Amount of income on mortgage?

[catnip1990]

Hi everyone,

My husband and I are keen to move to a larger property and are trying to work out what a sensible amount of our income would be to spend on a monthly mortgage. Pre the change in interest rates, we were obviously able to buy at a much better mortgage rate, and now wondering how far to stretch ourselves without tipping ourselves over the edge in the current climate!

For context, our combined income after tax, pension, student loans is £7100 (which I very much appreciate we are very lucky to have!). We are in our early 30s, children not on the horizon. My husband has pretty much peaked on his income, but I still have scope to increase mine.

I have a car on finance at £230per month and we are paying down a loan of around £9000 from a new bathroom this year.

We are keen to try and stretch to a forever home to prevent having to pay high stamp duty twice over.

We don't go out for food/drinks etc. much and pre-pandemic and since, haven't been ones to spend thousands of pounds on holidays and things.

I know it's a very subjective question! But I really would appreciate opinions.

Thank you! :)

I suspect you might spend more in the interest payments than you’d save by only moving once. If it takes you 25 years to pay off you’d repay about another 500k in interest on top of the house price

Can't believe 2 people think a 3 bedroom house is too small. I'd save, pay off bathroom loan and hope neither of your jobs are hot by recession. Seriously we know there is a deep recession to come. IT, HR, accountants, admin all get hit in a recession. Put of the blue a job could be lost. I'v lived through 2 recessions and I'd honestly wait and keep saving so when you do move you have higher LTV.

I’m also wondering how is it that’s with that salary you needed a loan / have not paid the loan already. Is it an interest free loan?

OP we’re in the same boat. (Our take home is £9500 though when I’m back in work after mat. Currently 7k).

we found out forever home and we’re going for it! It’s £645k and like you were in a semi detached currently. We’ve already paid our deposit for completion next year so we’re waiting to sell our current one. We managed to fix in a 4.5% before it went really crazy so you’re taking around 25% of our income on the mortgage. Considering it’s usually 4 we think we might as well go for it.

sometimes you just have to go for it! As long as you’re both on the same page and willing to make sacrifices if you need to.

Work backwards.

Work out your budget for current utilities, pensions, all savings, holidays, an amount for disposable spending, add contingencies, inflation, and an amount for childcare (offset the C Benefit).

Then see what is left to pay a mortgage, and how much you could borrow for that.

If you buy close to good schools and find a house suitable for a loft conversion you can futureproof that way. And extend when income rises.

If you are looking at a house for £600k and have a deposit of £100k a repayment mortgage at current rates will be about £3k per month. This is about 43% of joint income which I don't think is very manageable. You also risk negative equity if property prices drop 20% which will make remortgaging harder.