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?

£500 left over after bills and food is okay.

Is it though? I wouldn't agree at all.

OP, we were in the same situation a few years ago when we bought. On paper we can afford a great deal, in practice, once you factor in the expenses of actually running the house (and I'm not talking about utilities, those would be included as regular bills) plus the time invested, £500 per month doesn't go very far.

The first time you have any kind of moderate, necessary home repair, that £500 and then some will be gone.At the best, you'd be treading water; this is assuming you're fortunate and don't have something really major happen until you've built up a good savings account -- and even then, it can be difficult. DH and I DID have a good savings built up and then along comes a £15,000 home repair that no one could have predicted...and we are very grateful we didn't buy someplace that stretched us to the limit.

I don’t think £500 a month is a lot of spare income, if you think about

• child’s activities/clubs
• birthdays and Christmas
• home repairs/maintenance
• car repairs/maintenance
• hair cuts
• clothes
• shoes
• holidays
• meals out
• hobbies

It depends on how you budget. The op said £500 TO £1500 is disposable, depending on mortgage size.

In my budget I count disposable as after those things listed above, (if I choose to pay them) so each category has a budget and gets allocated to an account.

Not everyone chooses to pay all that but it should be counted before you count your income left as disposable.

I stretched myself many years ago before dc. Luckily it paid off and I am now pretty well off own my home outright with my partner, have two rentals and a tiny holiday cottage all mortgage free because of it. But it wasn't much fun at the time.

I take it, that disposable amount is after food/groceries. Do you know exactly how much you spend on groceries, or are you estimating? Because people usually underestimate the cost. They often forget about the bits you forgot or run out of, and picked up on your way home from work, and the coffees, snacks and lunches that were bought.

You need to keep all receipts for things like that, for a couple of months, and see how much you are actually spending.

Car costs. Work out how much petrol you buy each month, as well as insurance, road tax, MOT and servicing costs, new tyres/wiperblades/screenwash etc. Add it all up and divide by 12.

Presents. How many people do you buy for each year? Allocate a budget per person, then add it all up, divide by 12.

Entertainment, give yourself a budget for days out, cinema, meals out etc. Divide by 12.

Hairdresser, dentist, prescriptions, and so on.

If you don't budget for these, but pay for them as they happen, it's easy to find yourself over spending, and underestimating their costs.

Thankyou to everyone!

We don’t add up what we spend currently as we don’t really need to but as of this month we are going to use a budget planner and try and stick to the more expensive house cost. I am immature financially, DH is the sensible one.

After 6 months we are planning to see how much we have struggled and then can decide what to do.

We need to put our house up for sale in spring ideally and see what happens after that.

After 6 months we are planning to see how much we have struggled and then can decide what to do.

Good compromise Mane :)

Have you thought about looking for a smaller house with land to extend in to further down the line? For me I was fortunate to get a cheap detached house in need of repairs where I paid down the mortgage as quickly as I could. This gave me a sense of security and more disposable income so I could save more. We've finally put a big extension on the house giving us loads more room. Its taken 10 years to get here but so worthwhile now. Think also that more people divorce over financial problems than for any other reason - do you have a fallback position if one of you were to fall ill and be unable to earn? Good luck with whatever you decide to do!

Sounds like a plan! The little incidental costs soon add up, and I think you'll be surprised at how much, once you're tracking your spending.

I would buy to the maximum of what I can afford in a buoyant property market where prices are going up very quickly. I would do exactly the opposite in the times of national financial uncertainty.

Could you agree in the middle ground?

I had this dilemma myself (but just within myself as I was single at the time). I went with the cheaper place, and I felt really smug about how affordable my repayments were going to be, compared to friends in similar situations that had stretched themselves.

However I never liked the house or the area and didn't enjoy living there. 8 years later I eventually did sell, but the place hadn't gone up much in value compared to others in the same city, plus with the expenses of buying/selling, stamp duty and moving, there wasn't much capital gain. Plus I had spent 8 years in a poorly located, run down, too small house. In comparison, my friends, who I was (secretly) so smug about, are now sitting on gold mines. Not that they would ever sell, as they love their places!

So I would say stretch yourselves, within reason of course.

You are financially insane.

@MarshaBradyo 5% is high. You can get mortgages with no penalties less than that. Call a whole of market broker and talk it through.

Sorry meant to tag the op

I agree with your husband. Leave comfortably within your means. You'll have a lot less stress later.

The question DH and I asked ourselves when we were looking at moving to a bigger property, is... why are we moving? Yes, we wanted an extra bedroom for family to stay in, yes DH needs an office when DD moves into the spare bedroom, yes I'd love a proper downstairs hallway and entrance way. But... we also realised there was a fair dollop of pride in there and wanting to appear successful to others.

We would be looking at a minimum of £150k on top of our current house value to get anything like what we ideally wanted (with kids in school we're limited on location). That's a steep hike on our mortgage payments and our budget would take a big hit. After some soul searching, we realised we didn't want to spend all our spare cash on a huge mortgage.

Luckily we bought our current house with an eye to extending, so that's still an option. Maybe there is a compromise on the house type? If your DC isn't established in school then could location be more flexible?

Having spent the last year on a tight budget, it's not a very fun way to live. It was stressful watching our savings decline to cover the shortfall and I would worry about a home/car repair bill or utilities getting more expensive. Every month was a balancing act trying to anticipate any extra expenses. Luckily I'm working now and our budget is better. We can enjoy the odd paid for day out, the odd takeaway, worn out clothes can be replaced.