Guest Posted March 28, 2014 Share Posted March 28, 2014 The recent article on BBC News about Land Registry data said ... [it] found buyers were spending a higher proportion of their incomes on mortgages than at any time since 2005.Does anyone have a graph of mortgage repayments "as % of take home" or "as "% of salary"? What is the rule of thumb for a healthy percentage - i.e. should you spend a maxium of 33% of take home on rent/mortgage? Quote Link to comment Share on other sites More sharing options...
porca misèria Posted March 28, 2014 Share Posted March 28, 2014 The recent article on BBC News about Land Registry data said . Does anyone have a graph of mortgage repayments "as % of take home" or "as "% of salary"? What is the rule of thumb for a healthy percentage - i.e. should you spend a maxium of 33% of take home on rent/mortgage? In my youth, around thirtysomething percent was considered the norm in more developed countries like Germany and Switzerland. But not remotely possible in the UK, unless perhaps you had social housing or BoMD. I think the UK is more in line with that figure these days. Well, excluding London at least. Quote Link to comment Share on other sites More sharing options...
Guest Posted March 28, 2014 Share Posted March 28, 2014 In my youth, around thirtysomething percent was considered the norm in more developed countries like Germany and Switzerland. But not remotely possible in the UK, unless perhaps you had social housing or BoMD. I think the UK is more in line with that figure these days. Well, excluding London at least. Cheers. I am facing another wave of being told by family members "I don't know why you don't just buy somewhere". I'm trying to show them that although mortgage payments would currently be 33% approx of our income, even a small rise in interest rates would send them toward 50% of income.... which I see as very risky. Quote Link to comment Share on other sites More sharing options...
whitemice Posted March 28, 2014 Share Posted March 28, 2014 As little as possible. Houses don't cost that much to build, and don't get consumed as you use them. As technology improves, the quality should be going up and the costs (as a percentage of income at least) should be going down. Tying the cost of a product to someones income is the first sign of monopoly thinking. http://voices.yahoo.com/the-history-behind-debeers-diamond-cartel-12119.html Quote Link to comment Share on other sites More sharing options...
Guest Posted March 28, 2014 Share Posted March 28, 2014 As little as possible. Houses don't cost that much to build, and don't get consumed as you use them. As technology improves, the quality should be going up and the costs (as a percentage of income at least) should be going down. Tying the cost of a product to someones income is the first sign of monopoly thinking. http://voices.yahoo.com/the-history-behind-debeers-diamond-cartel-12119.html What an utterly vacuous answer. So the most I should borrow is as little as possible. Great, I'll let my wife know. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted March 28, 2014 Share Posted March 28, 2014 What an utterly vacuous answer. So the most I should borrow is as little as possible. Great, I'll let my wife know. Wouldn't say vacuous. Idealistic yes, but we live in a rentier state, so borrow as much as you can. It used to be 25-30% of the main earners income. However "its different now." Quote Link to comment Share on other sites More sharing options...
longtomsilver2 Posted March 28, 2014 Share Posted March 28, 2014 If they say you are in fuel poverty when >10% of income goes on heating then I'd say 20% max (double income). Our own personal circumstances show we are lucky as it's less than 10% for us (9%) and will be ~5% when we remortgage later this year. True happiness. 33% is usury. Quote Link to comment Share on other sites More sharing options...
monks Posted March 28, 2014 Share Posted March 28, 2014 Never really understood the point of applying a %age to costs such as mortgage. Firstly it makes no discrimination between someone on £10k a year and someone else on £150k. Then personal circumstances, eg is it a single 30 year old or one income family household. Then theres additional expenditure, attitude to thriftiness etc (there are plenty of people I know who appear to be paying 2-3 times what I do for insurances, utility bills etc), discretionary spending, season tickets, gym memberships, car running costs, holidays, existing debt / interest payments, what stage of your career are you at (any pay rises / cuts on the horizon)?? Sorry, but its pointless saying 25-30% is the acceptable figure Quote Link to comment Share on other sites More sharing options...
