to buy a house I can't afford?

[blinkineckmum]

I am hoping to put in an offer on a house as it's the right place and right timing for various reasons. I am usually really cautious with money, and have a smallish mortgage on my current house. The house I want to buy is just about affordable, but I would double my mortgage debt and repayments. I could just about do it, but it's a huge house, and it would all be much easier if I rented out a room or even a floor. AIBU to consider buying this house, if I can only comfortably afford it by having to rent some of it out? Thanks for any opinions

Have you ever had a lodger? Do you know anything about it?

Is there demand for it in your area, what is the going rate, would you actually like having another person in your house?

I think you need to define "can't afford". (Not necessarily in public here, but in private!)

People have radically different ideas of affordability. Like you, I have a very low mortgage (and mine is at extraordinarily low cost) on my house. I pay a couple of hundred a month on it. I am cautious wrt debt and I like having disposable income. My friends have much bigger houses and mortgages, between 3 and 10 times as much as I pay, but they are comfortable cutting back on things like going out and holidays for the sake of having a lovely house.

One thing I would say is: make sure you leave contingency for work that needs doing. A big house may swallow quite a lot more money than a smaller one in terms of the money you need to spend to keep it in working order, or to upgrade things. I would be wanting to look at the state of the electrics, heating, plumbing and any issues with damp/water penetration in some detail before taking the plunge.

The fact you could only afford it by renting out a room/a floor is not exceptionally reassuring.

As PPs have asked, have you got any experience with lodgers? Will you even be able to find any? You say you have 3 small DC, which could make renting less than ideal for various reasons. What if things go tits up and they stop paying rent?

So wait a sec - this is a new build house ? You do know about the new build premium don't you ? Aka overpaying.
I would seriously reconsider stretching yourself financially just to buy something which will fall in price once you own it.

It's one thing to over extend n a rising market when economies are coming out of recession. Quite another to do so in a falling market with an economy that is likely to bump along for a few years.

How big is it op? Ours is 3,500sq feet. That's a lot of heating and lightning, maintenance regardless of mortgage.

How big is the house? Why would a lodger want to rent a room in a home with three children aged 0-3? Is there a living area for the lodger or would they share your kitchen and living room for the tv etc?

I had two lodgers and it worked well as we were all single and everyone shared facilities. I don't think you are set up for a lodger in a family home with small children.

I think it really depends on your exact financial circumstances. We're on the market currently and looking to upsize, and am allowing about 30% of our total current take-home pay to go towards our new mortgage. It would be on a fixed rate interest deal for 5 years which should get us through until the worst of our childcare bills are over and both DDs are of school age, and then at the end of that 5-year term when the mortgage interest rate will inevitably go up we shouldn't be much worse off really as our childcare bill should be considerably less each month. We didn't want to massively overstretch ourselves as we still want to be able to afford to live and take the DDs on holiday each year etc, and don't want to be in a position where we risk losing the house if interest rates jump.

Why would a lodger want to rent a room in a home with three children aged 0-3?

This is a very good question

Also worth considering that your mortgage provider won't necessarily be entirely happy with the plan for you to keep a substantial sum of money held back from the deposit, if you are close to the line on their affordability measures. They may expect you to put the money into the deposit if it reduces your monthly payments to a more reasonable amount.

Another one here who thinks you'd be lucky to let a room/floor with three under 3! You have to consider that a lodger would want access to the kitchen, laundry area, living room, bathroom etc and isn't just someone staying in your spare room - and obviously you have to still heat and electrify their living space!

You'd be able to set the price, but it would have to be fair/competitive and actually you might have to undercut other locally let rooms to compensate for your circumstances (all those young children!). Also, you'd have to consider who you'd be happy to live with; would you accept someone coming in late at night etc?

Finally, you'd have to be very careful in checking over your mortgage and home insurance details to ensure that lodgers are permitted - most standard policies from both outlaw having lodgers and/or letting rooms through outlets like AirBnB etc.

Overall, I'd say that YWBU to commit to a property that you doubt you could afford. I'd also say that overpaying on a mortgage only to remortgage yourselves to the hilt was a bit daft in hindsight.

Ask yourself:
Do you really need the extra room this house offers if you'd just end up trying to let a whole floor of it? Why not buy somewhere with one floor fewer and keep your mortgage repayments low, maximising your earlier over-repayments of your current mortgage?

My dd has rented a room several times and she has 2 very little ones. It's usually fairly short term and the people generally go home at weekends. She doesn't see much of them at all. But she lives in an area where other short term accommodation - for a few weeks or months - is generally very expensive and there are plenty of jobs. Given that you can earn up to £7000 a year tax free from renting out a room I think it can work well for some people.

