Would you/did you borrow to your max for a mortgage?

[LLK12]

Hi,

We're currently in the process of getting on the market, so we are right at the beginning of the process. Not looking forward to the stress of it all 😬 but it's definitely the right time for us to take the plunge.

To the original question- I know the general consensus would be absolutely not! Never borrow fo your max. However, our situation is, our household income is almost certain to rise quite quickly, as I'm due to go back to work in the next year and DP is in a very senior role in a fast growing sector, so career progression has been fast and should continue to be. Salary increases are fairly regular, with guaranteed bonuses, so we feel the risk would be lower.

That said, I'm also very aware that nothing is guaranteed, so bearing that in mind, does anyone ever borrow to the max?

Be really interested to hear your thoughts and personal experiences.

Thanks 😊

I did - but when I did, the max was three times my salary and I really couldn't have afforded it otherwise.
Is the max a lot more than 3 times income now?

Also, I had a decent deposit (thanks, Dad) so a fair amount of equity even starting out.

We are borrowing 5.5 x (two salaries). I think what you can borrow in terms of multiples is determined by your income and whether it’s a single or joint application.

I certainly know of lenders who lend considerably more than that - but they are for the very wealthy.

No, we were able to buy the house we wanted without stretching too far, and it was important to be able to cover the bills with one salary if need be.

Presumably you massively benefited from the very low rates we had?

Ah, lots of different experiences and opinions. I'm surprised by the amount of people who would.

That lifestyle balance is definitely more of a concern for me than DP. I'd be happy to have less disposable income for the extras if we lived in a more desirable area in a bigger house, but if we didn't really have any money to enjoy the more desirable area, then what's the point?

I did.

Long before there were all the checks there are nowadays, I was a single FTB and to buy a house (even the scruffiest house in a rundown area, not a forever home) I had to be "generous" when stating future prospects, overtime, bonus, allowances etc.
When I sat down and worked out my first month's budget, I had just £10 to live on!

In reality though, things rapidly got better.
I took a PT job for evenings/weekends.
I got an increment at work which was rapidly followed by the annual wage increase and then a promotion. With my promotion came the chance to change my work location which meant I had no commuting costs.

Within a year I was firmly on my feet with money to spare and an increasing bank balance, 2yrs later I was able to take on a larger mortgage and put my savings towards moving into a real "home".

We had rates of about 6% on the flat @kirinm and then probably 5% when we bought the house 13 years ago. But yes we have managed to overpay in recent years partly due to low interest rates and partly with diverting any pay rises towards the mortgage payment.

When we last got a mortgage in 2007 they would of leant more, (a ridiculous amount) but we didn't max out. It would have meant we were spending £££ on the upkeep of a large property with big grounds.

That was at a peak boom time Lenders wouldn't lend that much now. But its that sort of thing to consider- not just paying the mortgage but the cost of maintenance of the property.

And how long you want to keep working.

OP how old are you and DH? Any DC planned? Sounds like you’re in a great position - use it wisely and build WEALTH through investing. And buy the ‘dream’ house when you are wealthier. Hint: no matter what property obsessed Brits tell you, houses are liabilities; not always sound investments. And for anyone who rushes on here to tell me nonsense, their house has doubled in value - well so has mine. But while houses in areas like London have doubled in a decade, global funds tend to do even better with far smaller costs to you. Anyway look up the Donegans and Rebel Finance School. Demographics are also shifting: the older baby boomers will begin to pass on and their properties will go to market, possibly creating a glut of bigger homes. That’s the time to buy, when you notice this happening. Also beware the Budget and watch to see if the residential property tax replaces council tax. This too will cause a drop at certain price points. Basically you have time on your side in that the market is uncertain and people feel broke. I wish you well with your careers but AI is really killing a lot of professional roles. I hope you and DH do not fall victim to it.

We did but we are in an expensive city in the South East. It was worth it to stay in our community/not have to move schools etc.
DC are primary aged so not too expensive childcare wise, and we don't really have any expensive tastes...e.g. we visit relatives or do eurocamp holidays, we have an ancient Nissan etc.

I bought a 45% share on Shared ownership then staircased to 70% share when I got promoted about 12-18 months later. Interest rates were very low then. Have benefitted from equity growth.

Yes, because we couldn't have brought without doing so.

No but we have experienced redundancy that threw on us on our arses. Never again would we get a mortgage that couldn't be repaid on a single income.

We did, in our early 40s. BUT DH’s income was disregarded as he’s self-employed, so it wasn’t our max-max. And my job is basically bomb-proof. And we have another mortgage-free flat rented out, so if all else fails we’d sell that and pay our mortgage off. We are due to pay it off when we are 65, but we are overpaying so will hopefully be done by the time we are 60.

Would I max out both of our incomes and sell our flat to put towards the deposit for a house? Nope, because around here at that price there is far too much volatility in the market. There were some houses we looked at which were originally priced at £1.75m which were reduced to £1.5m, and eventually sold for £1.35m - those kinds of price drops terrify me. And quite small changes in interest rates very quickly become unaffordable when your mortgage is that size.

Yes I did, twice. Once when we first bought 26 years ago and again 7 years ago when we moved. The problem.is there is no wriggle room.

We did but I was working part time so we knew I could earn more by increasing hours as dc got older so it wouldn’t always feel a stretch. It was a bit of a gamble but felt like a measured one.

I think it depends on the stage of your life.

When I was a 1st time buyer in my early 20s, yes No other option. Now mid to late 40s no. Mortgage is 2x salary an we just want to over pay and be mortgage free asap.

DH got made redundant a couple of years ago and really struggled to get another job. It's certainly changed my perspective on risk.

I also just want to enjoy as many holidays as possible with the children, rather than pay an even bigger mortgage.

I know the general consensus would be absolutely not! Never borrow fo your max

Says who ?

For me (and I'm pretty sure I'm not alone) I couldn't have afforded anything without borrowing to the max. This was 35 years ago, and it has been the same for my dc and my dnieces and nephews buying in the last 5 years or so.

If you are young, at the start of a career that is fairly secure, then it makes sense to get the biggest and best, or the property in the best area you can stretch to IMO.

No, and it was just as well last time our mortgage came up for renewal as my H had been furloughed and they only took account of my salary not his. We will be remortgaging again next year and it’s likely the mortgage will only be 1x our combined salaries.