Monthly Debt

[alittleknowledge]

I heard somwhere that you should try to keep your monthly debt (on outstanding loans/mortgage etc...)under 30% of your net income. While I understand your lifestyle would have an impact on this figure, is there any truth in this?

 

[stobear]

I remember this approx figure being given by banks etc years ago when calculating if you could afford a mortgage, not too sure it applies anymore, but as you say it depends on your lifestyle and other financial commitments.

 

[anon]

re ; Monthly debt

30% is no indication of anything. For example there is a big difference between someone earning €120K pa and someone earning €50K per annum as regards the 30% indicator. remember there is only so much money you can spend on things like groceries / utility bills etc, so a 50% debt level may well be more appropriate for someone on a higher level. as has been said it depends purely on individual circumstances

 

[unsure]

Should cost of childcare be taken into account when working out the percentages Mortgage on it's own only about 20% but including childcare costs it goes up to 40%!!!!

 

[oysterman]

Re: childcare and affordability

I know that Ulster Bank, for example, do take childcare expenditure into account.

This strikes me as outrageous - if a couple wish to spend their money on quality chilcare as opposed to a posh car or a couple of foreign holidays annually, just how does this make them a poor default risk? Bloody banks......

 

[Bridget]

childcare

I don't see why the banks shouldn't take this into account; certainly when I was looking for a mortgage 18 months ago the banks didn't and were offering me huge amounts which I couldn't repay, mainly due to the cost of childcare. After all, you might take a holiday once and rack up debt, but childcare costs go on and on and on and on ..... to the end of primary school at least and maybe even beyond.