With a ten percent deposit, how many times your salary would you feel comfortable borrowing?

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Assuming no major credit card debt etc. This is more of a nosey parker curiosity question, after a discussion with a friend.

I think it all depends on how secure your job is and whether you are likely to have decent salary increases year on year.

We borrowed 3.3x joint salaries.

It is now 6x single salary.

Can still afford it.

3

Daisy chain, very similar to our set up, although we have a 15% deposit. Our repayments are £770 (for 2 years!!)

The mortgage advisor told me to think about how much you want your monthly repayments to be first, then you work from there.

Surely it depends on interest rates and disposable income? And the size of deposit. And type of job eg how secure.

I've no idea. I think we are on about 2.5 times our joint salaries? That feels quite high in terms of repayments.

We worked from repayments, not multiples. The theoretical value of the house and the mortgage are irrelevant if you can afford the repayments and don't want/need to move or redeem.

In 2004, as FTBs, we were offered up to 6x joint on 100%+ mortgages. Fortunately we had the sense to laugh heartily and take far less, being more like 4x and 90% (still a lot) but with a monthly amount we could comfortably afford. Indeed we overpaid every month forseveral years, wiping around 10% extra off the debt by 2008.

Our most recent mortgage is based on about 75% LTV and was about 2.5x joint. We knew, although the bank didn't, that I was pg, so we wanted to have repayments on the new house comfortable on a single salary.

Erm. Why don't you go and see a mortgage adviser? They will be able to go through all of your options.

We did 3 x

It partly depends on situation. We borrowed more than I would have liked given that we're dependent on my income as DH is a SAHD, however, having a fixed rate for 5 years means that when that ends the DCs will be in school and DH (hopefully) earning again. For the short term I'm OK with the risk.

I would only be happy having 2.5 but I hate any type of debt and noose round my neck so may be too cautious.

We were initially offered 4.5x DH salary (i don't work) with a 10% deposit. Which was totally crazy. Our repayments would have been crippling and then we would also have needed not only the 10% deposit but the 3% stamp duty and fees. So we were offered £270k mortgage with a £30k deposit but then needed another £15k for stamp duty and fees. The repayments would have been about £1800 per month.

We worked out the most we could actually afford was £240k house with a £30k deposit and only 1% stamp duty.

Sorry, meant to say which would be about 3.5x dh salary. Anymore than that would be madness for us.

Knackeredmuchly, that sounds like a really good deal you have. I do like the idea of fixing for x years.

It's peace of mind and meanwhile you can keep an eye on new deals coming out. I'm a fixed deal tart, me

It's all very well saying start from repayments, but they can alter massively if interest rates rise - I remember people in the late 80s having a nightmare with this as house prices fell and interest rates rose. They could no longer afford the repayments but could not sell the house and pay off the mortgage that way because they were in negative equity. There were loads of repossessions. this is why I would keep the multiple as low as possible - no more than 3x salary.

3 times

Yes but then you get a fixed rate for two years or whatever and then go back when it ends and change your mortgage for a better rate after you've paid some of it off.

I got a mortgage of over 4 times my salary (with a 10%) but our joint income means it is only 1.7 times. (Husband couldn't be included due to being in probation period at the time - we plan to add him into the mortgage next year when he has finished paying of uni debt)

I have no idea what multiple of my salary our mortgage is. Probably around 4-5x. Then again I have no idea exactly how much I earn

Our repayments are about 30% of my guaranteed monthly income and would go up to maybe 40% if the interest rates went higher than they have historically been, so I feel comfortable with the level of borrowing we have.

I agree that repayments is where to start. These days, I have to pay for childcare & my commute as well as feed, clothe etc 2 DC so my outgoings are much higher than they used to be meaning I have less left for the mortgage so ended up with a lower multiple.
We got our broker to run the figures with base rate at 2%, 5% & 8%. And increase to 2% is! for us, affordable with few cut backs on a day to day level, just less in savings each month, 5% would involve some major changes to lifestyle (fewer/no holidays, cutting back what we do at the weekend). 8% would be difficult. Taking out a mortgage without doing these calculations strikes me as being rather naive.

2x

Aren't the banks cutting down on higher multiples of lending anyway?

Personally, I think we will have to go 4x to get a significantly better property than we have now, which is on about 2.5x. I agree on doing the IR calculations, though if we were taking on 4x I'd probably go 5yr fixed to mitigate the risk.

It was the new affordability rules that scuppered my buyer. Him and his gf had highly paid jobs and good deposit and only needed 2.5 x joint but didn't pass affordability test in May even though they did in Feb

I remember as a recent graduate in 1999 being offered a student mortgage that was up to four times my salary, and thinking that was completely perilous. And in any case, multiplying my salary by four back then only stretched to a lock-up garage in East London.

I suppose, even more so now, that the price of London flats necessitates borrowing huge sums, even with a healthy deposit.

We had bigger deposit but in 2006 borrowed 8 x but still never been a problem and we were very low earners. Our joint income was 14k! Never been a problem though.