Buy home we can afford or borrow money for forever home

[PeachOP]

Hi everyone, I’m looking for some advice. My partner and I are currently renting, but we’re now looking to buy our first home.
We’ve worked hard to save a 10% deposit, and during that time, we’ve had one child and are now expecting another. Initially, we set a budget, but after viewing houses in that range, we feel they’re a bit small. While they’re much better than where we live now, I worry they won’t suit us as our children grow, meaning we’d need to move or extend in a few years.
If we stretch our budget, we could buy a forever home, but it would mean borrowing from my parents and paying them back within a year. This is achievable but would mean another year of tight finances, and I’m honestly tired of scraping by after years of saving.
Would you go for the bigger house and tough it out for another year, or buy the smaller house and plan to move in 5 years

I don't know how you know it's your forever home from your position now. I bought house having looked at literally 100s. It was the wrong house I knew within the first week . Started the search again and found a house that wasn't even for sale. Been in it over 8yrs and my life is completely different from then till now, I thought this would be a "forever home" and in all likelihood it won't be life gets in the way , you can't predict what's going to happen. Go for what you can safety budget for and afford, that suits your needs.

Prices for houses usually only go up and then the gap becomes bigger and bigger and you might end up stuck in the smaller house. You also need to consider the costs involved with moving again in 5 years.

One thing to consider is school catchments which you may have already thought about and reversing your Rightmove search. Instead of putting in your top budget and looking at the top end put in 3 bedrooms and then go from cheapest to most expensive. See if there is anything out there with potential that is further down the price band.

I would consider the bigger house now because moving is expensive.

We gave our DS money to help with the deposit for his first home. We had to write and sign a letter for the mortgage company to se it was a gift and not a loan and we would not expect repayment. Would your parents be willing to do this?

I would go for the smaller one. And would take the bigger room for you, new baby will be with you for a while anyway,after that kids can share with a bunk bed. Spending more time bonding on maternity leave infinitely more important than a room for each child,which is over rated anyway.
Then you can save a bit at the time with a view to extend/convert the loft or whatever.

Thanks everyone, it seems to be quite an even split in terms of advice which is interesting. My parents would be willing to sign a paper to say that they would be giving a gift. They also said they do not want repayment but we want to repay them as quickly as possible as they work hard for their money and are not rich.

smaller and extending is definitely an idea but I keep hearing about how expensive extensions are these days do you think it would be more than the extra 100k now? (I have absolutely no idea about these things)

I’d go for the bigger one as long as you genuinely will be able to comfortably afford the mortgage repayments. Moving again is expensive and you can’t guarantee that the house will have increased in value by the time you feel you need to upsize.

Why are your parents able to lend the money but want it back so quickly?

Cross posted. Take their money as a gift and make them always welcome in your lovely home. I’m sure you’d do the same in their position to help your DC set up in a great home that will meet the family’s needs. If you’re fortunate you can hopefully be in a position to pay it forward to your DC one day.

Smaller.

”Forever home” is a marketing ploy to encourage young people to take on risky levels of debt.

If it’s only a year, go for bigger house.

Can you do the repayments in two years to make it less hard?

I'd go big.

You having a small room and the dc sharing will feel too small very quickly imo.

Then you've got the stress and expense of selling and buying in just a few years.

Extending is not easy or cheap either.

We can, but I’m just so sick of constantly scrimping and saving and feeling like we never have any money. We were so excited to finally have saved the deposit so an extra year of watching every single penny feels so unappealing even if it is better in the long run!

I’d stay put, save like mad, and reassess the situation once baby two is here and you get a better idea of the space you will need.

Bigger def

No point smaller and having to move in. A few years and more fees via stamp duty moving costs

V

One year of scrimping then in forever home

Smaller. Jobs might change, expectations may change. It’s good to have contingency when you have all the nursery bills and they’re sick and you need time off. What if one of you lost your job? I thought that wouldn’t apply to me or my peers, but my extremely stable job and company anonymous of redundancies and luckily I was spared but many weren’t.

Your children are young, they can take a move in primary school. Have the fun experiences now, as you may not get them again. You can afford a little holiday, honestly what that does for your mental health is amazing when they are young and needy. Save when you can and then look for a place when you know your requirements because they do change as they get older.

Smaller with room to extend … have you taken childcare costs for two kids into your budget?

Do you have any other money commitments? Credit card etc.
Are you sure you are not viewing through rose tinted glasses about the bigger house.
If you had a unexpected cash issue would it affect your parents as well ?

I think that the mortgage company would insist on a written statement from your parents that the money is a gift.

Bigger house, you’ll have to move again in a few years with all the associated costs.
sounds like the two bed is already too small for your family.
Good luck whatever you chose.

Which if they're paying it back, it's not. Not sure that's ideal.

No it would be a false statement which is not a good idea. If they thought you could afford to pay back more they’d lend you more.

This. Always buy the biggest house you can afford now. Cheaper in the long run and a better investment.

I'd only ever go for what I could comfortably afford now. You can always move to a bigger house in 5 or 6 years time. Once you have the new baby you'll have more nursery fees. You say the smaller house is bigger than you have now. You'd have a bit more money to enjoy life with your DC now. You never know what is around the corner. I don't want to be doom and gloom but there the economy is going downwards and your DH could lose his job.

If it's only 1 more year of scrimping then I'd go forever home.

We went for what we could afford with a view to moving a couple of years later. In that time house prices sky rocketed and for a time we couldn't afford to move.

By the time we could afford it we were close to being at the end of our mortgage and couldn't really face starting 25-30 years again.

I wish we'd just bitten the bullet at the time. It would've been hard for the first few years but right now I'd be in my "dream home" and still almost mortgage free!

I would definitely go for the bigger home. We are having to give one of our children a sum to help them buy their first home. There is no way they can repay it. They are in a similar situation to you.

Surely without (rough) figures it's all a guessing game, say I had 55k deposit what house can I afford? Ppl can't answer because they are missing the other factors .