Thinking of buying a house for the first time and having a hard time working out my budget. I'm in my late twenties and work in IT. I've lived on and off with the parents for quite a while and saved up a decent deposit, but now I have no idea what my outgoings are going to be when I get back to reality. I'm looking at 2-bed Victorian-era properties so I dare say the bills won't be cheap, and there's always the risk of work needing doing. I've found out what I can borrow, but I'm trying to work out what I *should* borrow.|
Most of my friends (who are couples) are saying I should spend the most I can afford, and get the best house I can. It's tempting but I'm incredibly risk-adverse, and as I'll be buying on my own it scares me to try and approach the limits of affordability. So for example, the nicest house I'm looking at would cost about 35% of my salary just on the mortgage to pay off over 25 years. The mortgage would be just over 3x my annual salary. It's a lovely house though.
I'm looking at some cheaper ones too, and they could go as low as 20% of my salary over 25 years, or realistically if things go well I could probably pay the whole thing off in 12 years (I'd be borrowing just less than 2x annual salary). I've never had debt before and hate the idea of it so this really appeals, and I could get a house as good as some of my friends have for this price, so I'd still be getting somewhere nice. Friends are warning me off here saying that I'll just lose a lot of money when I inevitably want to upgrade (huge fees and stamp duty, being in a worse position to buy, etc), and that I shouldn't be thinking of a mortgage like other forms of debt.
But my main concern is that even though I'm very happy at my current job, I'd like to go contracting in the far future, and I don't want to be in a position where the risk of doing that is too high due to an expensive mortgage.
Has anyone got any thoughts on this? What's a realistic percentage of salary to be paying towards a mortgage, or what's a realistic multiple to borrow? Cheers.