Mortgage affordability

We accounted for a couple of percent increase but not 12% like the BBc calculator says.

I think that's based on what rates were like during the crash of the 80s? I can't see rates going that high again and certainly not at once. I may be completely wrong, but we've had a boom then an awful recession in the past 10 years and mortgage SVRs have stayed between 4% and 8% (approx) so I can't see what would cause it?

I gather the advice is not to borrow at the very top end of what you can actually afford i.e. allow for rate increases. But 12% seems a little extreme to consider.

The majority of offers I see these days have a two or three year fixed rate, with an early repayment charge limited only to the fixed rate term. Following the fixed rate term, it reverts to a variable rate, but people have the option of remortgaging, either with a different lender or just a different product with the same lender, to get another fixed rate term.

At the moment, with interest rates so low, interest rates on fixed rates are usually more expensive, but give people more security for a couple of years.

Yes I considered a couple of % extra but not so high as 12%! When I took out my mortgage a little over 2 years ago it was 3.9% fixed rate. I've now switched to variable and it's about 4.7% which has added about £65 a month to our payments. A PITA but not unaffordable, simply changes the amount we are able to save.

In the process of figuring out our own affordability for moving though so ask me again in a couple of months ?

We were very naive when we took out our Mortgage but then it was our first one and I think we just got a bit carried away. We took out a 10 year fixed rate at 5.6%! We didn’t see the market dropping like it did, in fact it was projected to go higher so at the time it seemed like the best deal. 4 years on and it’s killing us but we can finally see the light at the end of the tunnel now, we dream of being on a tracker but we can’t change it. We will just know better next time.

To be honest we didn't really consider it but then we certainly didn't stretch ourselves so would be able to manage a moderate rise, if we had to we could probably manage if our monthly payment doubled although I very much hope they don't! I don't think rates would get as high as 12%.

Pretty sure when we applied the paperwork had a what if scenario on it if the rates increased a few % & also the impact if we went onto the SVR they had at the time.

I'm from East Herts originally - I used to live in Ware which is on the mainline into Liverpool Street & it's a lovely little market town plus there are some lovely little villages round it.

'Next to' Ware is Hertford the county town which has 2 lines into Liverpool Street & Kings Cross & again lovely villages round there too.

Am I right in thinking you are from Suffolk originally? Personally I don't think you can compare Herts to Suffolk, Herts wins every time in my book!

I did this for my first one too - 10 year fixed at 8 or 9%! Rates dipped (but not as low as currently) & I actually remortgaged, increased the mortgage to cover the early redemption fees & it actually saved me nearly £200 a month & that was also going from interest only to repayment. Now I'd never fix for more than 2 years.

Thanks, folks! Yep, I agree that 12% is rather extreme, just a musing really as to how high you'd consider for affordability reasons. I think we'd go tracker for the time being. I'm sure we've covered this before but any of you willing to share your thoughts on % of income you'd spend on a mortgage? (Please don't feel you have to give specifics, I'm just pondering lots today). Do you ever think about what that % would rise to if you were down to one income for any reason?

RTE - thanks for the info, that's really helpful. Yep, Suffolk originally but can't see myself moving back. We both need a reasonable commute (easy would be even better!) in to London so Herts is a distinct possibility. Mr Stork doesn't seem to be caving to my suggestion that we buy in London, even if it's just somewhere for the next few years. It makes lots of sense financially but he's definitely in country mode now! Off to Google Ware and surrounding villages, thanks ?

We also used the BBC calculator, and did take into account the 12%. I am sure it will never happen now the Bank of England has independence, but our mortgage would still be affordable at 12%, JUST. It would mean no savings, no holidays, cancelling BUPA, budgeting on food etc, but we wouldn't lose the house.

I don't think it's unreasonable to check your payments would be affordable at 7-8% though, just in case.

Oh, and our mortgage is currently 21% of income after tax. Will be increasing that this year though to bring the term down fairly drastically.

Ok third time lucky ... Hitched keeps eating my replies!!!

The area that Reb suggested is lovely, as is St Albans, Harpenden, Redbourn and surrounding villages...

We haven't maxed out so still have some wiggle room, plan is to overpay whenever we can to give ourselves a bigger equity when we remortgage.

We worked out what we could comfortably afford at the moment, taking in to account that if rates rose a little bit we could manage, less comfortably.

If rates seemed to be on the constant increase we would make a move and lock in to a fixed term deal.

That's interesting. An NHS paramedic with private medical insurance...?

Too bloody right! Actually it's for 2 reasons. First, speed of access to services. I had a back injury with ruptured discs 3 yrs ago, unable to be proved as work related, yet BUPA got me into intensive physio and acupuncture within 4 days of the injury. God knows how long I would have waited on the NHS. Second reason is that I am fussy. Yes, I'm sorry but if I needed non emergency hospital admission, for a scheduled operation for example, I wouldn't get any sleep on a ward. I can't sleep even at home if there s too much light, and even the slightest noise wakes me. For any rest or recuperation I'd need my own room.

