What % of your income do you pay on mortgage?
- Thread starter meandu229
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Depends on what mortgage product you have. Mine is a lifetime tracker at base rate +0.59% (so currently 1.09%) meaning even with the all-time low ISA rates, I am still better off putting into ISA instead of overpaying the mortgage. Even if(when) the base rate rises, I suspect ISA rates will also rise i.e. the best buys will remain more than 0.59% above base rate.
Soldato
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0%. My tenants in other properties will be buying my new house for me. Assuming other properties stay occupied, maintenance is minimal (just had a big outlay so should be fine for a while), and interest rates don't rise massively.
Letting properties is not as easy as some think and worked super hard (with related stresses) and made various sacrifices to get into a decent situation.
Letting properties is not as easy as some think and worked super hard (with related stresses) and made various sacrifices to get into a decent situation.
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Soldato
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Scott, have you not considered reversing that? Depends on your tax situation but the income you generate from your rented property is taxable. So having a larger mortgage on the rented property and lower mortgage on your residential can be beneficial.
QUite impressed by the numbers here with low % of income mortgages, unless it's only those who are willing to respond
.
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Soldato
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I think it depends on your salary. Obviously someone under £25k on a single person mortgage couldn't get those kind of rates. But if your on £100k+, I reckon it would be fairly easy to get those kind of rates.
Ahh that is a good point. Me and my partner are in the process of potentially looking for a mortgage as FTB's but I'm trying to get an idea in my head of repayments for either just me or for both of us depending on the amount a lender would consider lending us.
It's a bit of an odd situation where I'm working full time on a decent wage while my partner is technically working on a zero hours contract but still working full time (she has flexibility to work as many hours as she wants per week but realistically both her and the employer prefers regular 9-5. Why they don't just make it a full time position, I don't know!
). As you can imagine this makes mortgage lenders a bit twitchy when talking about joint mortgages! With that in mind we're considering just doing it on my salary if possible with anything she brings in as excess. We've got a good chunk of deposit and are looking at modestly priced houses for our area with the view to not move again for some time if we can help it (circumstances allowing obviously).
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Soldato
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Ahh that is a good point. Me and my partner are in the process of potentially looking for a mortgage as FTB's but I'm trying to get an idea in my head of repayments for either just me or for both of us depending on the amount a lender would consider lending us.
It's a bit of an odd situation where I'm working full time on a decent wage while my partner is technically working on a zero hours contract but still working full time (she has flexibility to work as many hours as she wants per week but realistically both her and the employer prefers regular 9-5. Why they don't just make it a full time position, I don't know!
You should be ok, I was looking for mortgages and got accepted on several for 30% of my salary to repay (post-tax). However, in the end I lent it from my dad. I was actually told when I was looking at mortgages is that if I had a partner who was unemployed, I would actually be offered a bigger amount of money and get a better rate, as they had 'potential' to earn money. So I would assume, that as long as you could 'technically' cover the mortgage on your own salary, you will be completely fine.
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Well that gives me more hope
I've got a few calls to make next week so we'll see what happens
Soldato
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There's one thing paying x% of your net income, but the key thing is how much is left over at the end of the day. 40% on £20K is quite a different prospect to 40% of £100K
Mortgage lenders still look at roughly the same salary multiple (3-4x) at higher salaries. People on high salaries can be risky customers as their income is less likely to be predictable (bonuses, self-employed income, etc.).
Very true, although those on higher salaries also tend to have higher other financial commitments too, although some may of course be discretionary.
Although we were not married at the time, and had no plans to, we decided to borrow and buy our house very much as a couple. For security, we worked out that our own comfort zone was that we could continue to repay the mortgage if one of us lost our job. It would be horribly painful and no fun at all but we'd hold on to the house. That might be over cautious, but I used to be a financial adviser and she's an accountant - both of us prefer to mitigate risk where we can!
If things are stable for a few years they definitely get easier, with pay rises and bonuses etc. Having very low, stable interest rates has also helped in the past few years, although I think everyone expects that these will start to creep back up as early as the end of 2014.
Soldato
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That's the advice I'd give to couples anyway tbh. Always make sure that if something happens, one of you on your own could pay it off (obviously it would be tough but still) and that as there will be two of you earning, try to pay it of bits early as and when.
It's a little different for me, as I'm doing it alone currently, but fortunately its a lend from my dad rather than a mortgage. I've kept aside savings equivalent to roughly one years salary, so if the worse did happen I've got some backup/coverage.