I have recently taken on a fixed-term contract for three years, which is giving me a salary significantly higher than I am used to. After the three years, however, it is very likely that my salary will drop to its normal amount.
My new salary currently gives me just enough to get a mortgage to buy a property in my city, together with quite a large amount of savings I have. But after the three years, I probably will no longer be able to afford the mortgage repayments.
So my plan at the moment is to take out a mortgage on my current salary, buy a property, live there for three years, and then sell it once my salary decreases. I've figured that this will be cheaper than renting for this entire period.
What I am interested to know is what kinds of mortgages I should be looking for to suit this plan. One option might be to go for a mortgage with a low fixed-rate for three years. But then when I sell the property, I imagine there will be a charge for an early repayment. Any general advice on this? Is this even a good plan at all?
My specific details are:
- I live and work in the UK.
- My cash savings (for the deposit) is £150k.
- The property value is around £450k.
- The mortgage will therefore be around £300k.
- My new salary is £65k / year.
- My salary in 3 years will probably be around £45k / year.