Borrowing £1m+

[EllaSW]

Madness?????

Depends on your income surely.

Can you afford the repayments? What if interest rates doubled. Or trebled. Could you still afford it then?

To buy a 1.42m house???? We can "afford" it i.e. afford the mortgage but it just seems a lot 🤣

I know what you mean... we're looking at property next steps and these are the sorts of figures coming up. It's perfectly doable but also makes my stomach flip.

@Hotcuppatea Around 300k pa and we'd probably fix for as long as poss. Still feels like a big deal

Totally depends. If you are on a wage that makes it affordable and it gets you what you want then why not?

Then buy something that doesn’t.

@Honaloulou i'm glad i'm not the only one. If you don't mind me asking - what do you feel equals completely doable? It's so subjective I suppose

What are the income multipliers and job security.

I do think it's madness at this point in the cycle tbh. We stretched as hard as we could in 1992 but that was when property in London was just recovering. Even then we had more than 50% equity though.

@NotKevinTurvey such as?! There are London garages on rightmove for hundreds of thousands of pounds 🙂

@WhoAre I love this! Just imagine

What are the monthly repayments on a loan of 1m?? (Just curious!)

If it’s more than you are comfortable with you can live outside London and commute. The Elizabeth line has opened up quite a few places to the East and West for people working in the centre.

Interest only at 2.5% interest is just over £2,000 per month.

We’re interest only on £1.8m, paying an average of 1.8%

The only thing that matters is what proportion of your take-home pay the monthly repayments represent, and whether you could till service the mortgage if interest rates went up significantly.

Interest only?

What would be the repayments on that?

How could you possibly even consider interest only in this market? What happens if house value tanks? Yes you’d be mad.

20 years ago we paid 500,000 for our house with a £450,000 mortgage. It seemed like such a lot at the time, but we are still here, house is now worth over £1,000,000 and repayments are £2,500 ppm. Will be repaid in 8 years.

If you can afford it, its fine

Oh and that was capital and interest. Its a joy to see the balance go down every month.

Would never do interest only tbh

No idea, we fly club

Yes, paying off only the interest. At under 2% I prefer to invest the capital repayment part instead.

We’ll either sell a property or cash in some investments when we want to pay the principal off, but for now keeping the repayments low works best for us.

@WhoAre

What do you mean? The repayments aren’t affected by the property price.

Everything in life is a trade off.

You need to be sure what you will have to do to have this house (for example, stay in your current employment) and what you won't be able to do (for example retire super early).

If you are prepared to sacrifice stuff and this is your dream, go for it.

If not, buy a cheaper house.