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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

to buy a house I can't afford?

101 replies

blinkineckmum · 23/09/2017 23:24

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

OP posts:

splendidisolation · 25/09/2017 10:00

Good point Newts in my head I was thinking supermarket workers 😁

turbohamster · 25/09/2017 10:09

Only you know how much of a stretch it is. What you consider a stretch might be perfectly normal to someone else.

We were over cautious with our first house, buying somewhere we could afford on one salary if one of us were to lose our job. The reality is 5 years down the line, we've had significant pay increases and could easily afford to pay four times our current mortgage rate. We'd have been better off stretching ourselves a little more initially, hindsight is a wonderful thing.

HerOtherHalf · 25/09/2017 10:17

I think there is far too much economic uncertainty and potential for house prices falling and interest rates rising to make over exposing yourself sensible. I also, from a purely personal POV, would hate to share my home with a stranger so buying on the basis that I would need to take in lodgers makes no sense to me.

MrsClegane · 25/09/2017 10:18

We had a mip. . No lies on it...then we went to apply for the mortgage and they picked everything apart. We can actually only take a percentage of this. ..we need to disregard overtime. ..etc etc.
I'm the end we couldn't even get a mortgage on a £80,000 house. ..though dh earns over £37,000 and we had 10% deposit never missed a mortgage payment and they could see from bank statements we were saving regularly more than what the repayments in new mortgage would be.
She was apologetic saying she knew we could but the computer says no.

Anyway..I would possibly speak to a mortgage advisor and see if they would actually even give you a mortgage enough for the house.

Allthebestnamesareused · 25/09/2017 10:52

I have found that whenever I have moved I have worried a bit about stretching myself.
When I divorced it was the first time I bought a property on my own and thought I may have to have a lodger but in the end I didn't.

You make yourself afford it even if you find cheaper brand food, buy less clothes, go out less for a while.

It is better to go for the best you can afford get now as the cost of moving fees, surveys, stamp duty will end up more if you have to move again later.

Go for it I say.

Original poster

blinkineckmum · 25/09/2017 11:13

Thanks again to all the people taking time to reply. I have told DH I don't think I'm comfortable with it, but he said let's try and see how it goes. So we're chatting with a mortgage advisor today, and getting our house on the market tomorrow. All a bit tricky with the kids!
To try to answer some of the questions. If we sell ours at a reasonable price (it is in a sought after location and nothing else on the market - has parking/ garden/ views, so hopefully should sell), and manage to get this one slightly under asking price. If we extend our mortgage... our repayment could go up by about 50%. Which should be ok considering childcare costs are about to go down.
The house is 12 years old and has been rented to multiple people, so set up for this already, and not in the most beautiful of states, hence the price.
It has 3 bedrooms and two bathroomson the ground floor, and a garden. A separate entrance on the ground floor with kitchen/ diner/ toilet/ utility room, and separate garden, then 3 bedrooms upstairs plus one bathroom. So there are options. We could do a self contained flat downstairs with bathroom and kitchenette (and possibly a washing machine too), using one bedroom or more (we would ideally like to keep one room for storage and one as a gust room). If we rented out, we would bring down the mortgage to lower than we pay now. Of course we need to consider if e want a lodger who shares our kitchen and utility, or is self sufficient.
I agree, we need to look at how a lodger would fit in with 3 small kids, and whether we could really afford it if we couldn't rely on rental income. And all the things we'd need to do to get it ready for rental. And all the other considerations mentioned.
I wonder if I need the hassle with my three small kids, but I suppose if we can afford it, this may be a great opportunity. We loved the house.

OP posts:

JoJoSM2 · 25/09/2017 11:41

If you wanted a lodger to be self-sufficient, the costs of making the accommodation appropriate are high (plumbing and electrics + a kitchen, washing machine etc). It could take you years to make your investment back.

Etymology23 · 25/09/2017 17:31

Clegane - did you have really high fixed costs? I was leant nearly 4.5x my income recently so them lending you less than 2.5x seems pretty risk averse by the mortgage company?! I'm careful with money though and went on a total spending freeze for the 6months prior to assessment- no clothes, no holiday costs going through at that time, a £7.50pm mobile payment plus bills, rent and petrol were my only outgoings. I don't have a car on finance and no childcare costs.

GeekyWombat · 25/09/2017 18:55

OP will your mortgage company allow you to let out part of your house under the terms of the agreement? I know someone who got in a real tangle with and ended up having to sell up because Halifax got wind of them doing something similar. Worth checking out for peace of mind.

5rivers7hills · 25/09/2017 19:00

Clegane - did you have really high fixed costs? I was leant nearly 4.5x my income recently so them lending you less than 2.5x seems pretty risk averse by the mortgage company?!

I was lent over 5x last year....

2.5x is super low.

sall74 · 25/09/2017 19:05

My idea of a "dream house" definitely wouldn't include having some stranger living in it with me.

Florence16 · 25/09/2017 20:00

I think it's impossible to accurately work out future interest rates and whether you can afford it then. We have no idea if the housing market will stabilise, go up, go down. This affects your LTV which affects your rate, which is also affected by BoE base rate and the £ by the years tor mortgage is over. You could be made redundant etc etc, it's very hard to predict.

