5.25 joint salary, though, so that could be as high as 11.5 times one person's salary for one house if you're buying together (they may have a slightly different calculation when combining salary).
And indeed my house, but not the mortgage, was well over 10 times my salary when I bought it. The mortgage was around 8 times my (entry level UK) salary, but about half that if you counted both of us.
Which is one route to how people end up in serious trouble: get a mortgage as newlyweds with 8 times one person's salary, then one person stops working for The standard post-marriage activity: kids, and now you have a house you could never have passed the affordability checks for, as well as a very expensive baby. Then interest rates rise. Game over. Luckily for lots of people, interest rates have been miniscule for a while, but I get the feeling that there's a lot of people on the edge.
Technically, but that's moot as there's two incomes so not really what we're discussing. And the only way that happened is because your partner earns the same as you.
People used to be be able to easily afford houses on a single income. My old boss, for example, bought a house alone when he was 25 and rented out a room. And that was back when tech salaries were low, especially in the UK where it was viewed as a perfectly normal job and no better paid than, say, a teacher.
That's just not really possible these days, a 25-year old teacher could never buy a half decent 3 bed house alone.
That what I mean. The "borrow 3-5ish times your household salary" hasn't changed that drastically (especially considering interest rates have been fairly low). What has changed is that the baseline is borrowing that multiple of two salaries to buy the same house.
In UK you always get a fixed rate for X number of years, then it automatically move to variable(but at that point you'd just remortgage again). Like we're on a 1.29% 5-year fixed mortgage, but the whole thing is 20 years long. But after 5 years we'll just remortgage again on new terms.
We also could have had 1.12% I think, if we increased our LVT to like 60%, but I didn't have the cash to do that at the time. It was in September 2021, so basically the historically lowest interest rates time in UK, ever - we were quite lucky to be remortgaging at that point. My sister is just getting a mortgage herself now and the lowest she can find is about 3% for 5-year fixed mortgage.
Where it goes wrong is when you remortgage in a higher rate regime, and the bank won't give you a new fixed mortgage to cover your remaining capital. Now you're stuck on the "punishment" variable rate you get when you don't remortgage.
you don't "always". The mortgage industry has a long history of different optimal strategies given different scenarios. For example, overpayment and payment holidays without incurring penalties used to be features only available on tracker mortgages. Discounted (yet still fluctuating) rates used to be effective.
Fixed rate mortgages are popular with people that don't want to take on the risk of payment fluctuation as well as in economic environments such as today.
In the UK even fixed rate mortgages are only fixed for the first couple of years, which wasn't so bad as rates were decreasing, but obviously things might change in the next couple of years.
And indeed my house, but not the mortgage, was well over 10 times my salary when I bought it. The mortgage was around 8 times my (entry level UK) salary, but about half that if you counted both of us.
Which is one route to how people end up in serious trouble: get a mortgage as newlyweds with 8 times one person's salary, then one person stops working for The standard post-marriage activity: kids, and now you have a house you could never have passed the affordability checks for, as well as a very expensive baby. Then interest rates rise. Game over. Luckily for lots of people, interest rates have been miniscule for a while, but I get the feeling that there's a lot of people on the edge.