What Is Your Household Income to Mortgage Ratio?

Sex on 20/01/2016 - 09:28

Hi all,

I'm doing some research and am interested in what percentage of your household's total disposable income goes into the mortgage.

So for example if you earn $1800 after tax per fortnight and your partner earns $1600 and the mortgage repayments are $1500 a fortnight, that would be $1500/$3400 = roughly 44%. Figures relating to your primary residence (as opposed to investment properties) would be really helpful.

Also, would be great to know if people would still consider themselves to have a comfortable standard of living or whether they are struggling with the amount they proportion into the mortgage.

Thanks!

Context: My girlfriend and I are looking into mortgages and are thinking about putting around 45% of income into the mortgage.

Financial

Comments

  • cDNA on 20/01/2016 - 09:36
    +1

    I was fortunate enough to stay in my parents house until I gathered enough money to build my own house. It took me 8 years.

    My job involves a lot of travel, so I don't want to have to deal with banks.

    My parents have a few houses on a mortgage and they put 30% of their income towards their mortgages.

  • Looking4Bargians on 20/01/2016 - 09:46
    +1

    30% of your salary if you have kids.
    50% if not.

  • xsacha on 20/01/2016 - 10:12

    29.4%.

    How you get $1500/fn mortgage though? Expensive house (over $1 mil), not much deposit (less than 20%) or large repayments (term < 30 yr)?

    You have to factor in if the bank thinks ~50% will be too risky as well. What if interest rates rise?
    If you are just making larger repayments, then the 50% is sort of artificial and can be reduced at any time without risk — that would be fine. If it is due to expensive house/low deposit, then you may find 50% too high.

    • whooah1979 on 20/01/2016 - 10:16

      $600k loan.

      • xsacha on 20/01/2016 - 10:20

        With my rate I see $1315 as fn repayments on $600k. I guess I should have added an option for high rate (big 4 banks) too.
        If you go are with a lower interest rate, like any of the ones posted on here, you'd get no more than 4%. So $1500/fn would be a $700k loan. With a minimum 20% deposit that's about $900k house.

        I think this just shows there are a wide variety of factors that can influence your % payback but do not necessarily increase your risk.

        • Looking4Bargians on 20/01/2016 - 10:46
          +1

          Which bank is not more than 4%. seems i am paying around 4.6%

        • gevidian on 20/01/2016 - 11:06

          @ozyboy: Ubank at 3.99%.

        • Looking4Bargians on 20/01/2016 - 11:34

          @gevidian: Any offset account with that ?

        • mosquito on 21/01/2016 - 23:05

          @ozyboy: Ubank is normally low risk, and simple, it's a subdivision of NAB.
          For that price I would go without an offset account…

        • [Deactivated] on 22/01/2016 - 15:00

          is that interest only? my broker gives me figures of closer to 2300-2500 (principle and interest) for a 500k loan with about 15% deposit.

        • xsacha on 23/01/2016 - 09:36

          @poop: ING has had under 4 with an offset for a while now. Finally ended?

          You need 20% deposit otherwise insurance. No one is talking about interest only I hope. 30 yr term.

        • naritas on 29/01/2016 - 12:25

          @ozyboy: If you check out this link and cycle through the tabs. You'll see there are a number of reputable lenders that are pricing at sub-4%p.a. at present.

          A number of them are also offering generous rebates for good quality borrowers looking to refinance, example here

          Hope this helps.

  • Jemz on 20/01/2016 - 11:09

    23 years old, no kids, 50% to save interest and pay off sooner, living comfortably.

  • tomleonhart on 20/01/2016 - 11:09

    16%

  • sa5ha on 20/01/2016 - 11:18

    We are looking to buy in the next few months, and based on current prices/interest rates, we'll be paying 29% of our take home pay on the mortgage. Couple, no kids yet, south east Melbourne.

  • geoffs87 on 20/01/2016 - 11:23

    probably worth thinking about all the addon costs of ownership as well.

    We have 2 properties (i know you said just PPOR), and we're dropping about 55% of our income into an offset account. This services the interest, strata, rates, water, etc etc.

    For my PPOR, looks like we're sitting at a little under 40% interest only (excluding the other costs mentioned above). We only pay interest, as our properties become investments after a couple of years, and we max the tax deductibility by keeping the loan amount the same.

    edit: Sydney, couple, no kids.

  • allegria on 20/01/2016 - 11:49

    34% at minimum repayments but I'm putting in extra to cover rates, water, insurance and it takes it to 45% of single post-tax average income. Doing okay :)

  • negger on 20/01/2016 - 22:19

    ~30%(actual less currently because of the money in offset account) of income before expenses on PPOR with interest only. All income in to offset and almost all expenses paid using credit card. Credit cards are paid in full from offset account every month.

  • Spending2Much on 21/01/2016 - 13:22

    I only work casual, no fixed hours. When it's busy and seasonal i earn ok and do ok, when it's quiet, I struggle.
    My repayments are $450 per week on my house.
    For instance. Over Xmas/new year with public holiday rates, it was 30%
    $1500 for the week.
    Last week, well, that was 196%……I earned $236 for the week.
    I'm on ozbargain for a reason……

  • Katekatekate on 21/01/2016 - 16:30

    15% - Maybe we need to be adding a bit more…

  • ukulele on 22/01/2016 - 09:30

    Out of interest, are you guys counting "household income" ie 15% of your combined salary (if you are in a combined household of course)

    I clear 2380 per fortnight, I put in 2200 a month into my homeloan; equates to around 42.66%.

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