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Costing Out Mortgage Affordability

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We're future FTBs, and I'm trying to work out the size of mortgage that my wife and I could comfortably repay when interest rates rise.

My wife works 16hrs a week due to young children, but in 3 years that will go up to 30 hrs a week when the kids are both at school. If we had a 3 year fix, a sudden increase in repayments when it ends could partially be absorbed by my wife's increase in take home pay.

Anyway, I've based our mortgage on 4 x joint salary, plus a 10% deposit. If the mortgage rate went up to 10% we could still pay it with moderate cut backs. Much more than that and we'd be introuble.

What are your thoughts on my calculations?

In case you think I'm trying to get the biggest proprerty we can afford, I'm actually just trying to work out if we can afford somewhere that we'd be happy to live in for 25 years!

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If you are doing joint the risk is that only one of you may keep your job, can you afford the payments then?

4x to me joint would be pushing it or are you assuming that in 3 years your wife would be working full time would would then bring down this to say 3x joint income?

Also can you start over paying immediately? If you can't to overpay by say £50 a month regularly then I'd say you can't afford it. Overpaying will in the long run safe you thousands.

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If you are doing joint the risk is that only one of you may keep your job, can you afford the payments then?

4x to me joint would be pushing it or are you assuming that in 3 years your wife would be working full time would would then bring down this to say 3x joint income?

Also can you start over paying immediately? If you can't to overpay by say £50 a month regularly then I'd say you can't afford it. Overpaying will in the long run safe you thousands.

Yep you're right - in 3 years the original load would be 3 x joint salary rather than 4. The plan would be to take advantage of current low rates and either overpay monthly, or save up those monthly amounts ready for the remortgage in 3 years. Can you overpay on fixed mortgages? Have never looked into it in much detail.

If one of us lost our job now we could cope, but if rates went up to 10% and one of us lost our job we'd have to borrow about £500 from family every month..... not something we'd like to do of course.

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Yep you're right - in 3 years the original load would be 3 x joint salary rather than 4. The plan would be to take advantage of current low rates and either overpay monthly, or save up those monthly amounts ready for the remortgage in 3 years. Can you overpay on fixed mortgages? Have never looked into it in much detail.

If one of us lost our job now we could cope, but if rates went up to 10% and one of us lost our job we'd have to borrow about £500 from family every month..... not something we'd like to do of course.

You can but they will charge you about 3%

if your mortgage is 4%+ then you would be better off paying and with only 10% deposit your rates will be quite high (relatively)

you sound as though you are looking at a reasonable mortgage load for your income, much better than most i know!

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You can but they will charge you about 3%

if your mortgage is 4%+ then you would be better off paying and with only 10% deposit your rates will be quite high (relatively)

you sound as though you are looking at a reasonable mortgage load for your income, much better than most i know!

Do you mean if mortgage rate is 4% plus, then paying a 3% fee on overpayment actually works out the cheaper (and better) option long term?

My calculations are based on a £160k mortgage. Our combined take home is about £2300 per month, if we stopped all non-essential outgoings we'd have £1500 a month left for mortgage payments. We have an emergency fund of 3 months salary sitting in a cash isa too.

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we did about 10k average overpayments, the BBC calculator is fairly accurate.

Overpaying is a real slog in the 8-9 years we had 2 bad years low pay. So for a 145k place is looking like 15 years (overpaying £10k every year). £50 a month overpaying is more of a token gesture. Some mortgages allow you to borrow back your overpayments or 1 year holidays if things get bad. Although we managed on 1 salary £12k a few years back but it was hard. I am just glad its almost over because I cannot remember a time where it was common knowledge the Government is corrupt to its very core.

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If you can afford at 10% rates then you should be fairly sound. At 10% the country would be in repo chaos...

For the time being, rather than overpay I would increase your emergency fund - I've always aimed to have at least 12 months take home salary placed to one side.

Overpaying small amounts doesn't make much difference in the first few years - it's really after several years of overpayments that you start to notice the difference. If you can make overpayments once you've built your nest egg I would heartily recomend it - a lot of mortgages will allow 10% over monthly payment without penalty. If you use a modeller you'll be surprised how effective that can be.

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If you can afford at 10% rates then you should be fairly sound. At 10% the country would be in repo chaos...

For the time being, rather than overpay I would increase your emergency fund - I've always aimed to have at least 12 months take home salary placed to one side.

Overpaying small amounts doesn't make much difference in the first few years - it's really after several years of overpayments that you start to notice the difference. If you can make overpayments once you've built your nest egg I would heartily recomend it - a lot of mortgages will allow 10% over monthly payment without penalty. If you use a modeller you'll be surprised how effective that can be.

Cool. Nice to know I'm on the right tracks. Soooooo...... what does the £160k morgage get me....... aaaaah, oh dear......... sweet FA.

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If you are doing joint the risk is that only one of you may keep your job, can you afford the payments then?

4x to me joint would be pushing it or are you assuming that in 3 years your wife would be working full time would would then bring down this to say 3x joint income?

Also can you start over paying immediately? If you can't to overpay by say £50 a month regularly then I'd say you can't afford it. Overpaying will in the long run safe you thousands.

Correct....over paying or reducing the term.....stop shopping and start working to one day live. ;)

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Overpaying depends upon the mortgage. Mine is fixed and I can overpay up to £10k a year with no penalty.

At present rates, and our current income, I would expect to overpay £300 - £400 a month.... subject to the mortgage Ts&Cs of course.

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We're future FTBs, and I'm trying to work out the size of mortgage that my wife and I could comfortably repay when interest rates rise.

My wife works 16hrs a week due to young children, but in 3 years that will go up to 30 hrs a week when the kids are both at school. If we had a 3 year fix, a sudden increase in repayments when it ends could partially be absorbed by my wife's increase in take home pay.

Anyway, I've based our mortgage on 4 x joint salary, plus a 10% deposit. If the mortgage rate went up to 10% we could still pay it with moderate cut backs. Much more than that and we'd be introuble.

What are your thoughts on my calculations?

In case you think I'm trying to get the biggest proprerty we can afford, I'm actually just trying to work out if we can afford somewhere that we'd be happy to live in for 25 years!

due to several unknowns, advice is not possible....for example, your salary could be very high...

you also dont appear to say if you could actually buy anywhere.

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due to several unknowns, advice is not possible....for example, your salary could be very high...

you also dont appear to say if you could actually buy anywhere.

Actually in one of the previous posts I said our combined take home is £2300. I also said £160k won't buy anywhere at present;. But,, it's good to know what we can afford.

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