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Mortgage - Salary ratio

Mortgage - Salary ratio

Old Oct 21st 2007, 10:32 am
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Default Mortgage - Salary ratio

Roughly how many times your salary are banks prepared to lend u? What is the norm?

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Old Oct 21st 2007, 10:58 am
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Default Re: Mortgage - Salary ratio

It works on broadly the same principles as in the UK. People do not talk so much about 3.5 x salary - more in terms of ability to repay. But you end up in the same place with the same logic.
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Old Oct 21st 2007, 12:42 pm
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Default Re: Mortgage - Salary ratio

Originally Posted by Gav_71 View Post
Roughly how many times your salary are banks prepared to lend u? What is the norm?

Gav
depends how much you are earning. If you are earning above £100,000 then 4.5x your salary is a possibility. You really need to shop about for a good financial advisor who knows how to get you the best deals.
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Old Oct 21st 2007, 2:33 pm
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Default Re: Mortgage - Salary ratio

We make about $110k and were recently approved for $540k. We have no other debts but do have children. You're best to work out what YOU think you can afford, because there is absolutely no way we could afford the repayments on $540k!
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Old Oct 22nd 2007, 1:06 am
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Default Re: Mortgage - Salary ratio

This is so true, the banks here will lend you massive amounts and it really is up to you to do a detailed budget and work out what you can afford. We have a combined income of $325K and the banks were prepared to lend us $1.5 million (gives me nightmares thinking of that level of debt). We opted to borrow $650K as we wanted money left over for holidays, hobbies etc rather than ploughing it all into a bricks and mortar.

Personally speaking most Aussies we have met over here (Sydney) seem to have a much more relaxed viewpoint on debt and have higher mortgages to salary ratios than the folks we knew in the UK (London). Could just be the people we know though.....
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Old Oct 22nd 2007, 1:14 am
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Default Re: Mortgage - Salary ratio

Originally Posted by Dorothy View Post
We make about $110k and were recently approved for $540k. We have no other debts but do have children. You're best to work out what YOU think you can afford, because there is absolutely no way we could afford the repayments on $540k!
It's mad isn't it! Out joint salary isn't that high, but we have large deposit, which I think is also a factor in how much they lend you (according to our FA) When we were told what sort of money we could borrow, I nearly fell off my chair... all good & well borrowing it, but would we be able to afford to 'live' ??!!
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Old Oct 22nd 2007, 1:23 am
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Default Re: Mortgage - Salary ratio

The bank just decides what is the most you can afford to payback, it's then upto you to budget and decide what quality of life you want.

You could probably afford to replay that but you would have to give up all your luxury items

Problem is Debt to a lot people is like a cliff to a lemming

Originally Posted by Dorothy View Post
We make about $110k and were recently approved for $540k. We have no other debts but do have children. You're best to work out what YOU think you can afford, because there is absolutely no way we could afford the repayments on $540k!
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Old Oct 22nd 2007, 1:23 am
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Default Re: Mortgage - Salary ratio

Originally Posted by charb View Post
It's mad isn't it! Out joint salary isn't that high, but we have large deposit, which I think is also a factor in how much they lend you (according to our FA) When we were told what sort of money we could borrow, I nearly fell off my chair... all good & well borrowing it, but would we be able to afford to 'live' ??!!
We have NO deposit and they were still willing to give us this amount of money. It's really crazy here. We've decided not to buy for another couple of years until we either buy the house we're renting or find something that we absolutely love and have to have.
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Old Oct 22nd 2007, 5:42 am
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Default Re: Mortgage - Salary ratio

Originally Posted by Dorothy View Post
We make about $110k and were recently approved for $540k. We have no other debts but do have children. You're best to work out what YOU think you can afford, because there is absolutely no way we could afford the repayments on $540k!
Hi Dorothy,

So how much would the repaymeny $540000, would be if you know?
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Old Oct 22nd 2007, 6:21 am
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Default Re: Mortgage - Salary ratio

The banks will lend you a huge amount of cash if you fall into the right category. We have no debts and no kids and were offered close to $900,000 (combined salary of $130,000).
We couldnt afford to live with a mortgage like that so we borrowed less than a third of that total. Take the figure they offer you with a huge pinch of salt do your maths to what you can pay back and stick to that figure.

Originally Posted by Gav_71 View Post
Roughly how many times your salary are banks prepared to lend u? What is the norm?

Gav
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Old Oct 22nd 2007, 7:17 am
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Default Re: Mortgage - Salary ratio

Originally Posted by chris and farideh View Post
Hi Dorothy,

So how much would the repaymeny $540000, would be if you know?
Approximately $2500 per fortnight at the 8.8% interest rate we were quoted. Maybe a little less if we shop around, but at that repayment amount, it's $5000 per month, which is almost all of our take home pay. How in the hell do the banks expect we could do things like eat or afford to get to work?
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Old Oct 22nd 2007, 3:07 pm
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Default Re: Mortgage - Salary ratio

Originally Posted by Dorothy View Post
Approximately $2500 per fortnight at the 8.8% interest rate we were quoted. Maybe a little less if we shop around, but at that repayment amount, it's $5000 per month, which is almost all of our take home pay. How in the hell do the banks expect we could do things like eat or afford to get to work?
OMG, I cant believe its that high, defiantly I'm sending the whole family to work.
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