What’s the most you’d comfortably spend on mortgage...

[planforeverything]

I know this is all relative as spending 1/3 of your income on a mortgage when you earn £2k a month is tight as the quantum amount you’re left with isn’t much but out of curiosity, what’s the most per month you’d spend on your mortgage?

I take home £4200 after tax. DH is £4800 after tax so £9000 per month.

We have no children and won’t within next 3 years (and possibly not in next 5), no debt and spend about £1k per month on non household bills.

My friends aren’t in London so even my £2500 per month mortgage now terrifies them. I’ve found a really dreamy house and we were going to wait until next December to move to save more equity but I’m considering ‘gearing up’

Mortgage would be £3750 per month - is it too much?

Mine is just over a fifth of our joint income but that income is less than your current mortgage so it's probably not a helpful comparison! I would go up to a third because that's what we paid in rent and just about managed it, but more than that would give me the willies. The key question is what would you do if one of you lost your job and/or couldn't work due to long term illness? Would you be confident you could sell up and move somewhere cheaper fairly quickly if you needed to?

thanks If earning lots more money was what was important to you then why didn't you chose a profession that paid you more?*

I’m actually in one of the most prestigious professions that people do think make lots of money

well it clearly doesn't pay as much as other professions.

Why did you feel the need to make that comment about income comparisons when it wasn't at all what the OP was asking about?

I’m confused too. I assumed you were a midwife, junior doctor or similar. What is “one of the most prestigious professions?” I can’t even think what it could be?

My mortgage is £428 a month.
My advise to yourself is buy a mansion with a swimming pool.
I have a 2 bedroom semi detached with a non heated outside puddle..

OP, we have a very similar income and take-home pay for us is £8,800 after pension deductions etc. No childcare costs to take in to account either.

Our mortgage is £1,900. We manage to save and/or invest about £3,000 a month so could afford a mortgage of £3,750.

However, I was badly burned by interest rate hikes eight years ago and would always factor at least another 5% interest hike on top of affordability. I know we’re unlikely to see interest rates go up by that amount, but it’s wise to take it in to consideration when discussing affordability.

Another thing is that my husband’s bonus used to range from £30-50k most years, but that was stopped overnight along with a lot of other perks once the recession hit. While he did manage to hold on to his job, bonus levels have not recovered so I’d never, ever take them in to account as part of income.

My personal comfort level for anything above basic housing requirement (ie, a house you want rather than need) would be that the mortgage could be paid by one earner, based solely on guaranteed income and not bonuses, planned pay increases etc.

I think that's a lot. We take home about 6,500 and our mortgage is 2k, it terrifies me! We have a lot of other expenses like nursery fees and expensive commutes too though. But I wouldn't go above a third to be honest.

Best to speak to a financial adviser who knows your attitude to risk, how much you save each month, how much job security you have etc etc.

Risk is much higher if you need to sell up in 5 years time than if you are buying a home for life.

If I were you I think I would underextend and overpay.

Sounds fine to me, plenty of cash left over a month, could potentially be saving a few thousand a month towards any unexpected eventualities which would quickly easily cover a few months on one income.

I'd do it differently. Chuck the same amount of money into your current mortgage, be mortgage free by the time you return up north and keep the London place as your pension and use your earnings / rental to buy the nice house up north. If you're not planning / likely to have kids, why have a ton more bricks to maintain and decorate and furnish and repair when you're already working long hours? make what you've got as comfortable as possible and pay it off, and have zero risk if one of you loses a job / is long term sick etc

If you do buy, buy for location, it's never an issue to sell a good location quickly (look at transport links, schools, local facilities)

We are incredibly lucky to live where we live because the house we were going to buy fell through and this one landed in our lap. It's a far better location than the other one, and as such has increased in value by a far greater percentage than the original. We know we'd never have an issue selling as so many people knock on our door and ask if we're ever thinking of selling would they mind letting us know (was one every other week this summer, it looks better in the sun!)

Ariela sounds like you did the right thing! Where are you based?! It sounds lovely!

I’m not in an apartment in the City, I live in a 2 bed Flat in Putney and am looking at getting more space. Just because I don’t have kids or may not have them doesn’t prevent me wanting a house. I have family who visit regularly and I can’t have my parents and brother to stay at same time as we don’t have the space. My husbands family also so not local so since having the Flat we have felt more cut off from our family. We used to have a 4 bed house in Bristol (where I qualified) and we used to have family visit once/twice per month and I miss it terribly.

