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MMR makes no sense


Wight Flight

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Wight Flight

Why are mortgage offers calculated on income multiples?

It strikes me that a couple can live quite well on £20k per annum. Add on £7k for every child.

Everything above that is spare money to give to the banks.

A childless couple on £100k net could afford £80k mortgage payments. They are missing a trick here.

 

Edited by Wight Flight
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Because most can't/won't/don't live well below their means.

We would have a very different world if your average person saved versus spent every last dime.

I do agree though, £20k for a couple is plenty of money in a lot of locations.

MMR won't factor in for people who can save/invest c 80%.

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spygirl
4 hours ago, A_P said:

Because most can't/won't/don't live well below their means.

We would have a very different world if your average person saved versus spent every last dime.

I do agree though, £20k for a couple is plenty of money in a lot of locations.

MMR won't factor in for people who can save/invest c 80%.

This.

The number of people who put a large cushion between their take home and their outgoing is tiny.

I look to save 30-50% of my take home. By save, I do include mortgage repayments (but not interest) and pension.

And bearing mind the average income is ~27k. Once youve took tax, ctax, utils, car, holiday, there really is fuck al left for ~80% +of people.

Besides, MMR does allow banks to lend ore than 4x income.

Most wont, for good reason.

You need to bank with someone who will make the extra effort to look at our history - for suitable high fee.

 

 

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Axeman123

Bringing in £100k net, taking a packed lunch to work and driving £3k used Fords? Most couples on £24k net seem to think they are entitled to eat out multiple times a week and drive an Audi SUV each. This country is crying out for a hard rain to fall...

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Bricks & Mortar
Posted (edited)
21 hours ago, Wight Flight said:

A childless couple on £100k net could afford £80k mortgage payments.



Under present rules, they're allowed to borrow, £400K, (as i understand it from upthread).

If interest rates go to 20%,  your £80K would only cover the interest.

---------------------

We have the high inflation already.  What chance of such high interest rates, sometime in the medium-future, (like before they've paid it off)?  

Edited by Bricks & Mortar
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Wight Flight
6 minutes ago, Bricks & Mortar said:



Under present rules, they're allowed to borrow, £400K, (as i understand it from upthread).

If interest rates go to 20%,  your £80K would only cover the interest.

---------------------

We have the high inflation already.  What chance of such high interest rates, sometime in the medium-future, (like before they've paid it off)?  

If interest rates go to 20% then inflation will be at 80%.

At which point nothing really matters.

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Bricks & Mortar
Posted (edited)
9 minutes ago, Wight Flight said:

If interest rates go to 20% then inflation will be at 80%.

At which point nothing really matters.

I'm thinking more of the Volker period.  Interest rates went up to about the same level as inflation, briefly were a bit higher, in order to kill it, (and the economy, and millions of jobs).

 

Edited by Bricks & Mortar
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Wight Flight
8 minutes ago, Bricks & Mortar said:

I'm thinking more of the Volker period.  Interest rates went up to about the same level as inflation, briefly were a bit higher, in order to kill it, (and the economy, and millions of jobs).
 

Volcker raised rates from about 11% to something like 18%.

A 70% rise.

You are proposing a 1000% rise. A very different kettle of fish.

 

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spunko

Outgoings always mirror the income, or at least in 90% of cases. The guy on 100k spends the same proportionally as the guy on 20k. 

Seems that most people on high incomes spend a large percentage of it on privately educating their kids .

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AlfredTheLittle
15 minutes ago, spunko said:

 

Seems that most people on high incomes spend a large percentage of it on privately educating their kids .

I was amazed to find out that someone I knew who sent her kid to private school was paying less in school fees than I was in rent. Housing costs are everything in the UK.

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10 hours ago, spunko said:

Outgoings always mirror the income, or at least in 90% of cases. The guy on 100k spends the same proportionally as the guy on 20k. 

Seems that most people on high incomes spend a large percentage of it on privately educating their kids .

Pretty much the impression I get.  Human nature seems to default to living at/beyond ones means unless you break the conditioning.

I think for higher incomes it is harder (self-induced) as the requirement for the imaginary persona is greater to upkeep. Private school, more expensive tastes, golf and sailing clubs etc

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