Can I afford a mortgage?

aa6972

aa6972

aa6972

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Can the wise OCUK please check my maths?

So I earn around 16k PA after tax, have around 50k saving.

4x the Annual salary for the mortgage, thats 64k,

it means I can buy a house = 114k - right?

mortgage at 3.5% for 20 years = £371 a month?

And in your experience, it doable for a single person, no kids, normal lifestyle?

Thanks guys :)
 
Pretty sure they calculate it on 4x gross salary, so it would be closer to £76k mortgage if you're on £16k after tax (~£19k gross)

Could be affordable, but completely depends on what other outgoings you have (e.g. if you don't drive and live 5 mins walk from work then that's potentially an extra £2-300 "spare" every month compared to if you have to run a car and commute 30 miles)
 
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only you can really answer the question

can you afford a mortgage - well you look at the repayments and your other outgoings and make a decision... since no one else knows your other outgoings we've got very little to go on aside from:

'probably since you're single/no kids'

Do you drive a car? Do you need it every day for work? How much do you currently spend on rent each month and how much do you currently save each month? etc.. Are you in a career where you'll see some progression and proper increases in pay as your role changes rather then same role + pay increases near to inflation?
 
That's about right, mine was 50K mortgage @ 330 a month! That calculation is bout right indeed! When you say 50K saving thats a canny lump sum to put down.

However it won't be 3.5% for 20 years fixed.... at the end of the mortgage you will have to investigate new deals. May be less, may be more.
 
That sounds doable, you should get a good loan-to-value with that size of deposit. It's worth buying the best you can because the house will likely earn more than you do (not meant to sound mean, this makes it a good investment).
 
aa6972 said:
Can the wise OCUK please check my maths?

So I earn around 16k PA after tax, have around 50k saving.

4x the Annual salary for the mortgage, thats 64k,

it means I can buy a house = 114k - right?

mortgage at 3.5% for 20 years = £371 a month?

And in your experience, it doable for a single person, no kids, normal lifestyle?

Thanks guys :)
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Yes it is doable. I would work on the basis that the rate may rise and fall significantly over the life of the mortgage. However your income will also rise over the same period. What is just affordable now will be very affordable in 10 years or so.

Could you afford double the rate for a period in the future after the fixed rate period ends? Contingency.

Also budget for insurances, initial purchase costs (may be 2-3 grand) and things like white goods furniture etc. (may not need to be new).

This is a long term investment but IMO far better than just renting.
 
aa6972 said:
Can the wise OCUK please check my maths?

So I earn around 16k PA after tax, have around 50k saving.

4x the Annual salary for the mortgage, thats 64k,

it means I can buy a house = 114k - right?

mortgage at 3.5% for 20 years = £371 a month?

And in your experience, it doable for a single person, no kids, normal lifestyle?

Thanks guys :)
Click to expand...

It's a bit naff isn't it?

There are some mortgage calculators online which can provide rough values, but ultimately, irrespective of (for instance) earning £24-31k, I find my choices of property abysmally limited. The only properties available for this sort of mortgage range tend to be scummy townhouses/ex-council/student abodes.

You have a huge advantage with that £50k deposit, but be very very careful where you are dropping it on. Be absolutely sure you want to do it, and even then, weigh up the options between dropping it all, or just £20-30k of it. I've not a penny in savings - not through doing anything wrong, but moreover not having any relatives pass away with money being left. Had to provide and support my family through some difficult times, which meant that my cash vapourised! Oh, and car finance.
 
If you are dropping a 45-50% deposit down then they probably wont care what you earn, its insanely low risk for the lender.
 
LOAM said:
If you are dropping a 45-50% deposit down then they probably wont care what you earn, its insanely low risk for the lender.
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They will care as lenders must ensure borrowers only get a mortgage they can afford.

It's not just about covering themselves if the property is repossessed.
 
A good option may be an offset mortgage. You have the deposit to get you in a good LTV (Loan to Value) ratio band, but you may not need to put the whole deposit in to get it. Whatever you have left can go into a linked account, meaning you don't pay interest on that amount, as if it was dropped on the mortgage, but accessible whenever you might need it. Any other bonuses / inheritance / savings can go into the same account, and offset the interest at any time too. And your day to day pay also offsets the mortgage until you spend it.

Yorkshire Building Society currently do a 10 year fixed offset. Could be brilliant for what you need. But try speaking to a financial adviser anyway, as they will work out whats best for you. Although their 5 year fixed comes in at a much nicer 3.09% (compared to 4.54% for the 10 year), and only £311 per month for a £115k house over 25 years.
 
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Subtract any loans/debts from your equation, e.g. Student loans. And subtract any fixed monthly outgoings, e.g, monthly child support to ex.
 
LOAM said:
If you are dropping a 45-50% deposit down then they probably wont care what you earn, its insanely low risk for the lender.
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Your demonstration of how little you know about the mortgage market is astounding. I would suggest you resist from posting anything more in this or any other mortgage related thread!
 
Having bought a house 3 months ago, it's important to accommodate for any home improvements for when you move in.

I'm fussy though, and as a result it's cost me an arm and a leg so far :p
 
Ciao bella said:
£371 a month that would be an interest only repayments?
repayment would be about £670 a Month or am i missing something.
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You're missing something.

They're only looking to borrow £64k, not £114k.

Seems a reasonable punt to me, assuming you can find something for £114k that is.

4x calc is usually on gross not net, so you'll be looking at a top end of £130k total (with 80k mortgage), which should still be within budget. 80k over 25 years @ 3.5% is about £400 a month, which is still only about 33% of your net income.

Just make sure you budget in ALL your outgoings, and I mean ALL of them.
 
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