Should we buy somewhere or keep renting?

[epa]

At the moment, the max we can afford/borrow is £450k. This can just about get a 1 bed flat in the Islington area. Nothing fancy but about as nice as what we currently rent.

We pay £1,800 a month in rent for a one bed, and the mortgage on this place would be £2,700 a month. Service charge is £700 a year.

I'm getting the itch to 'own' somewhere but then it's going to cost £1k+ a month just to do that, plus any redecorating and the like.

In a couple of years our salaries should go up a lot - so we'd be able to borrow enough for a two bed with a roof terrace.

It’s a difficult one and it’s all guesswork but if you can afford to save whilst still renting then maybe it would be worth waiting a couple of years to build up more of a deposit and be able to take out a bigger mortgage. You don’t say how old you are though which might have a bearing on things. Also mortgage rates are expected to fall and maybe house prices will just not go up in next few years effectively meaning with inflation they will fall.

When we were in a similar situation, we reduced our rental prices dramatically by renting a room in a houseshare rather than our own flat, which allowed us to save a lot faster, with a bigger deposit. This was a few years ago so the numbers and rates are obviously different. But I guess it's something a lot of couples do, or they move further out or live with family so the rent vs mortgage sums work out more favourably. It meant we could buy a nice 2 bed in zone 1 when we eventually did buy.

Continue to save and rent. You will outgrow a one bed in Islington in a flash. Really easy to then get stuck there if prices take a bit of a bashing.
Put that extra 1k a month away (more if you can manage it) toward a better option in future. Prices will not run away from you in the short term and may even continue to soften allowing you to skip the 1 bed stage.

Wait for 2 bed.

Do you need to stay in Islington? £450k is a healthier budget in other areas of London.

I agree with others that as long as you are reasonably happy renting at the moment, and considering your salaries are due to go up a lot in the not too distant future, it probably makes more sense to continue saving and move to a nice 2 bed with roof terrace in a couple of years.

If you buy a 1 bed now, you can't expect it to increase in value much in the space of the next 2 years so you wouldn't be gaining much, if anything.

I would go down the Northern Line and buy this. Its small but you do have an additional bedroom that would work as a nursery/office/spare room so probably good if you are planning DC. That room would probably service a DC until age 4/5. So even if you got pregnant after moving in, you have 5-6 years in that flat, probably up to 10 if you don't have a child immediately (assuming you weren't planning any). and tbh i have seen adults in smaller bedrooms nowadays.

From a commuting perspective, zone 4 isn't ideal but its definitely doable.

https://www.rightmove.co.uk/properties/146139818#/floorplan?activePlan=1&channel=RESBUY

Don't buy a flat... Houses are the real deal in this country.

If they commute, they could spend 8k on commuting costs between them per annum. And the house wouldn't have much change below 450k.

If interest rates increase to 6% or stay at their current level, they could be in a bit of a pickle if the salary rises don't materialize.

I am happy that at after tax 7k household income my new mortgage at 4.25% is £1250 and i have no car, DH cycles to work and i take the tube from zone 3. So it isn't too burdensome to service the mortgage, would be different if i also had to pay to commute from outside London or have to pay 4.25% interest on the extra 200k it would cost to buy a house!