Currently me and my partner are renting in London, which with bills included eats up around 50% of our takehome income.
It seems that if we were able to get a mortgage on a flat, we would potentially be paying less than the rent we current pay - with the bonus of owning property at the end.
However, I'm instinctively terrified of getting a mortgage (assume for this question we would be able to get one approved). While it may not be rational, my main worries are:
The housing in London is in a bubble, which may burst in the foreseeable future (Brexit not-withstanding, this was a concern before that as well)
I've had advice before that owning a flat is a dangerous game, as it can be near impossible to sell it in the future if needed.
If either of us lose our jobs, a mortgage would suddenly be a giant liability.
As we currently spend so much of our income on rent. Is it better to try to get a mortgage regardless of the current market - or are my concerns valid?
Right now it feels like we're throwing money in a black hole - and while we're OK for now; we are screwed when we hit retirement age.
For numbers clarity, our finances are:
- £35,000 and £25,000 (£60,000 total)
- Takehome: ~£3300pcm after tax, NI and pensions
- Rent: £1700 after council tax and utilities(£1425 before bills)
- Savings: ~£500 pcm
- Both of us have ~35 years of earnings before retirment age
From looking around, it looks like we could get a mortgage similar to the following:
- 25 years
- ~10% deposit
- ~4% APRC