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Assuming a 60k deposit (so 340k mortage), you could get a 2 year fixed mortgage at 1.53% so your repayments will be £1,178.31. £70k post-tax is around £48k so

by ig1 9y ago

Assuming a 60k deposit (so 340k mortage), you could get a 2 year fixed mortgage at 1.53% so your repayments will be £1,178.31. £70k post-tax is around £48k so £4k/month so the mortgage will take around 30% of your take-home pay which is a fairly standard ratio.

mtkd 9y ago
long term average mortgage interest rates are over 5% - if you're working in a STEM field what thought process leads you to blowing 1+ years net salary on a deposit for a 2yr fix at 1.53% with a 20+ year commitment?
- ig1 9y ago
  Mortgage rates are fundamentally unpredictable, you can't assume that they'll revert to a 30 year average. However what mortgage lenders do is "stress test" at 5%-6.5% that means they evaluate if you'd be able to afford to pay the mortgage + cover your essential costs (food, energy, etc.) if rates rose to those levels. It's essentially a worse-case assumption to ensure you wouldn't be bankrupt if that happened, not whether you'd be comfortably off at that level. If interest rates were to rise in 5-10 years time don't forget you could also remortgage to a longer time period to significantly reduce monthly payments if you needed to. Rates aren't going to jump overnight; if they rise it'll likely be a long slow-rise by which point you should have already paid down a meaningful percentage of your mortgage.
chrisseaton 9y ago
I don't think someone on £70k, paying rent, would be able to build up that kind of deposit.
- user5994461 9y ago
  You can in a few years if you flatshare alone, or if you live as a couple without children and double income.
FireBeyond 9y ago
Where are you renting near London (so you can work that same job) that you can both pay that AND save 60K? Considering that looking at similar 3 bedrooms to those suggested for purchase gives rates of around £1350 / month. Even putting aside another 1/3 of your income (high) still leaves you looking at 5+ years to save a deposit.
- ig1 9y ago
  £70k = 48k post-tax 60k/(48k*1/3) = 3.75 years And that's assuming you start from zero savings.

by ig1 9y ago

mtkd 9y ago

long term average mortgage interest rates are over 5% - if you're working in a STEM field what thought process leads you to blowing 1+ years net salary on a deposit for a 2yr fix at 1.53% with a 20+ year commitment?

ig1 9y ago
Mortgage rates are fundamentally unpredictable, you can't assume that they'll revert to a 30 year average. However what mortgage lenders do is "stress test" at 5%-6.5% that means they evaluate if you'd be able to afford to pay the mortgage + cover your essential costs (food, energy, etc.) if rates rose to those levels. It's essentially a worse-case assumption to ensure you wouldn't be bankrupt if that happened, not whether you'd be comfortably off at that level. If interest rates were to rise in 5-10 years time don't forget you could also remortgage to a longer time period to significantly reduce monthly payments if you needed to. Rates aren't going to jump overnight; if they rise it'll likely be a long slow-rise by which point you should have already paid down a meaningful percentage of your mortgage.

chrisseaton 9y ago

I don't think someone on £70k, paying rent, would be able to build up that kind of deposit.

user5994461 9y ago
You can in a few years if you flatshare alone, or if you live as a couple without children and double income.

FireBeyond 9y ago

Where are you renting near London (so you can work that same job) that you can both pay that AND save 60K? Considering that looking at similar 3 bedrooms to those suggested for purchase gives rates of around £1350 / month. Even putting aside another 1/3 of your income (high) still leaves you looking at 5+ years to save a deposit.

ig1 9y ago
£70k = 48k post-tax 60k/(48k*1/3) = 3.75 years And that's assuming you start from zero savings.