If your pre-tax income was 100k, what house price would you go for at today's mortgage rates?

[Littlehouseinthebigwoods8]

I've seen suggestions that generally you should look to spend 4 or 4.5 x your annual gross income on a house.
But with current mortgage rates what they are, this sounds unrealistic to me... Have I misunderstood something?

Yes, the 4-5 multiple is only about the maximum banks will lend. Seems a bit of a nonsense in volatile times when the biggest variable on the amount you have to pay back is the interest rate. I don't actually think the third of your net income metric is all that helpful either as it depends on the hard facts of what you have left - obviously two thirds of nothing very much has very different spending power from two thirds of a large salary. Best to start with your actual outgoings and what you need to live on once the mortgage is deducted.

I work backwards and base on affordability. Take Net income after pension, tax, cycle to work etc.

Deduct living costs (food, childcare, car costs, insurance, holidays, debt repayments, medical costs) and see what your disposable non-rent or mortgage budget is.

Now use a mortgage calculator to see how much that is for repayments, but allow headroom for a mortgage rate increase. IIRC stress tests before COVID were to 7% but I'd probably go to 8 or 9 today.

Possibly boring and sensible, but home security is a big thing for me.

E.g 4600 net might mean £2000 repayment might be comfortable. That's £350,000 at 5% over 25 years.
However if interest rates go to 8% the repayment is 2701 per month which is too much in my view.

300k at 8% over 25 years is £2,315 which might be more sensible.

Depends on your risk appetite, expected future earnings, do you have 25 years until retirement, etc etc.

I think where you live makes a massive difference. I am pretty sure most people in London would borrow at least x4 times their salary to purchase a property and that's the norm here given ridiculously high costs. There will always be posters from cheap parts of the country that will tell you they only had to borrow x3 their salary but that isn't feasible in the SE/London areas unless you have a very very high deposit.

The new normal will just be falling house prices, most people cant afford 3k a month for a mortgage on average property, just not worth it TBH.

No, but at the lower end of £1,750 thats probably less than the rent of an equivalent house, and unlike rent is more likely to go down than up!!

We have roughly that coming into the family pot, and are looking to move. We will take on a 250k mortgage max with our next house. We'll have a 40% deposit with that amount, and that'll do. Tbh, houses in a slightly higher price bracket don't appear to be worth it anyway.

We bought our house when our income was lower around £70k I think, it's now £110k, our mortgage is c£330,000, I am VERY glad we are not on £70k anymore and despite having had a significant bump in pay have no intentions of increasing our mortgage.

We are looking at a payment of £1800 when we remortgage, over a long term, so that is coming up to nearly a third of our net monthly income (£6k). We don't have childcare costs and very low pension costs (public sector) but this is the maximum I'd want to be paying on a mortgage really.

I've always heard the 30% figure as well, but of course that needs to be adjusted based on other expenses. If you have high commuting costs, as you've said above that might eat into your leftover cash and reduce your disposable income to an amount you're not happy with.

Our income is around £120k and ideally we want to keep the monthly payments close to our current rent payment (£1100). That is with a 20-25% deposit. We are obviously not spending all of our savings on a deposit so we will have a lot leftover to play with if we see something we really love that costs slightly more. We would really like to be able to pay our mortgage on one income in case one of us loses a job, wants to work part time, start a business, etc so that is another reason for borrowing less.

We are only looking at areas that will allow us to have the type of house we want within that budget. No children yet but will probably have only 1 or 2 so looking at good sized 3 beds that we can stay in for 5 to 10 years while kids are little. Will reassess if we need more space once they get older.

£120-£130K joint income here and we’ve just taken a mortgage out of £275K which for me is A LOT.

(Decent deposit)

Rent (and house prices) are going down at the moment, and you can walk away from a tenancy to a cheaper one but you can`t walk away from a mortgage debt.

https://propertyindustryeye.com/rents-fell-last-month-as-market-returns-to-seasonal-patterns/