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?

Oh right just read your numbers

Can you increase income?

It also depends where you are stretching in London can make more sense as houses have risen but the cost of moving is higher

Tough one for you

just read your update, you can pay down more on the mortgage each month to reduce it faster and then sell when you have more equity built up, ( not sure of how long you have to hold on to the houses for taxes etc) but you can go bigger that way, just means it takes a little longer to get to "the one" but you will get there... slow n steady wins the race

I'm with your husband I'm afraid. If you think you can afford an extra £400-500 a month, though, what's to stop you moving into the £150k house on a much shorter mortgage term (e.g. 8 or 10 years), and then once you've smashed that buying the dream forever home with all the equity you've accrued? You could get a 2 year deal so if it feels too tight you can extend when you remortgage and you'll get a better interest rate on 80% LTV than the 90% you're proposing.

If you only have £30k equity I wouldn't be buying a £250k house. Wouldn't take a huge market downturn to leave you underwater and you never know what life might bring!

I've always gone with the 'stretch yourself to the limit' approach. Things might be tight for a couple of years but it's much cheaper in the long run to do that and avoid the cost of moving again in a few years.

DH and I stretched ourselves to the absolute maximum - we had to, it was either that or leave London, where our whole lives are based. We now have a small property in an ok area - I’m very happy we were able to stay in London and love the property, but I wish we had more disposable income. That’s the reality of living in London though I think - unless you’re mega wealthy you have to make sacrifices. It is what it is.

We moved to your DH's idea of a house and left again within 3 years. We just about broke even or lost a little.. It was just too small for our growing family and we found modern estate living overbearing - small gardens, parking struggles etc.
We maxed out on the next move and are still here years later. I doubt we'll move on before retirement.
I would go for the ultimate house now..

We went about £50,000 lower than our maximum. We wanted to be able to save easily and enjoy days out and holidays easily. We are very glad we did, I am about to lose my job due to ill health and it's unlikely I will ever return to work full-time. If we had stretched ourselves we would now be finding life very difficult.

I'm with you
I'd get a longer term mortgage to reduce standard monthly payments and you can overpay if you want.

Only read the OP so far but if you buy an old house, there could well be expensive repairs or maintenance.
House prices are stagnant at the moment and interest rates low.
Should interest rates go up, or your circumstances change, you could find yourselves struggling.
House prices can go down as well as up, you could find yourselves with negative equity.
On the other hand, it is your home, and if you don't like the estate types, that could become a prison too.

At the moment we are currently on a rubbish mortgage rate to avoid the extortionate fees if we fix. If we do fix it’s around 3k to escape and we don’t want to be here 2 more years. We can’t port either.

Honestly, if DH lost his job we would be knackered either way.

I can see both sides, on one hand I do want tp be able to go on holiday and have nice trips to the zoo and all that without crying about money but I also want to have a house I can be proud of. I think I don’t want to be seen as a failure or the one with the tiny rubbish house

I wonder if a financial advisor is the way to go.

I stretched both times I’ve bought and not regretted it. But my salary went up and (comparatively) the repayments dropped, so only felt stretched for a year or so - and given eye watering cost of moving, I wanted to avoid it as much as possible. Will salary rise? I’m not sure I would do it in forties/fifties.

If you do decide to stretch yourselves then fix your interest rate for at least 3 years to give you a stable mortgage cost.

I would suggest living on the budget you would have to stick to for the bigger house for a couple of months. You will get an idea of whether or not it is doable and you can build up your savings with the notional increased mortgage, council tax, utilities i.e. put into savings anything you would have to pay on top of what you are currently paying so you have the same disposable income as you would in the big house.

OP, is there a possibility that you could negotiate very hard on one of the more expensive houses? I just say that as we bought at the worst time in our economic history in Ireland where everyone said oh do not buy as the world is ending but because we were the only people who wanted to buy we got the best deal ever on a period house in a fab location, so do not give up on the forever home, wait until you sell your house and then negotiate hard on the house you want. Perhaps if you go the house for 220 instead of 250?

I have always pushed myself to the max for any house I bought and have benefited hugely financially but I spend a lot of time preparing and reading the market and I would never take an unnecessary risk (ie I would never remortgage to buy a second home, I always bought a house we could afford to live in but we always had to forgo holidays for the first years in each house we bought - for people like me who love their home, that is the price we pay and are happy to). Also, you spend a max of 2 weeks on holiday, you spend every other day in your home so it should be somewhere you love being.

should be able to afford the essentials”

“Hopefully things would improve in five years”

literally spend every penny equity

I’m a risk taker but it doesn’t seem that you can afford it

I struggle to believe nothing in middle

* At the moment we are currently on a rubbish mortgage rate to avoid the extortionate fees if we fix.*

Mortgage rates are fantastically low atm. What rage are you on??