I think the NHS is brilliant for emergency treatment, and life saving interventions. For non life threatening stuff, not so great. And of course that's how it should be, being publicly funded. Funds should save lives, deal with what's critical, and if you want elective stuff, or to queue jump when waiting may be uncomfortable but won't kill you, then go private. I'd be more than happy to know my taxes paid for an operation on someone with, say, a ruptured appendix. I wouldn't be so happy if they were used so that Mr X could have his op on the Tuesday rather than a Thursday because he has a meeting he needs to go to on the Thursday.

I was thinking the same - maybe worth remortgaging as above? could make a saving every month

I moved into hubby's house 5 years ago nearly it was his house with his ex wife and though it is my home and i like living there (house looks nothing like when I first moved in) and hubby has said no to moving. We have worked out for an extra £20-30k approx could make a whole difference on a bigger property, as we are on repayment only, our mortgage has come right down, so though he was against it he's now talking about us moving likely to be 2015 I hope its 2014! To be honest I don't look at the scary 12% - but look around the 3/4/5% options.

We are currently around 25% of our income on mortgage. we could afford more but less living ? not sure yet what ratio we will be doing if we do move.

what are the best mortgage calculators around? to work out how much mortgage we could get?

No use on the Mortgage stuff, as I'm still renting (boo) but I'm also from Herts, St Albans and Berkhamstead are my favourite parts, both with very easy access to London - Euston or Kings cross, Berkhamstead might be a bit quiet if you're used to London though!

Oooh, have found some nice places in Ware, thanks ladies!

We worked out our new one based on what we could comfortably afford should one of us need to stop working for any reason. We didn't look at percentages ourselves, but OHs financial advisor went over everything so I assume he did!

As it happens we are going to be paying less per month on the new house than we do on our current house; however we are stretching the mortgage by an extra 10 years. If we repay as planned then I can technically retire by 50 as the mortgage will be paid off ?

We used ones on each bank's website, I found HSBCs the most straightforward. I'm sure there's one on compare or moneysupermarket though.

I always leave the calculations up to H as I am rubbish at that sort of thing, but when we bought our house in 2007 we opted for a tracker at 2% above bank of england base rate so we have been really lucky for the past few years due to the really low rate of 0.5%. We could afford another 3-4% on top of that but at the moment we are over paying where we can and have managed to get a good buffer in place should things go really bad with the rates and we can then take payment breaks while we try and remortgage.

We have been looking into new mortgages for when we plan to move and have found out that we could potentially kepp the mortgage we have and then take out a mortgage for the difference should the house be more expensive so I think we'll be looking into that when the time comes.

Thanks PB our bank is HSBC but current mortgage is not will check it out and do the compare sites too

Actually this is an interesting point... I'm intrigued to know what mortgage terms people have.. when I bought my flat I was told 25yrs was the default, but I took mine out at 30yrs. Given that I was buying young (23) I decided this would be fairly safe.

What have other people done?

Our BTLs are 20 year terms but I'm not sure what we'll do for 'our' mortgage. Mr S is now 36 so 25 years takes him to 61, 30 years to 66 - I wonder how realistic any of this is!

We took ours over 10 years to keep the interest low, that was three and a half years ago. Our next home will be somewhere between 15-20 years depending on what we can afford, and the plan will be to pay the house off completely. Our forever home would probably be another ten years on top of that, so by 55 we should be mortgage free, and own two homes.

30 at the moment, we will look to reduce when we remortgage in a few years.

12%! Eeep

we are fixed for three years, after that time we intend to shop around and will also be debt free so can realistically afford to pay much more. Plus we will both have had between 3/5% pay rises each year we *should* be ok.

Ours will be 35 year term. Not planning to still have them by then though!

we worked out that the repayments are affordable at 3%, do-able at 5%, stretchable-to-by-living-on-beans-and-no-heating at 8% and at 12% we would be buggered.

However, I like to think there will be a good bit of warning before interest rates manage to rise to 7%+

Ours is a 30 year term & we are entering our 4th year. We are very fortunate we got a tracker 1.99 above base so we have paid a substantial amount of capital in that time.

We always planned to overpay but unfortunately cost of living has increased much more than our wages! In an ideal world we def would.

Snap. My parents remember paying like 17% and Marie biscuits were a massive treat.

Our mortagage deal isnt portable so weve no intention of moving for a long time - will do home improvements, extension etc instead.

Our mortgage payment at the moment is just under 20% of our income but because my H is self employed his wages vary so we couldn't stretch ourselves. Our mortgage term is 25 years too but we don't see ourselves moving from this house for a very long time.

Our mortgage term was 25 years but with our over payments we have managed to cut it down to 12 years I think.

Ours was initially 20 years, so by the time we remortgage later this year, will be 18 but we'll take that down to 15 or even 12, I think.