Not to buy the most expensive home I can afford?

[libertybonds]

Background:

I'm a single mum. I earn a decent income, and could earn much more if I didn't handle pretty much all of the child caring responsibilities for my daughter. She is about to start school and I expect at least another year of covid school closures etc.

My ex pays the CMS maintenance every month, but sometimes threatens to withhold funds. He was also fired less than a year ago. He bounced back pretty quickly.

That's all to say that there is a chance I could earn a lot more in a few years' time, but it's not guaranteed. I also probably can count on the CMS funds, but I'm fearful of doing so.

The housing options within walking distance of school are a small flat that is easily affordable, or much more expensive houses that would be harder to maintain and require updating. The flip side is that theoretically I could add value to a house, and I'm probably overpaying for the flat due to the insane property market (I have an accepted offer).

The traditional advice is to buy the most expensive home you can afford. AIBU to buy the smaller flat, when I could afford more? It has outdoor space where my daughter could play (but no private garden, just a patio) but is pretty small.

Weve never bought the most expensive thing we can afford. I like that we can comfortably afford to overpay on our flat (we have 2 dc) and be mortgage free sooner.

I would he really stressed if my mortgage repayments were large.

You dont have to stay in the flat forever - even 5-8 years might see you even more comfortable in terms of income and you could move again.

My main thought when buying somewhere has always been "will this be easy to sell when the time comes" - so far so good.

I've never heard of anyone saying buy the most expensive house you can afford. What if interest rates increase?

Honestly, I'd chose the flat. You are a busy woman anyway, why take on another project that is going to drain your time and energy. Much better to have a cosy flat, that doesn't need a load of work, is quick and easy to clean and isn't going to cost a fortune to heat and furnish. You can move up the ladder again in a few years when you are more certain of your finances.

It depends on your age and profession. If your work is always in demand that helps in assessing risk. If you bought the house could you let out a spare room to help with costs and save for repairs? Flats can take much longer to sell as not everyone wants to pay a service charge and ground rent. I would look for something where you can add value. Again that is hard with a new flat. Don't over stretch yourself but look at all options. Houses often have hidden space such as lofts which could be converted if your income goes up.

We deliberately chose a house that was much less than our maximum budget because I don't cope well with debt. Glad we did as a few years ago DH unexpectedly lost his job and it was one less thing to worry about. I'd say if you're at all unsure of your income go for the flat.

Whatever you think the house will cost to renovate treble it, then treble it again
Materials and labour have gone through the roof, there is so much demand
I'd stay within my comfort zone for the time being

Key to me is that you have stated you are buying a 'home' not a 'house' as many.people would say.

This suggests you are considering where you would rather live and have the best life rather than any potential money making you could do.

You will make the right decision

I have heard the "buy the most expensive house you can afford" thing. I know people who have done very well on the property market following it. But I also know people who have lost homes or where meeting the monthly mortgage payments was a source of constant stress.

Anyway, I think you have 2 potential choices. A 3 bed house with a lodger to help pay the mortgage, or the flat (you could always move in a few years when your dd is in secondary and no longer needs childcare).

My dad always used to say buy the most expensive you can afford. I get his logic but when you're a single parent I don't necessarily think it's a good idea.

When i split from my ex I bought a house I could easily afford, it was one less thing to worry about. It was in a lovely area, within walking distance of the primary school, just not a very pretty house, think 1970s grey box. But it was easily affordable, so it took the pressure off me financially, I could also treat the kids to holidays and save. Once I was settled I over payed on the mortgage and put money into a pension. If I'd have stretched myself to the limit I think I'd be stressed to hell with no disposable cash, this way I had a buffer with my mortgage company and felt ok about money. I'm now in a great position financially, earn a lot more, I'll be able to retire in 10 years, kids are in secondary school and I'm about to move into a small, but gorgeous cottage in a place I love with a large amount of equity from my grey box, and a small mortgage. I found I never really wanted the big, 5 bedroom house, just something small and pretty

To answer some questions presented:

The flat is not new, but has recently been renovated. It has three bedrooms, but is small to me at 800 sq ft, compared to the 2000sq ft, 5 bedroom house that i lived in during the marriage (which my ex kept).

I won't get a lodger under any circumstances.

I've never heard that you are meant to buy the most expensive house, that crazy especially given all the unforeseen events recently. Who is it that says that?

Buy the one that makes you feel most comfortable with all the aspects

A small cottage then or terrace?
We are moving shortly. We over stretched ourselves a few years back and I only have one child at home. I am looking at a three bed plus study and wouldn't want a 5 bed with all the maintenence. We are good at renovation but don't need unused rooms. Look at a few things, sleep on it. Then make a list of pros and cons.

