Sensible Mortgage or too much risk?

[robhull]

Hi,

I'd really appreciate any of your thoughts on this, we're looking at a property at the moment for £425k in a desirable area, with a 175k deposit. Under a current 5 year lock in, this works out at about £1090pm on 250k borrowed over 25 years. This is about 26% our total income per month, after bills etc that leaves about 1.3k - and that's basically all eggs in one basket.

I think on paper it sounds fairly good, what I can't decide is around the risk of what might be in 5 years time and if 250k is just too much to borrow? If we assume maybe worst case rates go to 8%, and house prices have fallen then after 5 years that could jump to £1700/pm at 45%+ of our income. (Income wont go up much). Could I just have the attitude that worst case we down size in 5 years and write of some of the deposit if prices fall?

Where should you draw the line!? This is a nice property and a stretch for us, however we could just minimize the risk, live in a rubbish estate and go for a 300k place and have much more free cash?

Budgeting for unknowns like, cars, renovation etc also adds complexity :(

If it's your forever home, could you fix it for 10 years? Interest rates are historically low, and paying almost half the mortgage under those conditions would be good.

You could get an interest only mortgage and overpay when you can afford to? Interest only repayments on £250,000 are closer to £400 per month.

I think it sounds reasonable. Go for it

Similar to you. We have taken out a 290k mortgage and after all bills have about £1k spare.

It's a squeeze at the moment but my income will only increase, so we see it as short term pain.

Sounds ok to me. £1300 left after all bills sounds ok.

It sounds fine. £1300 after bills is a good buffer

I think it is very affordable at the moment. Not so much if one of you wants to reduce your hours, gets sick, made redundant etc. But you will both probably get pay rises in the next 5 years which will offer some protection from interest rate rises.