lynnbrooks

Just wanted to get an idea of What proportion of peoples wage goes on mortgage to see if there is a pattern.
I get the feeling that some are lucky enough to only have 10-15% of their wage goes on the mortgage.
Others have 50%.
Is the average about a quarter of the family income going on mortgage?
Lynn

Tiggs+Graz

Due to the rapid rise in UK house prices in the last few years I think that for most people in the uk their mortgage commitment depends on when they bought their house.

We bought ours before the house price boom so ours is about 20% or our income. If we bought now then we would probably be more like 50%.

Good idea to get a comparison between uk and oz!

Tiggs + Graz

Hels

We have just taken out a mortgage here in Oz and its worked out at just under 25% and that is with a 40% deposit. If we pay the full 25% of our income we are actually putting around $200 per month above the actual payments...


Hels

brisnick

i don't have a home loan yet, but i worked out it would be 58% of my wages in repayments.

and that would make me mortgage stressed (defined as over 35% of income).

Shellfish

A third if we are only taking my husband's salary into account which is why while I am working also, we are going to pay in as much as we can

andrew63

52% of my salary. Mortgage stressed is a good word! It's tough.
With wife's salary, less than 25% and quite manageable.

We would have been in the same boat if we never emigrated as it was time to move homes anyway and we would have maxed the mortgage anyway. Much prefer living frugally here than in the UK.

Andrew

steve99

We're probably running at somewhere around 45% going into the mortgage, this includes a couple of hundred overpayment each month and probably twice a year we make a couple of one off overpayments of around $1K each.

I think the OZ perception of having a mortgage is pretty different to that I was used to the in UK, they seem much more conservative in what they will borrow over here, our view when we got here was property prices are only going to rise, were still fairly young and our incomes should only really go up (all though with my recent career change thats not totally true!)
So we found out what the max we could borrow was (it was a ridiculous amount) we then decided where we wanted to live and bought the best we could find for a reasonable price, probably ended up borrowing about 60% of what we could of.
So at the end of the day we would have a higher than average mortgage, but we know now(and were confident at the start) that our property has probably gone up in 3yrs by over $300K. So the amount going to the mortgage is pretty irrelevant. in my mind (back then) the bigger the mortgage the higher the likely increase in property price.

People will respond to you with varying percentages, im not sure how you take into account individual circumstances and how they effect there income, its all well and good if someone only has 20% going to there mortgage, but if they only take home $3K per month ($2100 left ) they've got less disposable income than someone taking home $6K per month and putting 50% to there mortgage. So in my view the person paying 50% to their mortgage is the lucky one not the one only putting 20% towards it...
I would imagine Kids would have a big impact on what people allocate to their mortgage.
And for those coming from the UK, what stash of cash there bringing with them will play a big part in their property/mortgage decision.
Steve

TrickyTree

We should pay 25% but at the moment it is around 30-35% while we can afford it and are earning good money. I will also add to be aware that the banks seem to lend you any amount you want compared to when I got a mortgage in England which was a strict 3 - 4 times my yearly income (think we got offered up to double this with commonwealth and aussie).

TT

hawk2005

Don't have one - sold up in the UK (London) just before the current house price crash started and bought a fair sized place in Melbourne with the equity.

I feel sorry for people trying to sell property in the UK, prices have a long way to fall yet before affordability returns to the market.

ozzieeagle

I have a line of credit, taken out against my house. It's quite a common form of loan here in Aussie. I enquired about the availablity of them in the UK, and not many people seemed to know about it.

Currently the LoC extends to 1/3rd of the banks estimated valuation of my house, runs at 7.27 pct per annum, has minimum fees, has no payout date. The only stipulation being that one must pay the interest due each month.

Currently I owe approx 40 pct of the value of the line of credit or about 1/8th of the value of my house. Therefore the Minimum payment I have to make is about 7.5 pct of our income. I vary the payment each week, and normally pay about 30-40 pct of our income, giving a payout date of about 18months to 2 years. Although whilst we are working we never intend to pay it out. and am making big payments at present to reduce the intrest to a negligible amount, of say about 20-40 dollars per week.

The reason I use a line of credit, is if we ever need a big ticket item, like a car, renovations, oseas holiday (which we recently took) Furniture, orthodontics, or even investment property. About 5 years ago I bought a Holiday on site caravan with it and an outdoor spa about 3 years ago. We could do with a decent 2nd Car, as our second car is a datsun 120y about 30 years old, but I'm not prepared to make interest payments on a depreciating item, and will get a 2nd car when the Datsun dies.
We never have to seek out loan approval as it is sitting there and establishment fees etc have already been paid. It's a very useful tool for someone that has a lot of equity in their house. Although one has to be very disciplined in using it, therefore if one is the kind of person that blows out credit cards steer clear. I'm very tough in it's payments, much to my wifes chagrin.

We purchase everything on credit cards, using flybuys points as a bonus, and pay of the credit cards interest free each month out of the line of credit. It costs 70 Aud per year in admin fees to run. plus 7.27 pct interest on the outstanding balance that is calculated daily, all our income is paid directly into it.

Do these loans exist in in th UK ?

Shellfish

Hi Ozzieeagle

Can you tell me which credit card you use that allows you to go into credit? We have looked here but haven't been able to find one,

Thanks

Hels

Shell, do you mean which mortgage allows you to go into credit?

Alot of them these days allow you to access the equity like a line of credit using a credit card.

My sister has one of these mortgages and the only card she can use is a Diners Club and hardly anyone accepts these.

She is in the process of changing her Mortgage back to a "normal" one as she was finding although pretty good with money and (compared to me) disciplined...not nearly enough. They just dont seem to be getting head with paying off their house.

We opted for a mortgage that gives you access to any extra money we put into it only. So while we are in a good position to put some good money off our mortgage we will do and can at any stage in the future access it again. However we never have the temptation of dipping into the other equity we have in the house. I am a shocker with money and need all the help I can get stopping myself from spending it if its there...

MrsDagboy

We have a line of credit too, only $20K, against our investment property. We also pay our credit cards off each month, but dont use the LoC to do it. Why do you use the LoC, is it just so that the interest is much lower ie 7% interest instead of the 17% for the CC?

lynnbrooks

Thanx for the replies so far,keep them coming...
In all your opinons,with the market values of houses getting more expensive(it seems to be in Perth for instance) would people recommend to purchase a less expensive house with lower % payments as 1st time buyers in a new country or stretch the budget a bit to get a house that you know is in a area that while it's expensive,will only go up in value?
Lynn

Nicstids

Here in the UK ours is 8%. Mind you, we have been overpaying for a few years now so that has brought the percentage right down. When we bought our house nearly 10 years ago, our mortgage was just over £100k and I remember friends being really concerned that we had over-stretched ourselves. How times have changed!

Hoping that we will be mortgage free on Oz but I am trying to persuade hubby that it would be better to get the "perfect" property and have a small mortgage than compromise on the house we buy......