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10 Jun 2019

Are you spending too much on your mortgage repayments?

The cities where homeowners pay out more than 30% of their household income

Homeowners in three UK cities are spending more than a third of their income on mortgage repayments.

That's according to a new report by the price comparison website Compare the Market, which has assessed how affordable homes really are in 25 cities around the UK.

Here, we analyse the most and least affordable places to live, and offer advice on finding the right place to buy a property

The most expensive cities to buy a home

It's often said that homeowners shouldn't spend more than 30% of their household income on mortgage or rent payments.

Indeed, in some European countries (such as France), lenders are prohibited from offering home loans that would stretch borrowers beyond this limit.

But how much of a problem are mortgage payments for borrowers in the UK?

In a new report, Compare the Market has analysed house prices and mortgage repayments in the UK's biggest cities, and found that household finances are particularly stretched in three places.

Perhaps unsurprisingly, London tops the list, despite its higher average incomes. Mortgage payments on a one-bedroom flat in the capital would cost a couple 51% of their household income - and that's without factoring in any other bills.

In second place, homeowners in Brighton face a hefty outlay of 48%.

The only other city where buyers need to spend more than 30% of household income is Milton Keynes (34%), though Bristol (29%) only just misses the cut.

CityAverage house priceAverage mortgage interest rateMortgage as % of household incomeMortgage as % of single salary
Milton Keynes£267,8173.22%34%69%

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The UK's most affordable cities

This might paint a bleak picture, but in truth some cities remain more affordable for homebuyers.

In seven of the 25 cities investigated, a couple would spend less than a fifth of their collective income on mortgage repayments.

Topping the affordability list are Glasgow, Liverpool, Aberdeen and Derby, where it's possible to spend just one sixth of your income on your mortgage as a couple.

CityAverage house priceAverage mortgage interest rateMortgage as % of household incomeMortgage as % of single salary

Finding the right place to live

Of course, if you have a job in London, it's not as easy as upping sticks and moving to Glasgow tomorrow - as tempting at that might be.

That said, it might be possible to find somewhere a little more affordable, and perhaps enjoy a higher quality of life at the same time.

With that in mind, we created an area comparison tool for England, which you can find below.

To get started, simply type in the name of a local authority area to find and compare house prices and household incomes, alongside data on Ofsted school rankings and happiness scores.

Find out more:discover the pros and cons of areas with our guide on finding the best places to live.

How to save money on your mortgage

One of the best ways to reduce your outgoings as a homeowner is to consider your remortgaging options.

If you're locked in to a long-term fixed-rate deal you might be better holding off for now to avoid any early repayment charges.

If, however, you're coming to the end of your introductory period later this year or early in 2020, you can agree a new deal up to six months before the end of your current one, so it's not too early to do some research.

Right now, mortgage rates are low. Indeed, the gap in costs between a two-year and five-year fixed-rate mortgage hit its lowest level in seven years, according to data from Moneyfacts.

This means there are some great deals out there for borrowers right across the board.

Find out more: get the lowdown on your options with our guide on remortgaging to save money.

Advice on your mortgage options

If you're considering buying a home or switching to a new mortgage deal, it can be helpful to take advice from a whole-of-market mortgage broker, who can assess your options to find you the right deal.