max, have done on every house we've bought.

Greenhats10 Tue 11-Aug-20 22:03:32

Am a cautious one (but started another threat about my mate where they are split on this issue).

Its probably about your priorities and what your leftover income allows you to do and how much do you care about your house. For us, we are happy to be borrowing quite a lot under our top budget (approx.100k-200k less) but thats because I dont really want to be in a situation where I cant go on holiday or worry about job security because I've got an expensive house. I just don't care enough about a house - really care about schools and areas, but the house itself is just a box where I live.

Greenhats10 Tue 11-Aug-20 22:06:50

To those that borrow to the max...at which point do you expect to start to pay it off? Presumably borrowing to the max means a long mortgage and a hefty price tag i.e. you still plan to be paying off the mortgage into your 60s...Or do you just plan to downsize when older?

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SqidgeBum Tue 11-Aug-20 22:20:07

@Greenhats10 we took a 30 year mortgage at 26 years old, but on low wages compared to what we are earning now and will continue to earn. So our plan was to buy a cheaper house on the low wage rather than waiting 3 years for our wages to go up, keep the monthly payments low while we had kids, and once my two DDs are out of childcare and in school in about 4 years, and I am back in nearly full time work, we will up our repayments quite significantly. We plan on having our mortgage paid off by 50ish.

Greenhats10 Tue 11-Aug-20 22:24:50

@SqidgeBum - thanks! That's interesting....we are 40 and a max mortgage would see us pay it at the max till we're 70 or even 80 if we show that we're paying into our pensions.

@goldpendant - I guess ages plus circumstances might make a big difference here. Personally, I think that banks are lending way too much to people but thats just my personal opinion...

WowOoo Tue 11-Aug-20 22:28:25

We did and I burnt out! I hated my job and the pressure of paying a massive mortgage with little kids.

I had a lovely house with huge garden but no time to enjoy it. Have more disposable income now but smaller house.

SqidgeBum Tue 11-Aug-20 22:34:35

@Greenhats10 I think when it comes to mortgage everyone has to look at their own situation. There are so many factors; age, location, income prospects, job security, future expenses, and what you prioritise in a house. For us, we bought a cheap house in a cheap town, basic 3 bed semi, and we both work in industries which will always have demand and where the earnings will never go down below a certain level. We were therefore able to take a maximum mortgage at a young age knowing we were always going to be able to pay it. We were lucky in many ways (especially as we both had managed to save for our deposit in our early 20s and we had some extra unexpected money from the death of a relative which helped boost our deposit a bit).

A maximum mortgage isnt a good option for everyone, especially if you are maxing our your monthly repayment ability. I would NEVER take a mortgage that was more than what one of us earned in a month. For us, we had to be able to pay it on one full time wage in case one of us couldnt work.

Lazypuppy Tue 11-Aug-20 22:35:05

@Greenhats10 we took a 35yr mortgage at 28yo. We'll start overpaying in a few years.

We bought last year, money was tight for first couple of months, then got my promotion so very comfortable now.

Salary will jump up again in about 5years when i go for next grade, until thdn steady pay rises.

House is very important to us over other things so that is why we have spent a lot

FastFood Tue 11-Aug-20 22:49:40

I borrowed to the max in terms of monthly repayments, but just for 20 years (I'm 40 and FTB).

I'm very boring frugal, don't have kids, car or previous debt so I can afford it and still put over 30% of my income toward savings.

I haven't pushed the deposit to the max though, I kept few months of runway, just in case.

I live in London on my own so it's either that or being the proud owner of a parking spot.
Also, my home is my personal interior design project.

MartinJD1976 Tue 11-Aug-20 22:54:59

Yup, we've borrowed beyond what we thought was the max the bank would lend - and are getting a 5x joint salary mortgage for a house we are looking to buy at the moment. Looking forward to getting the keys, if it happens.

RHTawneyonabus Tue 11-Aug-20 23:05:51

We didn’t stretch ourselves before and now regret it. We are looking to max out this time in terms of what’s allowed for lending. It is cheaper to borrow money than sell our shares and pay cgt on them.

We are 40 and planning on interest only with the intention of downsizing once our 25 year term ends. That means monthly payment will be pretty low.

userbbb Tue 11-Aug-20 23:13:44

You have a good LTV so I don't think borrowing max is that bad. Also it depends on income, 50% of your salary going on mortgage is a lot more comfortable if your earning 10k as opposed to 1k a month.

Smallgoon Wed 12-Aug-20 00:45:34

I didn't borrow the max. In fact, my salary increased by £10k after I got my mortgage in principle, and I didn't bother informing the mortgage provider of this change. Initially, I was going to borrow the max I could and purchase at the top of the market, but I had second thoughts and decided I'd rather have a better LTV. So by purchasing at the lower end, and not over-extending myself, I got a 60% LTV which brought down the interest rate on my repayments.

PickAChew Wed 12-Aug-20 00:52:10

We could have borrowed about 60% more than we did but it didn't translate to a house that was any better for us in terms of size, layout and location. We bough around 200k and there was very little between that and 300k that ticked enough boxes. Our top whack tended to be smaller house, more desirable secondary school but we didn't need the school.

Whenwillthisbeover Wed 12-Aug-20 05:30:55

We never did and I kind of have small regrets. We were burnt quite badly in the late eighties when interest rates went up to around 15%. We did pay our mortgage but it was tough and Loads of people had their houses repossessed. As a result we never Really went Up to the max we could borrow as we ran a bit scared that if the rates went to that level again we could lose our home.

Had I known then what I know now we could have bought a much bigger house.

It worked out in the end though as our house is lovely in a good location, and we have since over the years extended twice and converted the loft to get extra room, borrowing extra on the mortgage as we went along.

Overpaying our manageable mortgage meant we cleared it seven years early.

RaisinGhost Wed 12-Aug-20 05:52:33

I am buying now and I'm planning to borrow the max. Interest rates are so low right now. As for future - if nothing else, inflation will make the payments relatively less over time. Plus hopefully a pay rise or two. As for paying it off in my 50s/60s, I still plan to be working then so it doesn't bother me. If I can't work then or I change my mind, I'll downsize or work it out some other way, that's 20 years away! Society could be over by then anyway.

cariadlet Wed 12-Aug-20 06:03:26

We're on our 2nd house. Both times, we borrowed well below the max and opted for higher monthly payments instead. That meant we could take out 10 year mortgages rather than 30.

We paid a lot more each month but less overall because we paid less total interest (interest rates were higher then) and could pay off each mortgage before the 10 year term had ended.

Rebelwithallthecause Wed 12-Aug-20 06:04:37

We didn’t buy up to our max

I’m risk adverse and wanted to ensure that we wouldn’t struggle should either of us be out of work for any length of time

We have been here 3 years and with wage increases we could potentially borrow a lot more and move some where else but I’m enjoying paying down the mortgage and increasing the LTV

PinkSparkleUnicorns Wed 12-Aug-20 06:04:44

When you live in London you literally have no choice but to borrow the max. Even then you're still going to get a property that's too small for your needs xm

BarkingHat Wed 12-Aug-20 06:07:50

Borrowed 230k in our Early 50s, with 300k equity from house we Owned outright. Aiming to pay it back in about 8 years. Bought a big house with garden that needs work for £485k with money for work.

We could haVe boroowed a lot ,more and bought a done house and bigger garden. I sometimes think we should have. But this place means I have the option of retiring early.

OneRingToRuleThemAll Wed 12-Aug-20 06:23:03

We borrowed 30% less than the max, but this was in 2008 when the max was a 125% mortgage for 5x our salary.

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