I was homeless at one point

I am gob smacked then that you are willing to take this risk. You were actually homeless?!

@Lovemenorca there is the odd £170k one that pops up, usually gets snapped up within 24hours and usually needs a fair amount of work.

One of the older houses has been for sale since last January at £235k, overpriced but they won’t budge.
There’s also another at £210k again been for sale forever because of a lack of parking I think. It’s practically touching next door despite being detached.

There’s also a new build estate popped up which I presume is causing some of the issues as lots of these older horses overlook the new estate.

I would think 200k is more realistic looking at figures more objectively.

I don’t want to cripple us. DH will go with whatever I say in the end, but if we can’t afford it I don’t want to be the one bringing us to our knees hence asking the question. I am very much a jump in and do things type of person not a thinker of consequences. DH is more cautious.

Mortgage advisor seems to think £250k would be fine

Yes, I had nowhere to live at one point and stayed with a friend for a few months. I didn’t sleep on the streets but had no fixed address. That was 10 years ago, I now have a good career, have an income of 60k and a family. Surely it’s not that terrible to want to better myself

* Surely it’s not that terrible to want to better myself hmm* oh don’t be daft

Look, you have had first hand experience of being homeless. Now imagine your child and husband being in same boat because of a decision you pushed despite your husband urging caution.

@Lovemenorca in fairness, it’s something that this thread has made me think very hard about and I think I’m pretty much going to let the sensible one of us make the financial decision!

I would hold off for a year or two if you can. The uncertainty over Brexit means that house prices could come down, or one or both of you might lose your jobs. In a year or so we will hopefully have a better picture of how things will pan out.

I wouldn't look at getting a larger property as 'bettering yourself' though, OP. A secure roof over you and your family's head is a priority for the majority of people and to hear someone who hasn't had that at one point in the past be so willing to take a risk with their finances is a surprise tbh!

As a PP mentioned, we were also hit with a rise in the mortgage interest rate to 15% and from what you've said so far, I think you would struggle to cope with a significant rise in interest rates. Luckily we don't tend to get large increases in interest rates but neither do we get large increases in salary either.

If you are looking in a very small area that is always going to limit your options.

We bought 8 years ago.... £125k over our initial budget but it’s a nice 1930s detached house in a really good commuting town in the South East. Also happens to be next to an outstanding state school. I would have preferred a Victorian house but my DH wanted a garage which led us to this period of house. I would not live in a house I don’t like but I would compromise on the style for the right space in the right location. Ours does have a pretty big garden and I think it’s a pain since we’re not gardeners but it’s possible to make them low maintenance ( depending on planting etc ). It was my DH who thought we should push ourselves financially. I was won over by the house etc which has been nicely done ( and had a dressing room.... shallow ) The difference for us is we had a big chunk of equity to put into it ( over 50%) and we’re both public sector workers with good salary replacement schemes should one of us die or become ill. ( redundancy not likely). I know it sounds mercenary but DHs family also had money so we knew we would never be made homeless because they would have bailed us out if necessary ( thankfully never needed). Our ultimate plan is to move away to a less expensive area and buy outright. So baring in mind the cost of moving for you I would not want to be moving again in a couple of years time. I would have a look at the houses you like and see if they’re overpriced or have been on the market a long time.... what are their circumstances? Do they need to move? My friend is currently buying and the valuation survey has said it’s overpriced so the vendor has come down £30k ( after already negotiating down from the asking price ).

The layout of the smaller ones doesn't seem to work as well for us. I prefer somewhere to put the dogs to dry off (utility or seperate space)

I'm with you here, but you dont need to spend another £100k to achieve this. You can have a separate shed in the back garden, connected to the back door via a lean-to or verandah. Oodles of space to dry dogs, keep outdoor kit, & deal with most of the mud & damp fur before coming back into the house.

We are useless at saving, literally useless.

In that case I would be very very strict on the spending and pretend all you have to live on is the money you'd have left over from the new mortgage & extra expenses (council tax, higher bills for water, electricity etc) on the big house. That would prove, one way or another if you could do it and would net you further savings as deposit/moving/renovation costs. You could pop the money into a savings account as soon as you get paid each month, so it's not available to spend.

I'd also be prepared to gamble on Brexit happening and house prices dipping - making your dream home more affordable as the drop would be a greater amount compared to the drop in price of your FTB starter home. There will always be a market for FTB houses as people can afford them on basic salaries and it's cheaper than renting. There won't be so much of a market for small semis on estates as second homes, so either way I'd save like mad as it won't do you any harm and see how Brexit/interest rates pan out.

I'd consider, if saving enough in the interim and you still have some emergency funds in the bank, paying a lump sum (a couple of thousand perhaps? )off your mortgage at some point to reduce the amount you owe as you will not get that interest on that money as savings. Check if you get any penalties for this., you may only be allowed to once a year