Proportion of income on rent/mortgage - and which would you choose?

[Ca Plane Pour Moi]

We were 60% of joint income, stressful when I lost my job only.

Now remortgaged on 35% and comfortable. But we have low commute costs and enough left over that I can go back to parttime soon. It isn't the %, it's the lifestyle and money left over each month.

[meow]

It isn't the %, it's the lifestyle and money left over each month.

I agree with this. If you earn $50000 a month then it would be pretty easy to live on half of it! I prefer to calculate how much we need per month for all the costs BESIDES rent/mortgage then figure out how much we can afford to spend on rent mortgage based on that. If what you need to live on is only 40% of your income then why not spend 60% on rent/mortgage? Whatever you can afford and works for you.

[Floweryfields]

I agree with this. If you earn $50000 a month then it would be pretty easy to live on half of it!

Unless you lose your job and then you're totally up the creek....

[wysiwyg]

I think is very dependent on individual situations - for example if you are reliant is only one income and you are talking 40% of it or 30% etc if that income stream disappears then you are in trouble whether is 30% or 40%. If you have for example a mortgage that is 50% of your income but you only actually spend 20% and save the rest (additional payments on your mortgage for example) then you are in a better situation if your income declines than someone who has a mortgage of 30% of their income but spends every penny of the rest of the 70%.

It also depends on how variable your income is likely to be - our mortgage started as about 40% of my income alone (DH income was not alot) but when I was on maternity leave or had no job at times it went up to 80% of income (as I didn't have one) - but that was short term thing.

I personally wouldn't live somewhere I didn't want to just to buy a house, if I was considering somewhere a bit different to current I would rent in that area first just to confirm could live with it - in your example you would probably save money renting in that area first too. Also is worth considering you can buy a house and not live in it, as a form of investment too, buy somewhere as the investment and then rent where you actually want to live.

I think renting long term before buying can be a valid strategy, if you actually save the money you would have spent on buying, and put it towards a deposit. Depending on where you rent vs where you buy I think you can actually save more money in the short-term doing this than buying somewhere and intending to trade up in 8 years for example. The past 10 years growth in house prices I don't believe will continue for the next 10 years - the growth will be slower in many areas.