To stretch us to the limit for a house?

[Maneandfeathers]

First world problems coming up.

We are currently looking to move and DH and I can’t agree on what to do.
We still need to sell ours anyway but are looking at styles/prices of houses and are in talks with mortgage advisors about what we hope to be able to afford.

DH wants to stick to the lower end of the budget and buy a house that we will easily be able to afford along with extra money spare but that won’t necessarily fit all of the criteria. The types he is looking at are smaller 3 bedroom semi types with small gardens in estate type areas and are coming in at about 100k less than we can afford to borrow according to the mortgage advisor calculations.

The homes I prefer are the much larger family homes, more rural with much bigger gardens. We have also seen some large 3 bed Victorian semis with large gardens. These ones would stretch us to the top of the budget and are 100k more than the first time (well some of them!) but would hopefully be a home for the rest of our lives.

DH thinks AIBU to want to buy a house that means financially things will be tight, not unmanageable but we would have to cut back a lot whereas he would rather have a smaller house and plenty of disposable income. He thinks the house will become a prison if we can’t afford to do much but house things but people are telling us to buy the most we can afford.

There isn’t much in the way of finding a house in the middle, houses tend to have a big jump in price here between the two styles.

I can’t get the idea of a lovely perfect family home out of my head though, is it all that it’s cracked up to be?
AIBU to push for the larger/better home?

I’m with your husband. Looking at properties £100000 below maximum at the moment, and still inclined to go £120000-£150000 below. I like having a large disposable income, lots of holidays etc. I think once I have the maximum value house, I’ll still want the spare cash too.

We stretched ourselves and I don’t regret it; we’d have outgrown a 3 bed very quickly (2 children plus DSD) and we’ve lived in enough places that are too small to know that it really grates on the both of us. I’m expecting this to be our “forever” home and there’s something very reassuring in that for me. We did purposefully buy a house that needs minimal work though so that we don’t have those associated costs.

Are you a mad keen gardener?

I find a large garden takes lots of time (or money) to maintain!

Hedge cuts, lawn, flower beds, maintenance etc

For me I think it would depend on how secure your jobs were and how easily you could find something else if you lost yours. Also, if the proverbial sh1te hit the fan moneywise do you have access to family who could lend you if desperate? Plus your age - if you’re younger, you have more time to earn and pay it off.

For us, jobs not hugely secure, very little options for DH if he loses his and no family money and we’re old - so I’d be tempted to go for the cheaper one.

However, if any one of those variables were different, I would just think sod it, and go for the bigger one.

Can you actually afford the top end of what the bank will lend you? Are you happy with monthly mortgage payments that high? And council tax that high? Plus presumably bigger general household bills?

I only ask as we certainly wouldn't feel comfortable (or indeed that we could afford) the real costs if living in a house at the max the bank will lend us. It doesn't seem to be a very accurate calculation at the AIP stage.

No point stretching to the limit.

Life will miserable

At some point, interest rates will rise. How will your finances cope when that happens?

For me it's all about location - we bought the only place we could afford in our ideal area (in terms of schools, safety, general vibe). I'm so glad because the value has shot up.

Dh is now xh and has left, but otherwise we could've remortgaged by now, extended and improved.

The house itself is small and poor quality, but it's worth it to me due to the rising value because of the location. Probably the only significant investment I'll ever be able to make

If you can still actually afford it - including things like holidays if you prefer to have them, substantial savings to cover emergencies, upkeep on a bigger, possibly old house and garden, new cars or expensive emergency repairs should they be necessary etc - and you're not planning to move, maybe not BU. But we're due another drop in house prices, so if you think there's any chance you would have to sell up should someone lose a job/get ill (do you have income protection and critical illness cover?) I'd be very wary.

I’m with your husband.

We did but only because my income was due to rise imminently after getting our mortgage due to qualifying.

Would not have done the same otherwise, especially when adding kids into the mix in the future.

