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Main Discussion

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Posted - 20 April 2017 11:35
have i got this right:

5.5 your net is around 10 times your gross
with interest rates at 2% that equates to a monthly interest payment equal to 20% of your take home.
Posted - 20 April 2017 11:45
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No I could not
Posted - 20 April 2017 11:48
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The higher your disposable income, the less that ratio scares you.
Posted - 20 April 2017 11:50
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Wait, is the 5.5x your net for a mortgage, then?

Bugger. On the basis of the OP I'd found a lovely looking 3 bed semi in Deptford for £750k.
Posted - 20 April 2017 11:52
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seems i wasnt

earn 100k
take home 55k
borrow 550k (ie 5.5 x 100k)
annual interest is 11k (at 2% of 550k))
cost is 20% of take home salary
Posted - 20 April 2017 11:53
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presumably they work it out on gross
Posted - 20 April 2017 11:57
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Parsnip - you seem to be forgetting you have to repay the mortgage not just the interest.

Even assuming a 30 year term, you will have a £2033 monthly payment, so £24,396 pa to pay. or a bit over half of net income.

Seems toppy to me, but I live in Manchester.
Posted - 20 April 2017 11:57
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I like to have a low overhead. Helps that we had a pretty hefty deposit, but that's irrelevant, really. I don't particularly wish to mortgage myself up to the eyeballs.
Posted - 20 April 2017 11:57
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I would still only have 150k. that's not even enough for a 25% shared ownership place
Posted - 20 April 2017 11:58
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If you wanted to pay off in 20 years you're looking at £2789 per month!!
Posted - 20 April 2017 12:03
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i wasnt really forgetting - i was showing the cost of borrowing
the rest of the money that you might pay is technically saving / accumulating - as you are reducing the debt.

i would advocate getting the smallest loan and paying it off as quickly as possible
but it all depends on circumstances
Disaster Zondi
Posted - 20 April 2017 12:05
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5.5x on full interest only? Good luck finding a lender who will do that without a huge deposit and enough wealth elsewhere to cover the loan.
Posted - 20 April 2017 12:08
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5.5x is a bit toppy... you don't need that big a change in interest rates for it to be quite punitive quite quickly.

I'd do 5.5x if I was <35and still expecting lots of earnings upside over the next few years to lower the multiple.
Posted - 20 April 2017 12:49
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Posted - 20 April 2017 13:05
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Abs, £150k I more than enough for a 25% shared ownership. Mine is much less. A friend is even less again.
Posted - 20 April 2017 13:22
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The LTV will be very low. Probably 65% or below.
Posted - 20 April 2017 13:49
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Meh- it makes no never mnd I am 54 this year tool old for a motrgage anyway

Also even if it was less, the service charge and the rent on the remaiining 75% mean I could not affoird it

That's the con about shared ownership, you will never own 100%
🐝 buzz
Posted - 20 April 2017 14:16
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"earn 100k
take home 55k"

Someone needs a better accountant. Or a better payroll team. That's about 10k short.
Posted - 20 April 2017 16:18
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I think ours was 4x (possibly 5x) the day Black Monday when interest rates rose from 10% to 12% and the same day to 15%. We had a repayment mortgage. However I don't regret it. I always knew I could always worker than most people and take on more work and earn more and more. It was not as if I was going to stay on the same income forever. It paid off.
Posted - 20 April 2017 18:28
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I think around 6x salary is manageable, but only if fixed and spread over a long term, e.g. 30/35 yrs.
Posted - 20 April 2017 18:35
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Good for you Lydia