Reck B Posted March 28, 2014 Share Posted March 28, 2014 Depends how much you earn... As we all have fairly fixed, unavoidable essential expenditure such s food, utilities and council tax I'd say that higher earners ought to be able to service a higher percentage of income on mortgages. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted March 28, 2014 Share Posted March 28, 2014 Typically, spending around a third of your income on rent/mortgage repayments has been considered the norm in terms of being able to comfortably pay whilst leaving you enough money to live on and save. Of course, in the UK anything goes these days .. the more the better I expect. The GB public just lurve their pricey housing. If you've managed to secure a house that costs you 6x your annual salary just think of the extra money you will be making on it as the price shoots up for ever and ever more. Quote Link to comment Share on other sites More sharing options...
fluffy666 Posted March 28, 2014 Share Posted March 28, 2014 What an utterly vacuous answer. So the most I should borrow is as little as possible. Great, I'll let my wife know. Let's put it like this. A very well appointed semi-detached house might cost 50-60k all in. Detached.. perhaps £100k. McMansion.. £200k. 2 bed terrace, perhaps £20-30k So if we match then against income, assuming that a single average income should buy a semi-detached house.. Mortgage would be 2x salary. Roughly £300 per month against £1500 per month take home, so 20%. Any more just means you are paying extra money for a patch of mud.. Quote Link to comment Share on other sites More sharing options...
campervanman Posted March 28, 2014 Share Posted March 28, 2014 The recent article on BBC News about Land Registry data said . Does anyone have a graph of mortgage repayments "as % of take home" or "as "% of salary"? What is the rule of thumb for a healthy percentage - i.e. should you spend a maxium of 33% of take home on rent/mortgage? Many other economies have that as a figure but in the UK it seems that anyone proposing such a restriction would be accused of wanting a nanny state. Quote Link to comment Share on other sites More sharing options...
whitemice Posted March 28, 2014 Share Posted March 28, 2014 What an utterly vacuous answer. So the most I should borrow is as little as possible. Great, I'll let my wife know. True, but so was the question. If I buy a beach hut in some far away part of the world and trade shares from my laptop, my housing costs will move towards zero. Housing in the UK seems to be some kind of tax, which you pay to the landlord. Who typically pays through the nose for restricted land, paid for with state subsidized money from the bank. The actual house may not have seen anything more than cosmetic work on it in a hundred years. The question is really about social norms for your age group, as many boomers have been paying close to zero for many years. Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted March 28, 2014 Share Posted March 28, 2014 Let's put it like this. A very well appointed semi-detached house might cost 50-60k all in. Detached.. perhaps £100k. McMansion.. £200k. 2 bed terrace, perhaps £20-30k So if we match then against income, assuming that a single average income should buy a semi-detached house.. Mortgage would be 2x salary. Roughly £300 per month against £1500 per month take home, so 20%. Any more just means you are paying extra money for a patch of mud.. Where did you get those figures from? It's a long way from my experience and I'm as mean as it gets paying for builders and materials. I'd add at least 50% to all of those to meet current building regs (and doing a lot yourself), +100% if you get someone else to project manage and do everything for you. Quote Link to comment Share on other sites More sharing options...
underscored Posted March 28, 2014 Share Posted March 28, 2014 Let's put it like this. A very well appointed semi-detached house might cost 50-60k all in. Detached.. perhaps £100k. McMansion.. £200k. 2 bed terrace, perhaps £20-30k So if we match then against income, assuming that a single average income should buy a semi-detached house.. Mortgage would be 2x salary. Roughly £300 per month against £1500 per month take home, so 20%. Any more just means you are paying extra money for a patch of mud.. What country are those numbers from? 1 bed flats start at 120k near me. Quote Link to comment Share on other sites More sharing options...
TheCountOfNowhere Posted March 28, 2014 Share Posted March 28, 2014 I know the answer to this one....as little as possible. Quote Link to comment Share on other sites More sharing options...
martymcfly Posted March 28, 2014 Share Posted March 28, 2014 What country are those numbers from? 1 bed flats start at 120k near me. They're build costs, not market prices. Quote Link to comment Share on other sites More sharing options...
FallingAwake Posted March 28, 2014 Share Posted March 28, 2014 OK, so husband and wife get out a mortgage that works out at 33% of their income. Great. Husband loses his job. What % is it NOW? Or wife (or husband) quits job to look after the new child. What % is it NOW? What's the point of looking at a statistic that is only valid at the moment a mortgage is taken out? Surely it should also take into account, whether it could cope with sufficient change, over a 25-30 year period. It also assumes their jobs haven't been outsourced to robots before 2039 Quote Link to comment Share on other sites More sharing options...