We have pushed ourselves. No kids yet, both in our 20's. We've got a 260k mortgage on a £66k gross income. LTV is 85%, mortgage 23 years. I should get an £8k pay rise within 1-2 years (2 if we do kids sooner), and we are fixed til the end of 2020. If rates are crazy high we will extend the term for a few years and overpay where we can to bring that back down. Now is the time to push ourselves if we ever will. We've recently upgraded from our first home which was a 2 bed semi, lived in it 2 years and made £50k on it, and now live in a four bed period cottage in a conservation area. It's our dream house to be honest. Life's short, you don't know what the future holds. Sounds like childcare costs will be coming down for you which is what would cripple us (we will probably only ever have one as a result). We're not you, only you know the circs.

Florence16 · 25/09/2017 20:07

It's probably more valuable to budget and work out your exact cash left after bills and what flex you have.

Currently we have about £500 for miscellaneous junk like coffees and Amazon orders and decorating the house etc. Not tonnes to be honest it quickly goes if we aren't watching t. If I really wanted to, I could clear credit cards with savings, stop a hobby, and cancel money put into savings for the dog, all of which would give me £450 instantly. Plenty we could cut out/down on.

I do work in finance so am a bit of a number geek. Mortgage companies stress test you to about 7-8% these days I think. If you can't meet repayments at that level they don't lend to you.

MrsClegane · 25/09/2017 20:10

It was all down to how DHs work paid his wage... they paid in dribs and drabs...basic pay, bonus1 (which was for turning up every day), bonus2 (for staying overnight on business which was every night as he worked mon-Fri away) and overtime..... so even though he got the same every week for over a year they would only take into consideration a percentage of it all.
It really was ridiculous....but nevermind...

OP...how did the talk with mortgage advisor go?

JoJoSM2 · 25/09/2017 22:15

5rivers7hills, I don't know that 2.5x is loads :D We borrowed less than 1x and even 2x seemed like madness...

Puffpaw · 25/09/2017 22:30

Op if you put a kitchenette in it will be classed as an annex I think and there will additional council tax. I'm not sure a mortgage lender would let you split into flats.

grumpysquash3 · 25/09/2017 22:33

If you can possibly do it, I would. Three DC take up a lot of space in their teen years, far more than you think they would when they are tiny.
Mine are teens now. We have a large 4 bed and it is not too big! It will be cheaper to move now than later.

5rivers7hills · 25/09/2017 22:34

We borrowed less than 1x and even 2x seemed like madness..

Wow but then you could pay off your mortgage in something like 2 to 5 years!

MoonlightandMusic · 25/09/2017 22:36

YANBU as from the sounds of it, you possibly can afford it, mortgage provider willing.
DH's parents did something similar to buy a large do-er upper, including taking lodgers and, at the time, they had four boys ranging from 0 - 5. As others have mentioned, they are still in touch with some of their old lodgers 30 years later so proved to be a good experience all round.

If you do want to move, it's worth considering stopping the over-payments on your current mortgage and moving that difference into savings so you have a better deposit instead.
Another thing people do is to estimate the cost of the new mortgage and set that amount aside each month for a while to see if they could really live with it.
In terms of fixing, because you can't generally pay off extra during the fix, perhaps consider either a split rate (e.g. 60% fixed/40% variable) or plan that when the rate ends you can, hopefully, pay down some of the capital before fixing again if that's what you do.

Hope the mortgage discussion went well.

Original poster

blinkineckmum · 25/09/2017 22:50

Thanks again for replies.
Predictably things aren't moving as fast as I'd thought. Mortgage chats happening tomorrow and Weds. Work, kids and life are slowing me down! Of course we could miss out if someone else gets there first.
DH still very keen but the more I look into it the more it seems to cost. I have chatted to lots of EAs today, and have a realistic idea of buying/ selling fees and stamp duty.
I will just have to see if a mortgage in principle can be organised. If so, I will make an offer only if we can do it without needing a lodger. DH says there are always people at his work who need a room for 6/12 months so I am leaning towards keeping it simple as a room + en suite with shared kitchen/ utility which should work with the Rent a Room scheme.
Will keep you posted!

OP posts:

Florence16 · 25/09/2017 22:52

Good luck with mortgage people.

We saw our new house for sale when on holiday and browsing Rightmove. We went to see it three weeks later after listing and selling ours, and moved in five months later. It can happen, but equally I'm a big believer that if things aren't meant to be with houses then they won't, the right one will appear

Puffpaw · 25/09/2017 22:56

Yes rent a room scheme is the best way to go. Good luck.

EDSFI · 26/09/2017 13:15

Hi,
Just a quick few points.

being able to rent a room out is a extremely efficient way of generating extra income as the £7500 of any income made this way is tax free regardless of any other income. Martin Lewis has a excellent article outline all the costs involved etc but it really is a brilliant way of increasing your income. Friends of ours have 3 small children and run a b&b which they also live in and have no problems.
if you want to know if you can afford it, just start over paying on your current mortgage so your current repayments will be the see as your mortgage repayments on the new property.
thirdly I think now is a excellent time to lock your self into a new mortgage deal. There is some really, really good fixed rate deals out there at the moment and if interest rates do increase then they may become unavailable.
the chairman of the Bank of England has already said any change in interest rates will be gradual and small so I wouldn't panic to much about interest rates raising and not at all if you go for a 5 year fixed. good luck and once you've made a decision stick to it x

Original poster

blinkineckmum · 30/09/2017 17:52

We got a mortgage agreed in principle and put our house on the market today. And the house we wanted sold today! So that's the end of that!

OP posts:

MoonlightandMusic · 30/09/2017 20:44

Oh that's a shame. Fingers' crossed something even better comes up.

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