I would go for the most you can afford. It would work out more expensive to have to move again in a few years. You can take your time in making it your own and if it's your forever home you get long term benefit from anything you do to it.

If you buy the cheaper option, inevitably there will still be things you want to do to it, even if you know you are moving on. As well as the expense of selling on again you end up with the extra expense of doing both houses up.

You need to consider running costs - it’s not just the mortgage but higher council tax band, bigger heating & electric bills, more maintenance (and cleaning!), etc.

Then as PP says, job security, ‘Forever Home’-ness - I didn’t want a more rural property looking towards teenage years.

Lots to weigh up.

I’m with your husband, I’ve seen friends get into serious financial trouble by over stretching on their mortgage.

Interests rates will go up. Either of you could lose your job or get ill.

I also want to live my life, travel and have a great time. I don’t want to be stuck inside a big house with no money to enjoy ourselves.

Not mad gardeners but we have 2 rather large dogs and 2 cats so location/ dog walks/garden space are a high priority for me but not so much DH as he is not so outdoors. He loves sitting outside in summer though.

We are both early 30s, one DC not sure about any more probably not. Both secure jobs, as secure as they can be anyway.

We are not rich by any means but at the moment are comfortable. We need to move as our house has no downstairs space at all and we are squashed!! Our current mortgage is short so we would be extending for a longer period of time wherever we go.

We have enough equity in the home to buy bigger house but no spare. We would literally spend every penny of equity on stamp duty/deposits/fees.
Smaller house would leave a small amount (5-10k) for redecoration.

I would say small house we could live as we are now, large house we would need to cut back on all luxuries but should be able to afford essentials. Hopefully things would improve after 5 years or so once we have paid some of the house off.

I am imagining how lovely it must be to have space to put things and how nice it will be to walk without standing on a dog or cat

Interest rates will rise but so will salaries. I’m assuming OP and husband earn ok if they have a £100k buffer.

I would be more like your husband, not for the disposable income but in case of a drop in income. I would worry about the what ifs if I went for the more expensive one. What if you separate? What if one of you loses your job or wants to stop working? What if interest rates go sky high after BREXIT? I sleep better knowing I can scrape by if things go wrong.

I'm with your husband. The Gottman's say if there is a difference of opinion go with the least risky option (safer for your marriage), which seems to be less financial pressure?

I wouldn’t purposely stretch myself until I knew how Brexit would pan out.

Hopefully things would improve after 5 years or so once we have paid some of the house off.

Hopefully is not a great plan.

But you’re young (relatively) so it depends on how much you want more space, bigger garden etc.

(We have a fairly big house downstairs-space-wise but still find there’s animals within a metre of wherever we go! )

What percentage of your take home pay would each house cost?

I borrowed at my maximum (I had to though, I'm single and I live in London). I have a stable job and can do paid overtime if I want. My wages have crept up in the time I've owned too, and now I'm comfortable with my outgoings. I was very aware that I was pushing it for the first year in particular. As others have said, think carefully about your other outgoings too (won't effect you, but somehow the figures my solicitor got for service charge were only half of what I have to pay, oh, and my car almost died on me 3 months in, I would have seriously struggled without overtime). That said, moving is costly in itself and you might have to factor in stamp duty. Personally, I don't regret it one bit

Have you factored in ongoing repairs in your budget? If you are stretched to the max what will fund a new boiler or repairs to it, decorating, a new roof or repairs to it, boarding the loft, replacement windows, tree work in the big garden etc etc etc. Older houses often need a lot of care.

Now’s not a good time for a stretch, IMO. No one knows what’s going to happen to the economy after Brexit.

Thanks all!
We don’t earn badly but are not rich.
As a rough idea...
The more expensive houses are £250k.
We can lend somewhere around £250-£275k depending on different banks.
DH wants to go for a house more like £150k.

We currently earn roughly £60k combined however we are up north where things are cheaper