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  1. #1
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    Default House loan - what percentage is reasonable/unreasonable?

    I know it depends on costs, no. of family members, etc.

    We have 4 kids. What percentage of peoples incomes do they spend on their mortgage?

    As of tomorrow we have no mortgage, but are in negotiations on a house and not sure how far to go.

    Any rough ideas would be great.

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    In rent we currently pay around 33% of df's income. I currently am not working.

    We are looking at a house to buy and with the current excellent interest rates we would be paying 30-28%.

    I personally don't fancy paying any more than that.

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    Little Ted  (07-10-2014)

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    Our mortgage is about 30% of our income, if we had different cars and dd wasn't in full time day care we could comfortably go higher, up to 50%. I don't know how well you can gauge this by % eg 30% of 100k leaves a lot less than 30% of 200k.

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    Little Ted  (07-10-2014)

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    I don't think we can go above 1/3 of his wage either, particularly when I'm not working.
    We've put one figure forward and they want $40k more. 1/3 of DH's wage would only let us put it up by another $10k.

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    DH is on a teacher's wage if that helps...so not $200k.

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    If you have any doubts don't do it. What will happen if you max the loan and rates increase?

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    Little Ted  (07-10-2014)

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    Just make sure you factor in a huge increase in rates. Current rates are at a all time low...

    Percentage is hard to tell as it depends on the size of your salary.

    I'd advise that you check your budget and how much you pent on rent for the last 12 months + how much you saved. Take 80% of that amount and that should be your maximum repayment at increase rate.

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    Little Ted  (07-10-2014)

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    We are now paying about 50% of DP BASE wage. Given he'll then also earn at least another 25k in overtime and its also not factoring in my wage either.
    Even at 50% we are quite comfortable. Mind you we only have one baby on the way. So a touch different

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    Little Ted  (07-10-2014)

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    Thank you for your input. It's good to have some different perspectives and ideas to consider. I don't want to get caught short - Could I ask where the 80% comes from?

    We've been paying off our first home loan and then our second car. Tomorrow we will be in the positives by $1k.

    We are mindful of the rates - our other loan we paid off at 7%. Would try for the 5 year fixed at the moment. Planning on going back to work in a few years as we've just had our last bub. Not counting on government payments either due to what was proposed for the budget this year and may pass through government next year! Can afford repayments as is now and should have second income before rates go up if we fix it. What do you think?

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    How long has the house been in the market for? If its a long while, it's probably just a bluff to get more money.

    One of my biggest regrets in buying my first house is not saying no. I think I could have gotten it at least 12k cheaper, considering it had been listed for a good while.

    Counter their offer with 5 or so more than your original offer and then wait I see what they counter with. If its a decent drop they may be willing to go lower again. If they stay firm on the 40 I would walk away.

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