[Finance] Does earning 100k a year make you feel well off these days?

[Weststander]

Aren't most lenders just doing a 4.6 loan to salary ratio?

Thanks. This sauce have calculated the 6.8 of a hypothetical of the average mortgage drawndown in the city, as a ratio to a couple each on the average salary in the city. To illustrate the ill affordabilty.

Mortgage to Salary Ratios - 80 UK Towns & Cities

Explore mortgage affordability across 80 UK cities with our in-depth analysis of average salary-to-mortgage ratios. Find out about your city here.

mojomortgages.com

 

[Herr Tubthumper]

I wonder how many other football chat rooms are debating whether 100k a year is rich or poor

 

[dazzer6666]

They are allowed a % above 4.50 income multiple but only like 10% of their entire mortgage book

….and that’s gone up significantly over the years. When I started in credit we had a policy of 2.5 joint/3x sole income

 

[Wozza]

I wonder how many other football chat rooms are debating whether 100k a year is rich or poor

20 years ago on the Fulham board.

 

[Paulie Gualtieri]

….and that’s gone up significantly over the years. When I started in credit we had a policy of 2.5 joint/3x sole income

I started in the world of self cert income, absolutely shocking underwriting! “Low LTV” was considered robust rationale back then

 

[sussex_guy2k2]

Thanks. This sauce have calculated the 6.8 of a hypothetical of the average mortgage drawndown in the city, as a ratio to a couple each on the average salary in the city. To illustrate the ill affordabilty.

Mortgage to Salary Ratios - 80 UK Towns & Cities

Explore mortgage affordability across 80 UK cities with our in-depth analysis of average salary-to-mortgage ratios. Find out about your city here.

mojomortgages.com

Some of the numbers on there are crazy.

 

[raymondo]

Thanks. This sauce have calculated the 6.8 of a hypothetical of the average mortgage drawndown in the city, as a ratio to a couple each on the average salary in the city. To illustrate the ill affordabilty.

Mortgage to Salary Ratios - 80 UK Towns & Cities

Explore mortgage affordability across 80 UK cities with our in-depth analysis of average salary-to-mortgage ratios. Find out about your city here.

mojomortgages.com

I live a few miles from Bath.
The city itself is clearly desirable (but can get packed with tourists,and it's not all great).
I believe a number of homes owned there are second/weekend homes from some monied Londoners. Excellent train connections from London now.
Also, being a heavy student City, many previous family homes (lower priced areas) have been converted by developers into multi occupancy student houses - high income now giving rise to far higher property prices, even in fringe areas.

 

[Machiavelli]

….and that’s gone up significantly over the years. When I started in credit we had a policy of 2.5 joint/3x sole income

Yup. And that's because property prices have increased significantly above inflation whereas the median real-term wage hasn't. Bank leveraging has increased enormously in that interim period (although it was at its highest c2007).

 

[dazzer6666]

Yup. And that's because property prices have increased significantly above inflation whereas the median real-term wage hasn't. Bank leveraging has increased enormously in that interim period (although it was at its highest c2007).

Indeed - I spent a year basically commuting to NYC and back helping sort out Lehman Brothers

 

[Wozza]

Some great stuff in this about wealth inequality between young and old (plus the death of brands and the long-term impact of porn and online dating).

 

[LamieRobertson]

….and that’s gone up significantly over the years. When I started in credit we had a policy of 2.5 joint/3x sole income

Slightly off topic….i worked in a department that was referred to as the delinquent borrowers in the early ninety’s …should really have been named the delinquent lender ….it was commercial lending by a now well known bank…..it was atrocious lending…’’are you able to write?” Oh good just sign here!…no capital, no experience in the business? None……not to worry

 

[Barham's tash]

Our household income is about £100k
£100k mortgage.
1 Car
£15k in various loans/credit card debt.
3 kids - 2 at University, 1 unemployed
Helping out Mother in law with some of her costs.

No I don't feel well off.
But bills are covered and we can probably just about afford a 1 week holiday away somewhere,

Could be a lot worse.

Not wanting to belittle ANYONES posts so far but would wager this is the most 'averagely/typical' scenario i've seen here so far in response.

Clearly there are caveats that if your 2/3 kids are nursery age then this throws in additional costs, also i'd say that a £100k mortgage is possibly lower than most but then you're presumably been repaying the principle plus interest for a while as the kids are uni age.

This is certainly the scenario I can relate mostly too but with a much higher mortgage - c£300k against a property worth £650k. Youngest child finishes nursery costs this July but we've taken the decision to move overseas for a few years at least with the intention of paying down the mortgage/credit card debts ASAP and being in a much better place when deciding what to do for the long term.

I certainly can see that had we stayed in the UK I didn't consider myself well off, lost all the free hours on childcare, would have upped pension contributions considerably to mitigate loss of personal allowance and reduce the effective 60% tax rate but in doing so would have been a 'struggle' to have a holiday every year without feeling guilty that we should be saving that for potential Uni costs etc.

For me >£125k in the UK felt like a trap and disposable income was still very much watched carefully month to month.

But I will happily qualify that we are fortunate to even be in this situation in comparison to so many. I have huge respect to anyone starting out 5 years ago having been serial renters, having maybe started their families whilst renting and trying to save a deposit without help from the bank of mum and dad.

We started out 8 years ago without significant help and that's why despite having modestly succesful careers it has felt like a struggle at times. A necessary one, but a struggle none the less.