Am I just dreaming?! Getting a 5.5 mortgage

[Keepgoing88]

We have seen our dream home, however it would mean getting a mortgage which almost 5.5 our 70k salary. If it helps we have £400,000 deposit as we have made money from property. Is it ever going to happen? Planning on speaking to a broker but have a feeling the answer could be no.

In the nicest possible way, are you bloody insane?

If you earn £70k between you, your monthly GROSS, before tax, is less than £6k.

Even at 3% interest, which is rock bottom compared to historic averages, your repayment will be almost £2k per month over a 25 year term. That’s before bills and maintenance. Do you want to be watching the pennies to afford a massive mortgage on modest salaries? What will you do when interest rates go up?

Of course, you could always borrow over 30 years instead of 25. Then you get the privilege of paying another £40k of interest to your lender over the term and you’ll still be paying a mortgage at 70. Great, eh?

For anyone saying, stretch yourself, salaries always go up and the mortgage will reduce because of inflation: that only works in a high inflation environment when salaries are also increasing, as was the case in the 1970s and 1980s. Average salaries have been stagnant for years now. Are you sure that yours will go up enough to render that amount of debt affordable?

On the affordability front - I hear many workplaces reviewing pension contributions currently, including my own. There will be many worried people as an extra £100, £200 on pension will affect some household budgets.

So I agree about affordability, it is important to think it through.

I don’t think Op’s net income is anywhere near £6k, especially if they have some deductions for pensions. Even if it’s evenly split between 2 earners, it might be closer to £4.5- £4.75k.

But Op, it would be useful to hear some more figures of your net monthly income and what you think the mortgage payments would be.

How much do you think all your monthly outgoings apart from mortgage amount to? Perhaps you live very frugally. Lots of people do live very cheaply.

Yes, that is why I specifically said that their GROSS income would be less than £6k. Either way,taking on a mortgage of that size is barking.

Yes - my mistake, not noticing you clearly said Gross.

True @Bluntness100, you didn't make a comment on whether it was a good or bad idea.

I think it's a bad idea for the OP to stretch herself so much on a household salary of £70K with children to support particularly at the moment when things are so uncertain regardless of other expenses.

This sounds a huge mortgage to take on OP.

There's a reason most banks only go up to 4 times salary, and it's to stop situations like this occurring for your own good!

I'm having to take on a large mortgage of 4 times salary on my own, as I'm splitting from my DP, however my mortgage repayments will be 23% of my net pay as I'm a high earner and I'm uncomfortable at that level, but needs must.

It sounds like your repayments will be at least 50% of your net income, which won't leave much for your all other regular bills, unexpected bills and fun money.

As you've got a large deposit, I'd look at buying a cheaper property, perhaps £650k instead of £800k, so you're not quite so stretched, and a £250k mortgage will be much more manageable on £70k gross income, and won't be too much of a worry if one of you loses your job unexpectedly.