Home loans

thesuninherhead

Do you and your H have some sort of guide as to how much debt is too much debt when it comes to mortgages and repayments? Obviously, banks will loan you more than you could comfortably cope with repaying- so how have you decided/will you decide what your house budget is? 

thesuninherhead

I should add that I've heard all sorts of guides, such as those based on the percentage of your income being used for mortgage repayments, or others based on your expenditure and how much money you'll have left over, but I'm just curious what has helped you decide your home/mortgage budget.

Mrs.B6302007

Most professionals suggest no more than 25%  of your monthly income should be mortgage.  We're under that.

pooh8402

I've heard that the rough guideline is that your monthly payment shouldn't be more than 30% of your income.

MyNameIsNot

We'll start with what we're able to afford/want to spend per month, and go from there.

That's how I figured out my car budget.  I wanted my note to be under X, and I had X to put down, so I went to the bank and asked what I could afford.  

tlv204

Ditto 25%. Ours was a little over that I think but we have hardly any debt. I also really don't think most banks will loan you more than you can afford. At least not anymore. I know that has happened a lot, but we had issues getting banks to preapprove us for the amount that we had already decided we were comfortable with. It might be different in Australia, but at least here banks are a lot more conservative with loans than they were in my experience. As much as they want the money from high interest rates, I don't think they want to take the risks of not making any money at all

miss.jawright

Personally when I bought my house I had the loan agent figure out my property tax, insurance and montly payment. I knew what my monthly income and expenses were so I made sure the mortgage left my room for fun stuff and savings. I also already saved an emergency house fund which I started tapping into whenever the house had a problem.

thesuninherhead

Hmm... there's no way one could purchase a house here for under 25% of their monthly income here- even an apartment or a dodgy old house out in the sticks would cost you more than that in repayments! I guess I may be better discussing this with other Australians given the high price of housing here comparative to the states. 

thesuninherhead

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_home-loans?plckFindPostKey=Cat:Wedding BoardsForum:9Discussion:60a08e8d-b438-4895-83e3-9ddcb482a0abPost:40d102ea-4684-4e63-bbc5-89fa09408219">Re: Home loans</a>:
[QUOTE]Ditto 25%. Ours was a little over that I think but we have hardly any debt. I also really don't think most banks will loan you more than you can afford. At least not anymore. I know that has happened a lot, but we had issues getting banks to preapprove us for the amount that we had already decided we were comfortable with. It might be different in Australia, but at least here banks are a lot more conservative with loans than they were in my experience. As much as they want the money from high interest rates, I don't think they want to take the risks of not making any money at all :)
<p>Posted by tlv204[/QUOTE]</p><p> </p><p>I think it is different. Our banks have reduced low-deposit loans, but will still loan you far more that you could really cope with paying off. They'll pre-approve ridiculous amounts if you've got the income to make payment (even if making payment would leave you with only a small amount of left over funds). I am guessing our loan (although I've not sat down to work it out) is about 35% of our current income... I'm actually unsure, though. Our financial advisor was all about loaning to buy shares (which we didn't) so we didn't get a lot of good advice as to home loan amounts. I do know that our is similar to our friends who are in similar financial positions, though. </p>

wcvsb3b5

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_home-loans?plckFindPostKey=Cat:Wedding%20BoardsForum:9Discussion:60a08e8d-b438-4895-83e3-9ddcb482a0abPost:08b14867-00ec-4095-8acd-6cd847f5ea5a">Re: Home loans</a>:
[QUOTE]We'll start with what we're able to afford/want to spend per month, and go from there. That's how I figured out my car budget.  I wanted my note to be under X, and I had X to put down, so I went to the bank and asked what I could afford.  
Posted by MyNameIsNot[/QUOTE]

This. I don't want us to have to put too much towards bills then be screwed when something unexpected comes up..

tenofcups4me

I think hard numbers are far more relevant than percentages. We did similar to Ohwhynot when we were figuring out how much house we could buy: calculated all our other monthly expenses and then figured how much we reasonably wanted to pay per month.

Then backed it up to see how much of a loan that came to given how much we wanted to put down as a deposit.

miss.jawright

Hnmm the houses are more expensive where you are? I lived in Queensland for a while (however many people conside Townsville the sticks and I was shocked at how inexpensive beach homes there were compared to homes in LA county. I was able to buy a house on graduate student stipend by renting out rooms until I either sell or can afford to live alone. Now FI lives with me but we still rent. I know most married folks don,t like to rent but it is an idea.

thesuninherhead

Townsville IS in the sticks! It would be great if you could get work around there, though. 

 

I live in Brisbane. We have a housing shortage and it's very difficult to purchase property here without paying an arm and a leg. 

 

There's lots of places in Australia that we could buy cheap homes, but they're all far away from cities where we would be able to find work. I guess it's the same as anywhere, really- but our housing market is very expensive in contrast to those in the states, or so I've been told. Nick and I are both bound to jobs in the city, sadly. If we were nurses or something like that where work is plentiful everywhere, I would totally go and buy up somewhere cheap out in the country or up on the coast and live/work there. If only!

 

thesuninherhead

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_etiquette_home-loans?plckFindPostKey=Cat:Wedding BoardsForum:9Discussion:60a08e8d-b438-4895-83e3-9ddcb482a0abPost:23c4afbd-5596-4bf1-b79a-8d707d4f24d2">Re: Home loans</a>:
[QUOTE]Hnmm the houses are more expensive where you are? I lived in Queensland for a while (however many people conside Townsville the sticks :) and I was shocked at how inexpensive beach homes there were compared to homes in LA county. I was able to buy a house on graduate student stipend by renting out rooms until I either sell or can afford to live alone. Now FI lives with me but we still rent. I know most married folks don,t like to rent but it is an idea.
<p>Posted by miss.jawright[/QUOTE]</p><p> </p><p>Have a look at page 10 and 11 here, noting the most affordable and least affordable places to live in the US, UK, Aus, New Zealand etc:<a rel="nofollow" href="http://www.propertyoz.com.au/rdc/library/6th%20Demographia%20Housing%20Affordability%20Survey.pdf">http://www.propertyoz.com.au/rdc/library/6th%20Demographia%20Housing%20Affordability%20Survey.pdf</a></p><p> </p><p>Brisbane in 22nd least affordable, although the sunshine and gold coast (either side of Brisbane- where I spend my childhood) are much higher up on that list- number 3 and 4 out of all places in the US, UK etc. Craziness!</p>