Based on these 3 overall earnings what would you be happy paying a mortgage of?

[Onedropbeat]

These are all potential joint incomes depending on the choices we make in the next month

Yearly / monthly take home :
A - £70k / £4700pm
B - £58k / £3750pm
C - £50k / £3100pm

Putting these through on mortgage affordability calculators they seem to offer far more than id expect.

Assuming now finance agreements or subscription services or hobbies what would you be comfortable paying per month on a mortgage on each of those earnings?

A.£1200-1400
B.£1000-1200
C.£800-1000

At a glance anyway but depends on other factors. Childcare or future childcare mainly

Thank you. That’s typically what I was thinking (on the basis of assuming no childcare or future maintenance)

Assuming no finance agreements or subscription services or hobbies what would you be comfortable paying per month on a mortgage on each of those earnings?

But you will have outgoings and lifestyle choices? Like, one car or two - how are you financing a new car when you need it, saving up for years or taking a loan at that point or whatever.

Holidays and other leisure stuff - what's your expectations there?

How old are you - even if a mortgage is "affordable" now is it within your own expectations of when you'd like to mortgage free?

How big your mortgage is will also have an effect on your overall outgoings as bigger mortgage usually = bigger property, so higher bills, maintenance etc.

What's your risk tolerance and how secure are your jobs? That has a huge effect on how 'comfortable' you feel at different levels of commitments.
I think the rule of thumb is "no more than 30%" of take-home on rent/mortgage, but to me that's too high

A I’ve done - Max 1,400 doable

Are you sure the take hone figures are correct? When our income was 85k the take hone was only 4500

That seems low take home for joint salaries on £85k @Mirrorxx? Unless there are two lots of student loan deductions? £80 K is circa £4900 take home (after deductions for tax, NI and pension of approx 7%).

@Lightsabre student loans and pension payments of about 8% each

Yes the figures didn’t include student loans as we don’t have them but also include child benefit

@Onedropbeat I’m just surprised student loans make the take home on 70k more than take home on 85k. It’s only about 350 a month

Percentage of earnings taxed is higher on 85k too so that would have an effect on the difference I suppose

2x £35k salaries take home (without student loan) £2286 a month + £140 cb = £4712 a month

If 1 person earned £85k (without student loan) they would bring home £4800 a month and not be entitled to cb

If 2 people earned £42500, they would bring home £5562 including the child benefit they would still be entitled to.

Mad really. That’s not far off a grand a month difference

We have a combined earning of around £95k and take home just over £5k each month after student loans and pensions. However our mortgage is only £1050 although we set it up with the intention of overpaying an extra £200 each month. I wouldn’t be comfortable with more than about £1400.

My reason is that interest rates at the moment are stupidly low and although they will hopefully stay that way for a while, if they don’t and they rise even to as much as 5% (which is still modest and not ridiculous like when they were 12-15% in the 80s) then your payment would probably shoot up to £2k+ And could you afford that?

We also wanted to ensure that all our essential bills including mortgage could be covered by one salary if needed and in order to do this the mortgage can’t really be more than about 30% of your total income as you would then have 20% left for bills and food and fuel etc.

So I haven’t worked out the answers for each of your 3 figures but personally I wouldn’t go much higher than 30% of total take home income.

Ps. I know if you’re on a fixed mortgage your payments wouldn’t increase immediately but unless you’re taking out a really long term then it could still only be a matter of a few months before payments increased a lot. There is so much economic uncertainty at the moment that I want to protect us against the possibility of not being able to pay the mortgage.

Very good point!

It would depend on (1) the reason for the income variance and (2) local house prices for me.

For example, if the work generating £70K was a less secure role, then it wouldn’t make me comfortable putting more onto a mortgage.

For house prices, it would also depths what I had to pay. I am on my own, income approx £75K. I am pushing as much as I can into my pension, and have chosen that over a larger mortgage. My mortgage is just over £500 (it was £120K over 25 years, roughly 2.5% average size far).

In 2019 I was at risk of redundancy. This year has been OK, but still - Covid. The peace of mind has been fantastic. Of course, you may be in an area where you need a larger mortgage - so I’m not saying you should go for £500. Just, don’t underestimate the mental benefit of knowing that your housing cost is adaptable to a drop in income. I’m paying it on my own (v low earning husband) but in a more financially matched couple, I’d prefer a mortgage than could be covered on one salary.

How big is your household and what costs does the salary have to cover?

This is crucial. I'm a single person/ no kids household I take home around A and pay a mortgage and service charge of around £1900 comfortably.

In non covid times I have quite a nice lifestyle with holidays/ eating out etc. During covid times I just hoarded all the fabric!