Mortgage as a Percentage of Take-Home Pay

p201055r

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I received a mortgage in 2008, just before my 53rd birthday and at a time when I was earning well with a number of allowances applied to my salary over the 12 month period preceding the application.

I had a reasonable savings record and in any event the mortgage was approved (and accepted for my part) at 92% of the sale price and terminating on my 70th birthday. The repayment at the inception of the mortgage was roughly 25% of take-home pay. My circumstances have changed a little since then - I am now retired - and at the moment, the mortgage takes up roughly 42% of my take-home (retired) pay - manageable but with zero wriggle room.

I know standards have changed and a 92% mortgage would be unattainable now, but can anyone give me a pointer to whatever guidelines, rules, agreements or accepted practice in relation to the percentage which a mortgage repayment should have been of take-home pay, which were in vogue in mid-2008, please?

Thanks!
 
are you seriously angling that you shouldnt have been given a mortgage of that amount? That horse has been well rode to death around these parts. In any instances did you retire earlier than you originally planned?!!
 
In mid 2008 Banks were still falling head over heels to lob out money.
They had good firm guidelines on loan to value on income etc but found novel ways to bypass their own safeguards.
In short in 2008 you could have got 100% mortgage on 6 times income without the inconvenience of properly having your income assessed.

Up to 2008 lending was in Wild West Mode .
In answer most lenders had a 4 times multiple of income (but they ensured your income got to 4 times)!in too many cases.
Hope this helps .
I have a feeling your post is more to do with ,did they act fairly?
 
I was working in banking in 2008 as a mortgage adviser and our criteria was total loan repayments could not exceed 40% of net disposable income. I would say this was fairly standard in the industry at the time.

The multiple of salary criteria was dropped years before, I can't remember exactly when but we were working off NDI for a long time.
 
Repayment of 25% of your take home in 2008 does not sound unreasonable or as if you were the victim of any application "massaging" that Gerry Canning is referring to.
The problem is fundamentally that now your income has dropped. Was it a planned retirement (i.e. did you know this was coming down the line for a few years) or was it forced on you by circumstances? If it was the former did you bring that information to the attention of the bank at the time?
 
Thank you all.
My purpose in asking is preparatory to a number of issues with the property and its financing being examined. There is, for example, an issue with whether the mortgage company had it surveyed. There may be other matters to be dealt with.

peteb - thanks, but don't jump the gun, please, there are a number of issues at play - as I've outlined - and based on the financial information I provided at the time, the mortgage company was not in error offering a mortgage.
so-crates - thanks for your "take" on this. I had heard of the 25% rule-of-thumb before, but as everything was moving so fast in the heady days of '08, it, like lots of other guidelines, could have ended up with the baby and the bathwater!
Yes, the mortgage company would have been aware of my compulsory retirement in 2011.
 
" There is, for example, an issue with whether the mortgage company had it surveyed."

Make sure that they crossed their t's and dotted their i's too. Check every page of the documentation.

I'd say they will definitely be forced by everybody to write the debt off if they did not survey the property. Not that there is any reason why they should have surveyed the property.

mf

:rolleyes:
 
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