mortgages - how much are you comfortable borrowing?

[bossykate]

hello everyone

we've been looking at buying a house recently and need to make our final offer tomorrow.

i've done our sums about a hundred times and although it will be tight, i think we can afford the large increase in the mortgage, without being overextended.

i think of myself as risk averse when it comes to debt (v. low mortgage atm compared to income, only have one credit card, cleared every month), so i've been wondering if i'm way off the mark thinking we won't be overextended if we move.

The new mortgage will be 2.52 times our joint gross salaries and the monthly repayment will amount to 35% of our net monthly salaries.

while i don't think that is low, i don't think it would constitute a silly amount either. mortgage cos certainly seem prepared to lend us more if we want it - i don't!

does that seem wildly imprudent, about right, or boringly, accountant-ly cautious to people?

i'd be grateful for any views on this. no need to mention actual numbers if you are shy about it (i am!), the proportions would be more useful in any case if people are willing to disclose them.

thank you all so much!

Our mortgage is about 2x our gross salary, and about 21% of our new monthly pay.

Near enough 3x DH's salary, although like Dinosaur want to convert our cellar so could probably say 3x DH's salary. No savings, no pension, zilch.

hello everyone

we decided to go for it and have put in a higher offer - now waiting to hear the result.

many really excellent comments, just wanted to reply to a few specifically...

jmg - yes you're right about fixed costs needed to survive, m2t posted a good example of what you were getting at i think.

iota - i've asked about the bills and have include the bills for the new house in my sums.

azure - having a bigger mortgage scares me too, especially since it seems only recently i was whingeing here about not being able to give up work! long story, but i think we are over that now, and like you i feel we are undergeared atm. i also think if we don't risk it now, it will be even harder in future.

zebra - i have been thinking about MPI so would be grateful if you had any tips/pointers.

gillw - we currently have an offset mortgage, but have decided predictability will be more important for the next 2/3 years. no fixed rate offsets on the market that i have found.

twinkie - that is most certainly true of credit card debt and other debt attracting a high interest rate. generally, one is advised to keep about 3m worth of salary in savings for a rainy day. being cautious, i like to keep more than that, and the mortgage is the only debt we have.

prufrock - i can assure you my bonus won't pay off the mortgage in 3yrs! i knew i was in the wrong bit of the industry. go for it if you can

aloha - a "veritable paragon of fiscal rectitude" - that's the nicest thing anyone's ever said to me

thank you so much everyone, also those not specifically mentioned above. hope not sounding too smug about savings and pensions - certainly don't feel it. got massive attack of cold feet at the thought of that much debt...

you have all helped a lot, thank you

bet we don't even get the damn house now!

good luck bk!

bk check out moneyfacts They've got a few offset fixes on there - albeit at slightly highre fixed rates than you could get on a normal fix

ooh aloha, someone else with an Equitable life pension scheme. depressing isn't it? been farting about for nearly 4 years since it went tits up, not being able to decide whether to take my money and run. of course as the months go by its less and less of an option as the penalties increase isn't it?

Fingers crossed BK, keep us posted!