Max mortgage(8 Posts)
I have posted before about my endeavours to find a property in our very popular village. At last something perfect has come up, we are in prime position, ready to proceed & with all finances in place. It is the absolute top end of our budget (it could go for more obviously) & requires a lot of cosmetic work (no rush to do this).
Although we love it, I’m wary about maxing ourselves financially, especially in a house that will require a lot of work over the years. Can you share your experiences, has this happened to you? Do you regret your decision? Best decision you ever made? I want to hear the good & the bad! So far friends have been warning that this type of financial commitment could be tough on our marriage...
We bought our current house 3 years back in the same situation. We did nothing to the house for the last 3 years and we are now in a position where we can fix up the place. We worked extra hard the last few years, no holidays, overpaid as much as we could on the mortgage and now we can breathe. It is tough going, but make sure you will be able to afford the mortgage when the interest rates go up.
NEMum - there are strong signs that interests rates will rise over the next year. I don't expect they'll rocket - BoE will not want to scare the horses - but do make sure you can afford it if they do.
I think the main thing is to work out carefully what your finances might look like, and whether the sacrifices are worth it. Everybody's tolerance of risk and debt is different - there's no right or wrong, just right and wrong for you. A lot depends on how much you care about stuff that is not your mortgage. If eating out, or going on holiday, is what makes your life worth living it's less of a good idea than if you're a real homebird.
Similar train of thought to Guilty. Interest rates are only going to go one way and there's talk of it happening very soon. You could find yourself barely able to afford repayments. I'd also have a think about what might happen in your life over the next few years - is your income likely to increase or will it stay the same or even go down?
I'd also consider the amounts that 'cosmetic' work costs. Kitchens and bathrooms are hugely expensive, taking down old wallpapers can reveal crumbling plaster that needs doing etc. Another consideration is that if the house is dated than it's likely to have an old boiler, old electrics etc. In my experience these houses needing 'cosmetic' work end up costing almost as much as real fixer-uppers. The only difference is that you can spread the costs over a few years.
From experience, we've been paying for our current house updates out of income but that's with a very low mortgage and high income. In the last house, we had the money needed for work when we purchased the house as the repayments were 30-ish% of take home pay at the time and paying-as-you-go would have been a nightmare.
We did, 7 years ago. Every penny the bank would lend us, and every penny we had in savings, save for £1000 which I kept back to replace the 40 year old
grim carpet. The day we exchanged we had a family bereavement overseas which meant we had to spend the £1000 on my H's flights and paying for funeral long story. So we had no spare money at all.
We lived with bare floorboards for about 9 months, we did nothing other than decorate the children's rooms. We did minor things over a period of time, and extended last year (so we'd been here for 6 years).
A few things to bear in mind :
1. I knew that our finances would improve in 3 years by quite a chunk - we wouldn't be paying £1000 a month for nursery and I would be able to go up from my 3 day week (now do 4 days).
2. It was 2010 when we bought - so market wasn't rock bottom but still fairly flat and things were on the up. I think that's different now, I'd be worried that house prices may go down.
3. Don't underestimate the impact that it can have on your social life - its hard inviting people round / having play dates when you're embarrassed about your house (but can't afford to improve it) . Its hard when you feel that the first thing you need to explain to people as they come in the door is that you hate the curtains / wallpaper / tiles or whatever just in case people think its your choice !
4. Also think about your time - for a while we could afford the materials (a couple of rolls of wallpaper or a few tins of paint) but not the labour. So my H would do DIY while I looked after 3 younge children, or we both did it when they were in bed. That's hard work too.
BUT having said all that, it is the best decision we ever made. We loved the life the house gave us from the minute we moved in (neighbours / proximity to school / community / bars & restaurants / family activities etc) and we wouldn't have ever been able to afford a house that didn't need work. We're staying here forever . Financially it has definitely worked out for us, but that was probably luck in terms of timing.
I personally don't think now is the time to stretch yourself. There is a lot of uncertainty at the moment and i believe the cost of living is going to go up significantly soon enough.
We have decided not to buy here for that reason when we were all set to move up (house on market).
Sadly our sale fellthrough but we were looking to move to a house at the top of our budget, our mortgage adviser found us a great deal, house was more than twice the cost of our current one but mortgage amount was the same as she'd extended the term (we've been overpaying current mortgage to shortern the term). That would have give us the flexibility to overpay, do work or cope with a rate increase.
Thanks everyone. We have decided to go for it but we know there will still be stiff competition. I’m hoping if it works out then at least we are going into this with our eyes open & aware of the pitfalls.
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