Did you borrow the maximum?

[goldpendant]

Inspired by another thread here, I'm wondering how many of you have or would borrow the maximum you're allowed for a mortgage?

DH and I are sort of house hunting, we have a very good equity ratio (80%) in current house but the sort of place we'd like to move on to requires a significantly bigger budget, where we'd be borrowing the maximum allowable and have a LTV nearer 45-50%.

Does that feel comfortable and would you do a similar thing for the 'forever home'? We could clear our current mortgage in 6 years but a new one would see us on a much longer term. We are both in secure jobs, for now.

Guess I'm just interested in how common it is to take in the maximum borrowing vs being much more cautious. We can't seem to decide what to do!

We borrowed about half what we were offered (FTBs in early thirties with large deposit and decent income only having delayed buying due to need for mobility for career progression). We found we didn’t need to use the maximum budget to get what we wanted, though we might increase the mortgage in years to come for a loft conversion if interest rates remain so low. If interest rates go up we may fund it from savings instead.

We also have zero other debt, no car loans, no overdrafts, no credit cards. We’re cautious re affordability so it’s always been a measured decision.

As ftb we didnt stretch to our max as i was concious i was going to be having a baby at some point- mat leave- part time for a few years

Sold that amd bought a bigger house 18m ago and did stretch ourselves

I was starting out being FT again and was expecting pay rises and childcare costs to reduce as dc go to school and took over 28 year term itll be done by time im late 50s if dont overpay or sell up and downsize

Id do it again

We based ours on being able to afford it on one salary - although it would have been tight and not much fun we could do it if need be.

Not the maximum though, could have borrowed scary amounts!

Nope never. By not over-stretching and by overpaying, we've been mortgage free for a while now - in our 40s - and it's great.

I don't know what ratio we borrowed as we based our mortgage on what we were comfortable repaying monthly, worked out what that would be as a mortgage and then went from there. We never ran the figures for a maximum allowed. We both had very stable jobs and earned well, and all would have been fine except at 46 DH has had a lockdown epiphany and is retraining as a teacher, whilst working as an LSA at well under a third of his previous salary.
I absolutely would not have predicted this scenario (throw in a new baby and me on mat leave into the mix) in a million years but I am eternally grateful we did not massively over extend ourselves. The figures aren't great but I hate to think what would have happened if we had gone for a massive house with matching mortgage - he certainly wouldn't be living his dream and I dread to think what that would have done to his mental health.
Your equity to cost ratio is healthy but how do you feel about your monthly payments?

I hate having to watch every penny I spend. Yes I’m quite frugal, but if I want something, I want to be able to but it. I think the ability to max out is dependent on how big your salaries are, would you still have quite a bit to spend too?

I also see clients with big (750-1M) mortgages and I can tell you by 55 they are very much over paying off the millstone. If they are not in big bonus jobs, slogging it out at the max is hard going.

I suppose it depends what you value.

We borrowed the max as we both know we're on track to earn a lot more and our jobs are as safe as they reasonably can be

I did, was the only way I could afford to buy by myself in London. I felt it was likely my salary would go up and I knew my mortgage would be cheaper than rent on a similar property so it felt justifiable. I don’t regret it.

What is max? doesn't it depend on income, job?

The only way we could buy is to borrow the maximum we could. So yes

@lollyfog usually about 5 times your salary

ok thanks @Bells3032

@lollyfog the OP means the maximum the bank will lend to you.

Yes when I was younger (23) when also in a career with some steep pay rises to come. But that was 3x pay in those days max.

No when I was 30 and it was 5x pay max, that seemed too high a risk, I was still single so no backup.

No when a bit older (40) due to childcare costs

No now due to age (DH is 50).

It’s shocking when I look at what we can borrow based on salaries, even on a 15 year deal. There’s no way I’d want to saddle myself with that risk. But if we were younger and happy with job security then yes.

We're just about to - but in our 40s and 50s, and only FTB 3 years ago as couldn't get the deposit together before (We're in SW London, so even deposits are ridiculous!), and with two teenagers we need more space.

We'll have a large amount of money coming from an inheritance in a few months, so will be able to put more in later. Household income is good, and we don't have an extravagant lifestyle, so we should still manage it comfortably whatever happens.

The mortgage is for 4 x household income, which works out over the shorter time period we have as around 3K/month.

We had an offer accepted on a property a few weeks ago. We’re borrowing approx 90% of what we can in total plus a £105k deposit. It’s for our ‘forever home’ and my salary will be doubling in increments over the next three years so shouldn’t be a problem.