Is a 5X mortgage still possible (LTV 66%) ?

Mr DT said:

So thats 46% of net income going on a Mortgage!! Do it over a more sensible 20 years (costing you much less in the long run) and that would move to over 50% of your net income!!

I thinks that's a lot of your net income going on a mortgage.

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I think what matters here is not what % of net salary is spent on mortgage but rather how much cash is left over after mortgage is paid for.

E.g. Exaggerating to stress the point, if a guy earns,say, 1 million net a year and spends,say, 60% of that on his mortgage then so what?
He still has anopther 400k left over.

Mr DT said:

That rubbish and you know it. "Oh i've just had a 5% salary increase darling. Should we over pay the mortgage or use it to pay for living expenses that have just happened to go up by ...er...ah...5%..mmm"

And in harder times large salary increase are less likely aren't they?

46%-50% of your net salary on a mortgage can't be sound advise can it?

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What? Do you believe that mortgage repayments are going to go ever upwards in line with inflation for the next 20 or 25 years?

Your arguments also seem to hinge on the assumption that the poster and his wife will never achieve salary increases greater than prevailing inflation.

Yes, I believe that someone who is left with over €3,500 per month net to live on is entitled to borrow €500,000 if that's what they want to do.

I too agree that the 500K is sustainable based on your salary, if you are the type that is a good saver then a mortgage over the longer term initially and later making increased payments might be the way to go. Personally I prefer 20 years or less. Don't understand how it can cost 500K to build a house though. It doesn't matter what the Irish times says, try your bank, have your figures ready and failing that a good broker. If they tell you no then they will have valid reasons for not letting you overstretch yourself.

Bronte said:

Don't understand how it can cost 500K to build a house though.

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Good point. Never thought of that. But now that you mention it, I remember a very rough rule of thumb given to me by a builder a few years back that you could build a house for €100 per square foot. This probably went up during the peak and has dropped back now. So €500,000 would build you a 5,000 square foot house.

Of course they have the right to decide to spend such a high % of your net income on servicing debt. (never mind the amount of interest thay are going to pay the bank over the period of the loan.)

And its your job to provide them with the prodcut to do this so it very one sided from you.

Just because they can borrow 500k doesn't mean its the best option for them. The other side of the coin says they have a very unblanced portfolio and have their eggs in one basket.

"high" earners (these guys aren't really high earners) usually have a life style to match so suggesting they have more cash left over at the end of they month is not exactly ture.

Asset rich but cash poor is what they may want to try and avoid. Have they got plans for retirement? At 37 he's no spring chicken?

Mr DT said:

And its your job to provide them with the prodcut to do this so it very one sided from you...
Have they got plans for retirement? At 37 he's no spring chicken?

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I might remind you that Askaboutmoney is not my job. It's a website where I answer questions as asked, based on experience gained in my job. It's not the same thing.

In my job, I'm obliged to get a full fact-find from a client before offering advice, which throws up most potential issues such as those you mention. On Askaboutmoney, I just answer the questions based on the information they've given.

Have a look at the original post:

PaulHoughton said:

I will be looking for a mortgage in the next few months of 500K. I have joint income with my wife of 113K and assets of 250K. Is this a runner any more? Or is the era of 5X mortgages gone as suggested in this recent Irish Times article?
[broken link removed]

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He didn't ask "Does anybody think this is wise or advisable?"

LDFerguson said:

Good point. Never thought of that. But now that you mention it, I remember a very rough rule of thumb given to me by a builder a few years back that you could build a house for €100 per square foot. This probably went up during the peak and has dropped back now. So €500,000 would build you a 5,000 square foot house.

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Well I suppose on a 250K maybe 350K site you'd want to build a 5000sq ft house, a site of that value may be in a very desirable area. DT it is not true to say that all high earners are high spendors. Some of the wealthest people spend very little. As for 37 to old to get a large mortgage? There's lots of us old people with large mortgages out there .

PaulHoughton said:

Why is it mad to borrow 500k? I am 37.

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He asked why in my opinion i thought it was mad and I offered the other side of the coin.

Mad, might be a bit harsh but he needs to open his eyes to the consquences and alternatives.

This thread is going nowhere so I am closing it. Hopefully the original poster found some wheat among the chaff.