How much mortgage is too much?

[Manc2]

I’m hoping to hear sone opinions on how much is too much to borrow for a mortgage.
DH and I are both 30 and live in Manchester. We want to buy a new house but can’t agree how much is ok to borrow.

We don’t currently have any children but may want one in 5 years ish.
Our joint income is 100k a year and our only debts are Student loans that will be cleared in the next coup of years.
Mortgage calculators seem to think we could borrow 550k which sounds huge.
So can anyone help with how much is actually reasonable to borrow? Thank you

We looked at the repayments rather than the total borrowed. I wanted our repayments to be at or less than 15% of our total take home pay.

Hmm 15% of our take home would be less than 900 a month which wouldn’t buy us much

Experts say the perfect budget should be 50% of salary on fixed bills (including mortage), 30% on Savings and 20% on fun spending. What would your mix be with big mortgage.

You also need to think about how many years you want to pay a mortgage for.

I think it's all very personal choice and what
your comfortable paying tbh.

Things we considered;
A good monthly payment that we could still afford to overpay on
The length
Factored in any future children, so SMP pay, nursery fees.

We decided what we would roughly like our monthly repayments to be then used a mortgage calculator to work out our total mortgage budget.

We also tried to keep our monthly payment low so if one of us were to lose our jobs the other could still afford the payments

DH and I have a similar joint income. Our mortgage is £1100 per month and our childcare bill is almost exactly the same. Money is ok after that and food/bills but wouldn't want a massively bigger mortgage to be honest.

I'd factor in....what sort of money is your ideal house? If you can afford to buy a bigger house, say a 3 bed straight off then that would help with not needing to move if a baby came along/working from home/guest bedroom etc.

What can you afford to spare each month? Could you afford that during maternity leave? Would you want to go part time after having children and could you still afford the mortgage payments if so? How much will your childcare costs be?

Try to factor these things in but it sounds like you're in a good position. DH and I earned nothing like that when we had our DDs and live in the South East and we've managed fine.

We didn't want ours to be more than 30% of our take home pay, it's actually 29%. This is an amount that felt comfortable to us, and if one of us lost our job we could still scrape by. We did have a large deposit though, if we only had the 10% we wouldn't have been able to afford to buy in our area!

If you want kids make sure you can afford the mortgage on a single salary. Even if you both work childcare costs can cost as much as one of you earn!

@FitAt50 I think with the bigger amount it would be 52% on fixed bills but that includes doggy daycare

My work pays 6 months full pay 3 months smp for maternity leave.
I think childcare would be about 800 a month

How much deposit do you have?
What length of mortgage do you want?

Our deposit would be 20-25%.
We would go up to 30 years as we are planning to retire at 60

I don't think you would get £550k on £100k joint
Go and see a broker.

@HolidayTime2021 we wouldn’t borrow the max but want to know if borrowing 450 is crazy

It's worth building in likely salary increases too. Our mortgage felt a stretch at the time but 3 years later we have both had two promotions and it feels fairly easy now!

I'd play with calculators and see what you could still comfortably afford if the interest rate shot up to 10%. There are fixed interest rates but they don't last the long and after years of low rates, they're expected to go up. 10% is a bit of an extreme increase but my parents had the misfortune of their mortgage going from up to 16% almost overnight during the 80s and losing their house as a result. They always remind me and my siblings when we talk about moving that it's impossible to predict the economy.

My joint income is the same as yours. Our monthly repayments are £1428 but we do have two children. Our mortgaged amount is £375,000 house is worth £500,000

@Shadowboy how do you find it? Do you pay much for childcare?

I would be happy upto £1200 / £1300 a month payment

I would also look 35 year terms, bring that payment down, over pay now until you have a child. Then it gives you more flexibility to stick at a lower amount while the child is in expensive daycare. Then once they are out or in free hours you can over pay again. Then once your term is finished, reduce the years to 20 or 25 years.

@forcedfun I hope to increase my income by 15/20k in next few years but it’s not guaranteed

450k sounds like a lot to borrow.

We earn circa 80k between us and have a 200k mortgage over 22 years so it'll be paid off in our early 50s.

Do you live in a pricier area of Manchester? What sort of property are you anticipating buying?

Another factor is the deposit you have.

If you're looking at a £400k+ mortgage, You'd need £50k+ for a deposit and fees, possibly more, so you'd ideally limit your loan to value to under 90%, preferably under 80 or 85% to get a better interest rate.

Our joint income is slightly higher that yours, our mortgage is £850, borrowed £240k to buy a £270k house, currently owe £207k.

We have 2 cars on finance totalling £500 monthly, childcare bills of around £500 a month plus kids activities around £200 a month. I wouldn’t want our mortgage any higher because of these.