Move now or never?

[Antepost]

Hi there,

We are currently considering a move of house from one side of Galway to another primarily out of a lifestyle choice. In doing so we would be upgrading and in turn taking on a bigger mortgage. What is the generally advised % of disposable income one should be putting into a mortgage? I have heard figures of 40%. I guess we are looking at 45% maximum (depending on the price we would get for our own house) and maybe as low as 42%. Over the next few years we have a number of windfalls amounting to 60k which we intend to use to reduce the capital. At the moment this seems affordable to us and our main fear is that if we do not move on this, then a similiar type move in a few years will have passsed us by.
Opinions / advice greatly appreciated!!

 

[Sarah W]

Re: Move now or never???

There is no "correct" amount of a mortgage you should be paying. Lenders work on a maximum of 45% of net disposable income when they are calcuating how much they will lend but this is stress tested at up to 2% over current rates. The term is to a maximum age of 70 (65 with some lenders).

Sarah

www.rea.ie

 

[Glenbhoy]

Re: Move now or never???

If it's the right move for you and you feel that this is the property you intend staying in, then maybe you should go for it.
On the other hand I would try and stay within 40% (will there be other expenditures - childcare etc?), bear in mind that there may be interest rate increases which will stretch things still further.

main fear is that if we do not move on this, then a similiar type move in a few years will have passsed us by

I personally don't agree with this, and indeed, I feel that media speculation along these lines has helped produce the latest round of property price increases, but don't let that put you off, i've bee wrong on this since 2003!!

 

[Howitzer]

Re: Move now or never???

Lenders work on a maximum of 45% of net disposable income

I remember being quoted a figure of 40% less than 6 months ago, has this changed recently?

 

[Sarah W]

Re: Move now or never???

I remember being quoted a figure of 40% less than 6 months ago, has this changed recently?

No - the maximum is 45% (50% in the case of professionally qualified applicants) but some lenders work on 40%.

Sarah

www.rea.ie

 

[Antepost]

Re: Move now or never???

I personally don't agree with this, and indeed, I feel that media speculation along these lines has helped produce the latest round of property price increases, but don't let that put you off, i've bee wrong on this since 2003!!

Glenbhoy,
You could be right andI don't agree with this either but sometimes you have to take a chance and manage the risks. I feel that the property we are thinking of moving to (current value 650k) will be out of our reasonable reach in even a years time. At the moment I think this is within our reach (and thats being conscious of the fact that I want to have a decent standard of living).

 

[Glenbhoy]

Re: Move now or never???

At the moment I think this is within our reach (and thats being conscious of the fact that I want to have a decent standard of living).

If that's the case, then go for it Antepost, there's no such thing as negative equity until it's realised - if you feel that you won't have problems with maintaining repayments in the future then by all means buy. It's one thing buying for investment, but buying a home in which you intend to stay is a different ball game. Good luck.