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?

We are planning to sell ours in February, brexit is a concern hence why we didn’t sell last year but we have waited so long now we feel we need to just bite the bullet whatever happens. Maybe this is a bad plan!

Lots selling in our area at the moment.

I took am team DH. Even having a buffer of 10k is very concerning. If your house needs rewirng that's half that money gone. A new boiler? A further 3/4K. Roof begins to leak? 5k. Small jobs soon eat up savings and the bigger mortgage plus much higher running costs will reduce your capacity to save more. In the meantime, you're limiting your lifestyle just so your dogs get a bigger garden and maybe your child a bigger bedroom. A mortgage advisor will tell you how much you might be able to borrow but that doesn't make it a good idea.
I've been in a position of not being able to pay the mortgage when interest rates rose steeply. I never want to be in that position again.
Life is for living. Having a big house to show off isn't necessarily living.
Buy the smaller one. Increase your pension contributions, start saving for uni fees for your child.

I would stretch as moving house is costly and it will save you moving again. We struggled for a few years but salaries improved and now our mortgage is less than a fifth of our income. Do you think your income will rise?

Definitely wait till after Brexit is resolved.

And then make your decision based on what interest rates are like/looking like they're going to be.

We're unlikely to see interest rates this low for that much longer. It's all very well extending yourself when rates are as low as they are. But remember - back in the 80s, at one point, rates went up to 15-16%. Could you afford payments then? That's not to say that rates will shoot up that high (although who knows?!), but you can't assume that money will be as cheap to borrow in the near future as it is now.

What are the repayment costs on a 275k mortgage that you've been quoted?

We have only ever based our mortgages on one salary.

It meant when DH was made redundant, and was out for six months we were "ok" ish

Say you buy the perfect house at the top of your limit.
Then the market crashes, & you are in negative equity.
Then interest rates rise, & you cannot afford the full payments every month, as you are already stretched as far as you can go.
You can neither recoup your capital outlay, nor keep up with rising monthly payments.
The house is no longer perfect, you are in deep financial shit, & looking at downsizing.
So after a lot of worry & grief, you find yourselves downsized a 'good enough' house - but you have lost a lot of money in the process, & may never recover enough to upsize again.

Conversely, you buy a 'good enough' house now, knowing you could have spent an extra £100k.
Instead of servicing that larger mortgage for the 'perfect' house, you have money left over every month.
Money that can be put into a savings account while you accrue enough deposit/capital to eventually buy the dream home - but without having to commit yourselves to any "up to the hilt" mortgage.

Also Brexit.
Also the election.
If the tories win again, we are in for more & more austerity, & less cash for ordinary people as the money supply is sucked up by the elite.

Having a big house to show off isn't necessarily living.

It's for enjoying a better quality of life. I personally prefer spending my days in a nice house and having less deposable income as it is also a good investment! Erm showing off isn't on my radar at all!

*Disposable

It's scary what you can borrow.

We could borrow nearly 400k according to mortgage adviser- but my repayment on £115k at the moment is £873 and we feel stretched!

Combined salary of about £78k which sounds a lot and is a lot to many but we do ok rather than feel well off.

What @Calmingvibrations said.

I / We really stretched ourselves with the 3 properties I / We've bought.
Big, scary decisions at the time, but definitely the right choices.

Does depend though on all the things mentioned. Likely career projection being a 'biggie'.
From what you say, you are young - you have time and options to move your mortgage in different ways if you needed to, and if you have the option to borrow £100K more than you need to, then you must be on a pretty high income.

I'd go for the bigger, better house at this stage.

The line that sticks out to me is Should be able to afford the essentials so basically any tiny shift in income/circumstances or mortgage rate increases (and they will increase, I’m guessing at your age you have only known low interest rates) you could be in financial trouble. A larger house means larger everything, your mortgage repayment is only part of the picture, you need to work out the running costs before you commit.

I'm with your dh, unless you need the space I wouldn't, you don't know what's going to happen with brexit. There's a big difference between your lower and top range. Could you not buy at the lower, spend 50k extending and then you've met in the middle? Personally I wouldn't want to forgo living and luxuries for a bigger house that we don't need and a garden we only use 6 months of the year (if you're uk based!).

Do you have a 15% deposit?

You're young, buy a smaller house near good schools and with traditional layout and proportions in an area that you know will increase in value and upgrade in a few years.

We lived in a Victorian house and it was a money pit. Single glazing, big draughty rooms, big heating bills. Everything more expensive as had to be bespoke (walls not straight etc).