If it's a good, rentable area, high demand, go for it.
If you'd have trouble renting, don't.

I would go for it but I'#ve always assumed I can always earn and earn and earn and earn more and more and more and if necessary work 7 days a week if I have to. We spent every last penny including children's savings (now restored) when we bought this house and it worked out really well. Have now paid off the mortgage afer 30 years of paying a mortgage and have a lovely house. however when I had a baby, toddler and 3 year old I worked full time not part time so I had a big career as it were that I was thrusting ahead with to earn more and more money at rather than hoping to take in lodgers whilst working part time.

We sold last year, we priced to sell at cira £1m so not a small sum of money. The first offer was from a chap who stated he was a cash buyer. It came out within a week that actually he wasn't! He meant that because it was 'him' of course he would get a mortgage so by default he was a cash buyer...

Having said that mortgage rates have never been lower. You could consider a 10 year fixed rate if this is a house you are planning to stay in for years. Life is just too short to be cautious. I see people on Location, Location looking for years - now that really is a waste of time!

What I wouldn't assume is that if it didn't work out you could always sell. It will cost you £££'s to sell and house prices are very funny at the moment. I think there is a correction going on especially in London and SE (which I think is a good thing - they are comedy prices previously)

Go for it. We bought a large Victorian house and rented out rooms to help pay to do rooms up one by one. Last room rented out when the oldest DC was 10.

I know someone who rents a 5 bedroom house. Just for herself.
I think she is nuts.But each to her own.
I think that you should buy a property the right size for your needs, not too big.

I'm with guilty100. What does 'stretching yourself' mean in the circumstances?

Saving a bit less?
No longer overpaying mortgage?
One less holiday a year?

Or struggling to pay bills, cancelling all holidays for the foreseeable future etc?

My OH and I spent at the top of our budget for our house, but it was a self-imposed top, because we didn't want to give up certain saving and spending aspirations. He's always telling me off for saying I 'can't afford' things when I've put £££ in savings that month, but to me, savings are a non-negotiable expense. For my dream home, that would probably change!

As others have said, you need to consider the increased costs. Friends of ours bought a large house about 18 months ago. They stretched themselves to the max to do it and have now realised that they didn't properly factor in the increased heating, power and maintenance costs. They're now having to make other significant changes to be able to continue to live there and that's even before the interest rates start to go up.

We stretched ourselves to the max when we bought here (about ten years ago) but luckily our incomes have also increased. Otherwise we'd really be struggling now. Electricity alone is £130 a month and that's before we try to heat the place.

@Crumbs1

"Our daughter has just bought at £500k aged 24 which to us seems an incredibly huge amount for someone so young and who isn't actually married to her partner yet. They have ability to do additional shifts if things went pear shaped"

WTF! Who is their mortgage lender??! Semi serious question, I would love to know who lends someone that young who does shift work that large amount of money!!!

We've just stretched ourselves for our house. We've increased our mortgage significantly and have a forever house now. We took the view that if we could afford the repayments, which we can, then long term it is absolutely the best place to put our money and when we eventually downsize we will have a far bigger pot for our retirement than we would have if we played it safe. Having said that we still have over 50% equity in the house already and we were offered a lot more than we too so therefore, if we get into trouble we'll be able to sell up and buy somewhere smaller. We've fixed for 5 years and we'll take a view after that. However, our cutting back means less savings but being able to maintain our standard of living in every other sense.

So, I wish we'd stretched a bit to buy our FIRST house (although I did love that house) which we owned prior to having kids. We might not have then felt the need to move after we'd had them.

I wouldn't buy a house where I was dependent on finding a lodger to finance it, maybe ever, but certainly not with kids as part of the mix.

splendid two doctors would work shifts and be a good secure bet for a lender.

although at 24 very junior doctors

What if things go tits up and they stop paying rent?

Lodgers have hardly any rights, it isn't like having an AST where you have to go to court to evict them and it can take months

With a lodger, at any time for any reason you can give them notice to quit - we have the agreed notice to quit at a month but could have 2 weeks if both agreed on the license.

Unreasonable is probably not the right word, but potentially unwise, if you are going to be putting yourself in a situation that is unnecessarily stressful. It all comes down to how much you really want that house. If it's your dream house and you are willing to deal with money being tight and having to make other sacrifices, then it's fine. You just have to go into it with your eyes open. Good luck whatever you do!