HBW KNOWLEDGE / PLANNING
What monthly payment can you sustain?
A suitable payment follows from your future household budget, including ownership costs, reserves and foreseeable changes.
Use the costs you will have after buying
Your existing basic rent will generally stop after moving. Other costs remain or rise: energy, insurance, maintenance and apartment service charges. Spread annual bills over twelve months and include existing loans, travel and childcare costs.
An example household budget
| Monthly item | Example |
|---|---|
| Reliable household net income | €5,200 |
| Living expenses, transport, insurance and commitments | − €2,700 |
| Future ownership costs, excluding the mortgage | − €450 |
| Reserves and additional contingency | − €350 |
| Remaining mortgage payment capacity | €1,700 |
Avoid counting the same expense twice, for example costs already covered by apartment service charges. A lender will also assess your household using its own criteria.
Connecting the payment to the loan
For a repayment mortgage, the initial monthly payment can be approximated as: loan × (annual borrowing rate + initial annual repayment percentage) ÷ 12. A €300,000 loan at an assumed 4% borrowing rate and 2% initial repayment gives €1,500 a month. The rates are illustrative, not a current offer.
Test the more difficult years too
- How would parental leave or part-time work affect income?
- Would a major repair leave enough cash?
- What balance might remain when the fixed-rate period ends?
- Would repayment remain affordable on retirement income?
Frequently asked questions
Is 40% of income a safe limit?
A percentage cannot replace a household budget. Two households with the same income can have very different commitments.
Is the lowest payment always best?
Lower repayment reduces today’s payment but generally leaves more debt outstanding. The payment, repayment period and future interest risk belong together.
What does this mean for your plans?
Discuss your purchase price, own funds and intended borrowing with us.
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