Have also bought with every penny we had / could borrow with the certainty that income would improve (after nursery / maternity leave). Those years, waiting for that increase, were a bit miserable. Not much money for hols / nights out etc.

Could you buy a smaller house with scope to extend in the future? That way if your finances do improve, you've got potential to get a larger house without moving?

I don't think there's a right or wrong answer here. Personally I agree with you and would rather stretch myself financially for a "forever" house. However I can see your DH's point of view.

I would try and buy at lower end, but something with potential, so maybe a smaller house, but with room to extend.
I don't believe there are absolutely no options between the £150k option and the £250k option, it's just that there will be different compromises.

I think there would be around £400/£500 difference between the two mortgages.

DH would like to spend the £500 wheras I would rather invest it in the larger house.

We are useless at saving, literally useless.

We wouldn’t have any money to fix our current property if anything major happened either, all of our money is tied up in equity. We have a few thousand in savings at the moment as we know we are moving in the next year but don’t usually. We have enough equity to put deposits down, pay solicitors/estate agent fees on both the smaller and larger properties but with the larger we wouldn’t have any left over for work that may need doing.

Anything that did need doing would have to be done as and when we could manage to get it done.

The cheaper properties seem to be in better condition than the more expensive as they are newer (new build type estates mainly which i don’t particularly like)

Maybe he is right

But that will be a factor for some people HipHip we live very much in a “doing much better than the Jones’s” society these days and people will stretch themselves for this reason, not all, but some do, it’s the way of the world and competitive human nature.

I’d go with your DH. There’s too much uncertainty at the moment and for the next few years. Since we’ve moved 4 years ago we’ve had to replace all windows and doors which we were unaware of from looking and surveys, every appliance has broken, central heating and electrics have all needed work, we had a costly garden wall repair and have spent at least £15k in total. None of these showed up in the structural survey and then there’s general running costs on top of that. We could have stretched to a large cottage however are in a 3 bed on a nice estate and are stretched despite going under £100k under budget

We had the same dilemma when we bought our first house together 7 years ago. Only it was me who wanted a smaller/more of a starter home and my husband wanted a bigger forever home. We went with the bigger home and honestly it was stressful. Our bills were high because it was a big place to heat up and our taxes were high and we had to buy a ton of furniture. It also seemed so expensive because I went on Mat leave 3 times. It's great now 7 years later though because our house went up in value so much we never could have afforded to buy a house like this if we waited. We also had 3 kids within those 7 years and the house fits us perfectly. However I do want to say that we have no young kids in our neighbourhood, no one for our kids to play with. A lot of the kids at our school live in the neighbourhood with the smaller houses and they all hang out and play with each other after school and it's a huge regret of mine that we missed out on that. Our neighbourhood is impressive I guess you could say but everyone is older and has kids that are teenagers/university age and we really don't fit in

Go for it. I had this same quandary a few months ago (I started a thread too ), and in September we moved into a very pricey house indeed. We love it. It's in our absolute dream location, has space for all of us (we too were squashed and struggling previously!) and a big garden. It's absolutely our forever home.

We don't have much cash at all, but then I'm not working, and we have 2 very tiny children, so life was never going to be full of luxuries. DH has a secure job and we're confident we could sell the house quickly if disaster struck.

My advice: do your sums carefully and repeatedly. We saw a mortgage broker who managed to get us a surprisingly good deal. The house is old but in excellent condition, so we didn't need even to redecorate. However, we did make sure we had enough put aside in case the boiler suddenly died, or anything else urgent cropped up.

It's our forever home, and I'm thrilled we're here. Yes, Brexit makes things uncertain, and yes, the housing market is ridiculous at the moment, but if we'd dithered we would either be even more squashed and frustrated. If we'd gone for a cheaper house we wouldn't have loved it, and would have dreamt of making another move in the future (and stamp duty is a killer!!). We're here, we're settled, we love it, we're happy, and it doesn't matter a jot that lavish holidays are off the table for a while! Best of luck to you.

It also depends on how handy you or your DH are with DIY my DH has renovated our property himself we wouldn't have been able to afford to otherwise. He has plastered, wired, plumbed, carpentered. and put electrics in. He knew absolutely nothing when we moved in so has acquired many skills!

You’d be mad to stretch to the limit. Brexit looming, interest rates at historic lows.

Have you thought about/stress tested what you’d do in the worst possible scenario, one of you losing your job, interest rates climbing rapidly?

And do yourself a favour, grow up and get some savings together. You sound really immature when it comes to money.