Browse Forums General Discussion 1 Apr 11, 2011 7:55 pm Hi all, I'm selling my place at the moment and looking at buying another place with a larger loan. My repayments would be 50-60% of my after tax income (depending on interest rates). I'd like to know how this compares to others and thought it would be interesting for eveyone to get an idea how their loan obligations stack up against the average. Obviously I'm not out to know what people owe or how much they earn - just how much they have commited themselves to paying off their house. I guess it's probably handy to know if the figure involves financial dependants or not. Feel free to join the poll. Re: How much of your income is spent on loan repayments? 2Apr 12, 2011 8:37 am Combined household income or personal? Edit: If if it were just my income it would be 74-75% if interest gets to 8.5% So effectively we could not afford to pay it if it was just me. GLW has a job and home business though. Re: How much of your income is spent on loan repayments? 3Apr 12, 2011 10:38 am I would be pretty worried if my repyts were around the 50% or higher mark. What will you do if the interest rates increase as they are predicting? Years ago Bank's had a policy of not going over 30% of disposable income. We always try to remain below this figure. Some things are worth waiting for. Re: How much of your income is spent on loan repayments? 7Apr 12, 2011 12:55 pm Melrich Ours are at 20% of combined after tax income. I think 35% is about the limit, anything above that is not really sustainable long term. Is that at your current re-payment? Mine is 41.2% of household total after tax but the repayment figure i used is much higher than the figure we paid last month. On last months mortgage figure for just our old house its 25% and for the total loan amount after the knockdown rebuild at this months interest rate is 36% of combined after tax income not including GLW home business income. Do you think that more than 35% is the limit in general or just for you personally? Re: How much of your income is spent on loan repayments? 8Apr 12, 2011 1:07 pm With combined household income it varies from 26% to 28% depending on how many hours overtime the other half does! On my income alone its around 76%. Re: How much of your income is spent on loan repayments? 9Apr 12, 2011 2:16 pm I'm noticing a trend; those with lower repayment percentages seem to be those with two people's income being put towards the mortgage (of course some haven't mentioned their relationship status so it could be simply an assumption on my part). So IMOH if you want to keep your income/mortgage repayment percentage low make sure there's someone else to share the bills with you Re: How much of your income is spent on loan repayments? 10Apr 12, 2011 2:19 pm I think you really have to count combined household income (which of course is the same as personal income if you are a single income household ) - is meaningless to count personal income of one person only - have known people whose after tax repayments were 100% of their personal income - in other words, in a couple one income went entirely on the loan and they lived on the other one. Re: How much of your income is spent on loan repayments? 11Apr 12, 2011 3:00 pm ours is 36% of my after tax income.. we only have the one income.. would be nice to have two incomes, but not practical for us with two young kids, so will probably stay as one income indefinitely at this stage. Re: How much of your income is spent on loan repayments? 12Apr 12, 2011 3:26 pm Our combined is about 23% Re: How much of your income is spent on loan repayments? 13Apr 12, 2011 3:38 pm chrisandkate Melrich Ours are at 20% of combined after tax income. I think 35% is about the limit, anything above that is not really sustainable long term. Is that at your current re-payment? Mine is 41.2% of household total after tax but the repayment figure i used is much higher than the figure we paid last month. On last months mortgage figure for just our old house its 25% and for the total loan amount after the knockdown rebuild at this months interest rate is 36% of combined after tax income not including GLW home business income. Do you think that more than 35% is the limit in general or just for you personally? I pay more than 20% of after tax income, probably closer to 30% but my minimum repayment figure is 20%, just that I pay overs to get ahead of the morgtage. You have to count combined income. I think long term 35% is about the maximum for anyone (unless you earn a lot of money). If it goes up to 40 - 50 % for short periods it is probably not a problem but if you anticipate locking in repayments of 35%+ of after tax income for 5 years or more you are likely at some point to run into difficulties. Re: How much of your income is spent on loan repayments? 15Apr 12, 2011 5:21 pm One thing that I figure is worth considering is that what might be 50% of an income today is likely to be alot less in 10 years. Who here earns the same today as they did 10 years ago? So the longer you have a loan the lower the percentage is you will most likely be paying. I figure if you can survive the first five years you will probably be okay - depending on interest rate rises of course. I think it is a sign that Australia is a fairly wealthy country that people can actually afford to use half their income to pay a house off and still have money for the essentials - 20 years ago that would not have been possible as it took a greater proportion of income just to pay for the bare necessities. I guess thats whats helped drive property prices up so much. That said thinking about a loan of 50% income is still enough to keep me awake at night. Re: How much of your income is spent on loan repayments? 16Apr 12, 2011 5:41 pm On current rates, mine is about 35% of income (solo) but I generally put 50 - 60% into my loan to smash it down a bit quicker. Unless you earn a decent wage like I am lucky enough to do, paying a mortgage of on your own will eat up a big % of your income - particularly in perth...... Re: How much of your income is spent on loan repayments? 17Apr 12, 2011 5:55 pm ours is about 40% just on one income for now. Can't wait till I earn a decent income. I think it also depends on how much you earn. Someone on a lower income will be struggling if their repayments are around 50% as they won't have much left over for other things, whereas someone on a higher income might breeze through paying 50% on their mortgage as what they have left over is a lot higher. Re: How much of your income is spent on loan repayments? 18Apr 12, 2011 7:00 pm It looks like mine will be about 49% (when they start) of my take home pay, but if I take the salary sacrificed vehicle out of the equations, it drops to about 38%. Thats for the first 3 years though. At full interest rates it would be 53% (with salaray sacrifice payments) or 41% (without salary sacrifice payments) Re: How much of your income is spent on loan repayments? 20Apr 13, 2011 9:05 pm My vote went to the 40-50% range... However we are intentionally paying twice the minimum amount - VERY eager to get rid of this mortgage....!!! Building on the Sunshine Coast - Land settled 22nd July 2009 Building contract finally signed (after much deliberation on our part) 11th November 2009 Building commences 25th January 2010 - small local builder End of June - almost completed fit out 26th July - MOVE IN DAY!!!!!!!!!!!!!! The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19640 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35748 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 12111 |