Household income vs size of mortgage

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JMc#5

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Oct 2, 2008
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As the title suggests I'd be interested to get an idea of the sizes of people's mortgages with relation to their household income.

As a start I'm looking to buy a house for around $500-550k, my wife and I have combined income (before tax) of $110k.

May help to get an idea of affordability.
 
JMc#5 said:
As the title suggests I'd be interested to get an idea of the sizes of people's mortgages with relation to their household income.

As a start I'm looking to buy a house for around $500-550k, my wife and I have combined income (before tax) of $110k.

May help to get an idea of affordability.
Click to expand...

How much of that $500-550k are you looking to borrow? Could be an issue with your income, are you also planning on having kids (or have them)?
 

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Serviceability wise, as long as there are no other loan debts, borrowing $500K should be attainable.
 
bunsen burner said:
if you're planning kids you should prepare for 0 year olds. It's unlikely your wife willgive birth to a couple of 7year olds.
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Adoption not an option? :)
 
Follow the cats, but not from there... This whole thing was meant as a hypothetical as I was looking to get an idea of what size loan I would be able to get with a prospective income (seeing how much my wife will need to work etc)...

I don't have kids yet, but intend to have kids from the age of zero, most definitely.
 

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You're going to clear about $90k. I'd spend $40k tops, but from the get go you want to save up a $30k buffer on your offset account.

Let's say $55k deposit get's you a $525k buy with $20k stamp and $10k buying costs = $555k. Your debt is $500k

Right now you can get a loan at major banks @ about 6%. That's $6k for every $100k borrowed. Plus they'll make you pay principle.

It will probably cost you $35 - 40k per year. Interest goes up to 7% you're looking at 40-45k.

Take into account:

a) Your income is likely to rise
b) Your wife's will fall - either to 0 or might work part time.

It's a buyers market in Melbourne right now (if that's where you intend to buy). I think it will be for a couple of years yet. But don't wait too long, there's not going to be a boom but if the tide (supply/demand) changes too much you end up undoing the most recent part of your saving.
 
bunsen burner said:
You're going to clear about $90k. I'd spend $40k tops, but from the get go you want to save up a $30k buffer on your offset account.

Let's say $55k deposit get's you a $525k buy with $20k stamp and $10k buying costs = $555k. Your debt is $500k

Right now you can get a loan at major banks @ about 6%. That's $6k for every $100k borrowed. Plus they'll make you pay principle.

It will probably cost you $35 - 40k per year. Interest goes up to 7% you're looking at 40-45k.

Take into account:

a) Your income is likely to rise
b) Your wife's will fall - either to 0 or might work part time.

It's a buyers market in Melbourne right now (if that's where you intend to buy). I think it will be for a couple of years yet. But don't wait too long, there's not going to be a boom but if the tide (supply/demand) changes too much you end up undoing the most recent part of your saving.
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Big one is the deposit. That seems to be the biggest hurdle for a lot of people. Need to be disciplined and the more you save the better to lessen the LMI (even if it can be capped).

If you have any loan with a 6 in front of it, you are paying too much.
 
Visions said:
If you have any loan with a 6 in front of it, you are paying too much.
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Depends on what you earn.I know heaps of people who have loans bigger than $600k. I have a mate who was on combined income of $130 and had $600k+ loan. And he was paying it off quite fast too (world's best saver). Now his combined income is around $200k
 
bunsen burner said:
Depends on what you earn.I know heaps of people who have loans bigger than $600k. I have a mate who was on combined income of $130 and had $600k+ loan. And he was paying it off quite fast too (world's best saver). Now his combined income is around $200k
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Sorry, you misinterpreted my statement. By 6 I was referring to the interest rate.

Agree with you, plenty of people out there with large loans who are handling it better than those with smaller loans.
 
Visions said:
Sorry, you misinterpreted my statement. By 6 I was referring to the interest rate.
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I agree. Maybe someone needs to start a thread re lending. Where to get the best rates and what sort of discount you can expect and how much that is dependent on how big your loan is.
 
bunsen burner said:
I agree. Maybe someone needs to start a thread re lending. Where to get the best rates and what sort of discount you can expect and how much that is dependent on how big your loan is.
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A lot of lenders nowadays offer extra discount if the LVR is below certain thresholds in conjunction with the discount for particular loan sizes.

As a broker I always see specials that particular lenders offer from time to time. For example at the moment a non-bank lender I deal with is offering a variable rate of 5.32% for any loan amount over $150K and LVR < 75%. This includes a free linked offset account, and no ongoing fees for the life of the line. Better than anything I have seen on the net.
 
JMc#5 said:
Follow the cats, but not from there... This whole thing was meant as a hypothetical as I was looking to get an idea of what size loan I would be able to get with a prospective income (seeing how much my wife will need to work etc)...

I don't have kids yet, but intend to have kids from the age of zero, most definitely.
Click to expand...
Can 0 year olds even have kids? I'd wait until I was in at least 20s before having kids.
 
JMc#5 said:
As the title suggests I'd be interested to get an idea of the sizes of people's mortgages with relation to their household income.

As a start I'm looking to buy a house for around $500-550k, my wife and I have combined income (before tax) of $110k.

May help to get an idea of affordability.
Click to expand...

I have like $1m total mortgage owing on a $100k salary. I'm getting around $80k worth of rental income though.

It really depends on your living conditions and how much you'd like to extend yourself.
 
bulldogsfan said:
I have like $1m total mortgage owing on a $100k salary. I'm getting around $80k worth of rental income though.

It really depends on your living conditions and how much you'd like to extend yourself.
Click to expand...

Can I ask what kind of property it is? It's a reasonable yield that you are getting.
 
JMc#5 said:
As the title suggests I'd be interested to get an idea of the sizes of people's mortgages with relation to their household income.

As a start I'm looking to buy a house for around $500-550k, my wife and I have combined income (before tax) of $110k.

May help to get an idea of affordability.
Click to expand...

be careful with that much debt


especially if the housing bubble bursts, if you or the misses need to stop work or interest rates increase


I am not saying don't do it but just make sure you are happy in life with that much pressure
 
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