In terms of area - that’s precisely what we are doing and trying to buy in a good area that always sells. We like Parsons Green, Putney and Barnes (which seems to never lose value because of good primary schools). Neither of us work in ‘the city’ and my husband never will but I need to be close as in my profession I will likely move jobs again (which likely will be back in c.London). It’s crazy what a £3500 mortgage gets you - not a palace like you’d expect in London terms in those areas.

We are sitting tight post Brexit - whilst not what I want to do my DH thinks it’s for the best in case there is some kind of recession. We bought our Flat when prices were very high though, not peak, so there is a chance we have to sell our Flat for what we bought it at (definitely wouldn’t need to sell lower)

DH and I were in a similar situation a couple of years ago. Mortgage was £2,500 and we wanted to move and increase mortgage to £3,300. Income was around £9k pcm (DH and I earn similar amounts).

What we did 1 year before moving was to increase our repayments (overpay) so mortgage cost was £3,300 pcm. This was a good test to see if we could comfortably afford higher repayments AND also helped increase our equity before moving.

Personally I wouldn’t do what you are proposing. We recently were under offer on a house in an area close to what you’ve mentioned (currently live in a house elsewhere in London and wanted to move for schools) chain broke and I’m kind of glad.
Our monthly income is c11k but 2/3rda husband. The new house was going to be £2.5k mortgage over 20 years but at a low interest rate for 3 years. Current mortgage £2k but taking £100k+ of savings from stamp duty. That level was freaking me out. Mainly what would happen if DH lost his job (it’s a tough job market out there). We do have £3k Nanny cost and I could go full time if he did but I’m glad it didn’t happen now.
I know you say you are on track for progression etc but so was I. If i made work no1 I could be where my DH is salary wise BUT I wanted kids. They didn’t come easy and cost £40k (I’m not old started ivf at 32) and meant I took a sideways move at 32 rather than pushing up. Don’t regret it at all. Means I can work part time get paid well and leave at 5pm. A friend who was taking 2 years to conceive took a lesser job (paying £100k) and was preggo in a month. If you decide to go for the kids you don’t want to close down all your options.

FlossieTeacakeFauxFurCoat

This is a really good idea. Can I ask a question which you might be able to answer - I’ve been putting my extra cash that I could pay in to the mortgage in to savings. My neighbour told me she overpaid on mortgage and when it came to selling they had to sell for less than they bought for so effectively lost equity. She told me she now keeps all money in savings which is what I’ve been doing.

How much do you save on interest and is it enough to out weigh the risk if your property drops in value?

Did you do a full year of overpayments then start looking or did you start looking for a place before then?

Thanks!

All this “you should only buy something that you can afford to pay on one salary” stuff - how do you expect single people to ever buy anything??

OP your incomes are high and sounds like you’re in in/demand professions. I would be comfortable with that level of mortgage debt.

It costs me 46% of my net pay to live in my house. In London. With a mortgage 5.5x my salary and av bonus amount (they looked back over 3 years).

What would happen if I was sick? I have income protection for 2 years and critical illness cover. What would happen if I lost my job? I have savings. I have a part time lodger, I could get 2 full time lodgers if I had to incase of no work. I could take a job at a lower salary and manage. I could sell up if I had to. No dependents make this kind of thing easier.

@planforeverything you have a fundemental misunderstanding.

You don’t ‘loose’ the money you use to pay off your mortgage, even if you’re in negative equity. You’d be in deeper negative equity if you did not do that. The only issue is the cash is obviously not available to you to be spent on something else.

You can look online and mortgage overpayment calculators and worn out based on your interest rates what is the most efficient use of your money.

We did a full year of overpayments but you need to check with your mortgage provider that you can do this without penalty.

WRT which is better, extra cash in savings or paying off the mortgage. It depends on interest rate. For us, it was better to use our spare income on the mortgage than on savings. Overpaying also gave me comfort that we could take a payment holiday if anything ever happened to our income.

Our situation was slightly different in that we had DC before moving, therefore already accustomed to (exorbitant) nursery fees.

And to answer any critics of high earners. I worked 2 jobs and studied at night school to achieve my level of earnings. No inheritance, no bank of mum and dad, no handouts. And like the OP, I also financially support my parents.

FlossieTeacakes - done!

We are doing the overpayment of the extra £1k a month to grow the equity and reduce interest and we’ll assess where we are next December. Hopefully managing comfortably and we can justify the new House purchase! here’s hoping it’s not going back to the days of eating like a student....

Btw this is tangential but you should never take a payment holiday unless you are in dire straits. Redundancy or a self employed partner with a critical illness? Fine - that's what it's there for. But never take a payment holiday e.g. to spend a year travelling. You will need to declare it on every subsequent mortgage application ever and are likely to get 'computer says no' responses as a result from many major lenders.