Cinzano Bianco Posted March 28, 2014 Share Posted March 28, 2014 Let's put it like this. A very well appointed semi-detached house might cost 50-60k all in. Detached.. perhaps £100k. McMansion.. £200k. 2 bed terrace, perhaps £20-30k Materials only, maybe... Quote Link to comment Share on other sites More sharing options...
oracle Posted March 28, 2014 Share Posted March 28, 2014 The recent article on BBC News about Land Registry data said . Does anyone have a graph of mortgage repayments "as % of take home" or "as "% of salary"? What is the rule of thumb for a healthy percentage - i.e. should you spend a maxium of 33% of take home on rent/mortgage? basic rule of thumb: 30-35% mortgage/rent 10% anciliiary housing costs( council tax, water,electricity gas) 10% fuel for car/transport costs 15% food 30% over to cover day-to-day costs,and jollies. so taking average salary of £26000p.a( £1700 pcm net) = £450-500pcm rent £170 pcm council tax,gas,electric,water) £170pcm transport £200 pcm food. £600-650pcm for day to day expenses/maintenance and entertainments (this would also include things like tv licence, sky subscription,mobile phone contract, VED and car repairs if needed,broadband etc)etc. I would suggest that the first 2 are rather conservative at the moment, typically in SE,the rent/mortgage would typically be in the region of £650, and ancilliary housing costs would be £250. Quote Link to comment Share on other sites More sharing options...
alexw Posted March 28, 2014 Share Posted March 28, 2014 What an utterly vacuous answer. So the most I should borrow is as little as possible. Great, I'll let my wife know. By little as possible I expect he means falling general prices as happens with virtually everything else as productivity rises. If we can produce houses more efficiently now than in the past, and I'm sure that must be the case, then why on earth should the price rise? Should it not fall? Thus if housing cost 33% of yearly average income in 1970 then due to productivity rises it should now be a lot less than that. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted March 29, 2014 Share Posted March 29, 2014 Thus if housing cost 33% of yearly average income in 1970 then due to productivity rises it should now be a lot less than that. I expect it would, if you take like-for-like. If you had no assets, that would of course mean sharing with strangers. And somewhere with pressure on housing (like London), sharing not merely a house (as in a modern regulated HMO) but a room. You'd be lucky if the fridge (shared with many strangers) worked, let alone the hot water. You wouldn't have heating or double-glazing, and a cold snap would mean frost indoors. Productivity may have risen, but so have expectations! Quote Link to comment Share on other sites More sharing options...
Venger Posted March 29, 2014 Share Posted March 29, 2014 Cheers. I am facing another wave of being told by family members "I don't know why you don't just buy somewhere". I'm trying to show them that although mortgage payments would currently be 33% approx of our income, even a small rise in interest rates would send them toward 50% of income.... which I see as very risky. How much in percentage terms of their income is spent servicing a mortgages, do you think? What Percentage Of Income Should Be Spent On Housing? It's easy to lecture other people what income/debt to spend on housing, when your own mortgage debt has been inflated into almost nothing vs HPI leaving you with massively valued house. Followed up by house price bail-in intervention then measures for even more potent hpi, and the general belief by all home-owners hpi will always continue and no crash. London full of such homes / valuations.... http://www.dailymail.co.uk/news/article-2592033/Put-pebble-dashing-house-Council-orders-mother-remove-smooth-facade-2-6m-home.html Quote Link to comment Share on other sites More sharing options...
MrPin Posted March 29, 2014 Share Posted March 29, 2014 I know the answer to this one....as little as possible. Some people would have us believe the opposite. Quote Link to comment Share on other sites More sharing options...
Millaise Posted March 29, 2014 Share Posted March 29, 2014 I've posted this before, but Mrs Beaton's book of Household Management mentions an eighth to a tenth. It clearly isn't a third to a half as it would be for me today . Rent. Some authorities say one-tenth, others one-eighth, of the total income should be spent in rent, but so many circumstances such as the size of the family, its position, and the locality in which it is necessary to reside affect this estimate, we are disposed to think it is a question best left for careful consideration in each individual case. When facing the problem of taking a new and larger house, one should bear in mind that the mere increase in rent does not represent the whole of the extra, expense that will have to be borne, for besides rates, which of course increase proportionately, a larger house seems invariably to increase expenses all round. Yet it is not easy to give explicit reasons for this undoubted tendency. I think this came from a later 1915 edition, although I can't find it to check, but it still stands that for an appropriate house for your standing, a lot less of your income was required. Quote Link to comment Share on other sites More sharing options...
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