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Original poster

Is 150k a large mortgage?

79 replies

julesjam · 11/04/2013 15:07

...for a 4/5 bed house in Scotland, garden, garage, 2 recep etc. worth around 250k

Payments would be around 600/month. We're lucky to have a small mortgage atm because we bought about 8 years ago, so have a lot of equity in the current property, but increasing to 150k would more or less double our payments.

Is this reasonable? I'm trying to convince DH that it's doable but I think he's a bit Shock. Am I, in fact, deluding myself??

OP posts:
Trills · 12/04/2013 16:49

£600 a month, and 1/5 of your take-home pay, and having a mortgage worth for only 3/5 of the value of the property, all sounds very reasonable indeed to me.

SirChenjin · 12/04/2013 16:53

No, not for the whole term of your mortgage, Ali, but you can fix it for a decent length of time - it definitely pays to shop around. Anyway, it sounds as if the OP has a good handle on things.

LadyKooKoo · 12/04/2013 16:57

We have just moved and gone from a £70k mortgage to £170k. It was daunting but so worth it. Mortgage is 75% LTV and repayments are approximately one fifth of our monthly income. We are on a 2 year fixed rate at the moment and are overpaying by pretty much double. Based on what you have said, I would say move and do it now. The property market is likely to improve over the next two years (I work in property management and everyone says it) so get the house you want while you can afford it.

Original poster
julesjam · 12/04/2013 17:25

Ladykookoo you're playing my tune!

FWIW I'm looking to port the current 50k mortgage we have as it's on a tiny interest rate, close to base rate, which we managed to fluke just before everything when bananas. So if we carry that over, and extend the term back to 25 yrs a third of our mortgage will be v small payments, the other two thirds will of course be a new mortgage with a 'normal' rate. But that's how I'm figuring we can keep the payments comfortably low - I would definitely considering overpaying, or reducing the term in the future, as circumstances allow.

DD2 is starting nursery, will be at school in 2 years so I'm intending/hoping my income may increase again then as I have more time to dedicate to freelance work or switch to a full time post if possible.

OP posts:
Spero · 12/04/2013 18:04

Serious question - why does it matter if prices rise or fall? Presumably your house will also rise or fall along with all the others? So your position doesn't change.

I thought this would only be of relevance to anyone who wasn't already on the property ladder.

I don't think anyone should seriously think they can play the housing market. All these 'experts' predicting things - didn't see them predicting the crash. Move if you want a nice home, not because you think you are cannily assessing the market. I think that could be dangerous.

FasterStronger · 12/04/2013 18:24

Because it changes the amount of equity you have. And for many this means getting into negative equity. I agree that rising house prices are only good for downsizers but it does not follow that falling prices are ok. Really we want near stability.

Spero · 12/04/2013 18:41

Yes, I can see the problem if it puts you in negative equity. But if it doesn't, if your house falls or rises, so too does the house you want to buy.

If house prices dont fall I can't see how my daughters generation will ever own a home.

Alibabaandthe40nappies · 12/04/2013 18:54

Inflation Spero. It is coming at some point, it has to. All this debt, there is no way that the country can earn enough to pay it off.
With inflation wages will rise, and so prices will come back more into line with earnings.

Alibabaandthe40nappies · 12/04/2013 19:00

But I absolutely agree that people should be moving to buy a home for themselves, not in a speculative way.

And LadyKooKoo with respect, everyone says it because they are desperately trying to talk another bubble into existence. The current house-buyer generation have had their fingers burnt now though, so many people who have stared into the abyss even if they have managed to stay out of it. That memory is going to take a good few years to be replaced. No-one is going to be looking to borrow a 6/7 x multiplier of their salary again soon.

Peetle · 12/04/2013 20:24

We have a £150K mortgage which costs us just under £700 a month. It was almost £1K when we moved as rates have come down so much. Like an awful lot of people we'd struggle if they got back to that level, but that doesn't mean it won't happen.

Queazy · 12/04/2013 20:33

Our mortgage is 1/3 of our salaries and massive but we're in London at the moment. It makes me nervous in case something happens to our jobs or I can't go back to work after mat leave, but as the other posters say, I guess you'd never get one if you worried too much.

£600 between two people with two stable incomes sounds very reasonable. Sorry if repeating anyone - but speaking to a (free) financial adviser really helped us. I needed a money makeover

Xx

Prawntoast · 12/04/2013 20:35

General inflation does not mean wage inflation is guaranteed. Inflation is and has been outstripping wage inflation for several years now. Wages are being kept down by outsourcing and globalisation. Also unlike the 70's the unions in this country are relatively weak, there are aren't strikes week after week demanding pay rises that outstrip inflation.

marriedinwhiteagain · 12/04/2013 20:43

Are property prices increasing where you are?
Are the repayments affordable when all other costs accounted for?
Can you take a risk vis a vis job security?

It's the risk of other factors that needs to be taken into account rather than the level of the mortgage I think. What happens if it goes tits up and is there still a benefit if it does?

Khaleese · 12/04/2013 20:48

Peetle why would you struggle? Have your circumstances changed?

We did a big move a few years back, our 5.5 fell to 2.5 but we kept our payments at 5.5 and overpayed.

Its the chepest it will ever be so overpay if you can.

LadyKooKoo · 12/04/2013 22:15

My parents bought their first house in 1978 for £3k (people thought they were insane) and sold it for £14k in 1980. House prices shoot up and then drop, it is the way things work, it will happen again. Problem is that wages don't increase that way.

Monty27 · 12/04/2013 22:20

600 should be affordable if you're well paid.

Nursery fees etc are that around here so budget carefully.

hth

mateinthree · 14/04/2013 12:22

Yes LadyKooKoo, however last time they shot up, the government pulled out all the stops to prop up house prices so they haven't really dropped back to where they ought to be.

It is amazing that there are still people out there thinking house prices are now 'low' and we are due a boom. The economy is in the gutter and will be for many years, who is going to to be driving up the prices of millions of houses?

Spero · 14/04/2013 16:56

I am in the top 10% of earners and had a 10% deposit. Just about managed to squeeze myself into a 2 bed terrace with a ridiculous mortgage. Interested to know just how house prices are going to 'shoot up' again.

Who the hell will be buying?

LadyKooKoo · 14/04/2013 18:30

I don't think house prices are 'low', the market has levelled off. An increase is an increase whether it's half of a percent or 10% and prices are going up.

Spero · 14/04/2013 18:43

You said they will shoot up! If they 'shoot up' I assumed that was by more than a few thousand pounds.

IrnBruTheNoo · 14/04/2013 18:53

We have a small mortgage through choice (less than £150k) for a 4 (all double!) bed house, two receptions rooms, large garden, etc. I personally would not want to go above £100k if I could help it for that size of house.

TracyK · 05/05/2013 19:47

Don't forget to factor in the increase of council tax, heating and insurance when you move up. Plus legal and moving costs. We have £140k mortgage in Scotland, but I'm overpaying in the hope to get t under £100k

leaderscorp · 08/05/2013 07:30

It depends on the interest rate. However, 150K is not that large.

gazzalw · 08/05/2013 07:53

It depends where you live. In London and the Home Counties it's pretty small I would say....

Lavenderandlimes · 16/05/2013 12:54

You need to work out if you can afford it if
*you go to one salary (illness job loss)
*that you can afford the repayments when the interest rates return to normal in 5 years....