Tarting up a property costs money. So not only would you need the deposit and mortgage sorted, you’d need ready cash or credit card for tarting up and punting the big house. If you use credit then that costs extra if it takes longer than expected to pay it off.

It also means dirt and dust everywhere, potentially no kitchen or no bathroom for a few days. In my case no bath/shower for a nearly a month! How would dc be during that? It can be difficult.

The main way to make money is to do it yourself. Can you or your pals fit a kitchen or bathroom? If not you can still make money, just not as much. Plus every area has a ceiling price. So you need to tart your but not waste money. So you need to research your market. And work out if spending 15 grand on kitchen and bathroom is worth is when you deducts all the costs and estate agents fees etc to sell the house on.

Living in a bombsite for a year to make a ten grand profit may not be worth the hassle? Although if it makes you 50k…!

I think that you may be better with the small flat just now. Is there anything you can do to add value to that?

When we applied for our mortgage, we were told that because the term of the mortgage went on beyond my children reaching 18, we couldn't count CM or CB as income for our application so you mightn't be able to use CM anyway.

I would go for a smaller, more affordable place. Your DD would probably appreciate more disposable income to do stuff than a bigger house. I don't think most kids actually care where they live, as long as they have their own space. I personally wouldn't like to be mortgaged up to my eyeballs.

I've never heard that. I deliberately bought less than I could afford. The plus side is that I'm on track to have paid off the mortgage in my 40s. I also didn't wanted to be trapped by my lifestyle. I didn't want the pressure of earning the same amount for the next X years.

I’d rather buy smaller and have money for luxuries than buy a big house and struggle to actually live.

We live in a small house, we could afford to move but would rather have money to go on holiday, weekends away, treat the kids and actually live our lives rather than living in a. Big house tied to a huge mortgage.

It sounds like security is very important to you, and rightly so, you certainly don’t want to have to rely on maintenance from your ex. I would get a smaller place, build up some savings, enjoy not worrying about money and live life.
However saying that, I take it there isn’t a middle ground option of a little two bed house or similar?

The traditional advice is to buy the most expensive home you can afford

Actually it isn't. No one should be doing that. That's how you end up fucked when any little thing changes.

You sure you are overpaying the flat? Where I am houses sky rocketed but flats stagnated few even dropped

If you could genuinely live happily in the flat then it does feel great to not worry about money. We chose a home we’ll within our means.
In the other hand, having too little living space is itself stressful. So if the flat is very cramped then it might not be the best option. Think carefully about your lifestyle and how much space you need. Can you have friends over for dinner? Is there room to work / for homework? Can your dd have friends to play? Etc.

It's all about balance. Buy the biggest you feel financially comfortable with.

But also have some awareness of what's easy to sell (for you in the future) and try to future plan for yourself now.

I'd buy a house, but only if I could afford it.

Flats need maintenance too and can be more complicated because you have to sort out how to share the cost with neighbours. (Or maybe that's just a Scottish thing?)

When I split from ex I bought a tiny house so that my mortgage was smaller, leaving me more money left over to support the DC who are now young adults.

In addition, this means I have been able to regularly overpay the mortgage, so I can be rid of it earlier, and go part time/semi retire at a younger age.

The only caveat I would have is that when I was looking at flats, some of the maintenance costs were HUGE, and actually made the monthly outgoings higher than the higher mortgage costs of a house. Also, with a flat, you continue to pay that maintenance charge once the mortgage is paid off.

I hope this is useful - good luck!

Having been in a similar situation to you, I would say buy the flat. I bought the house and i bitterly regret it.
It needs much more work doing than i initially thought (even though i had a full survey)
It's not just the monetary costs, it's the time costs too. Sourcing reliable trades takes time. If you do work yourself it takes up time, and trying to decorate / diy with a small child around is near impossible.
Also it impacts your quality time with your child too. Money spend renovating reduces the spare cash for days out and holidays etc.
A small child is not going to give a hoot whether they live in a house or flat. Spend your money making memories! Are there nice parks etc nearby? A garden may not matter.
Given the choice again I would spend less on a flat and bide my time until I was able to work more and afford to move somewhere larger.

Yes I'd go for the easily doable flat option too. Spare cash, no hassle. We are doing the exact same now, my mortgage payments will be £222 so we will be able to overpay.

Good for you and also, I salute your ability to be financially independent of your ex who sounds like he is entirely unreliable through meanness.

I've never bought the most expensive house we could afford. I've always wanted to go on holiday, trip out, meals out etc and not to have to worry about mortgage payments.

Mortgage free at 47 which is a great feeling and would have been completely impossible if I'd always bought the most expensive house I could afford.

The flat sounds ideal and if you've got a good feeling about it go for it. Hope you're both v happy there

We chose to spend a bit less on our main home and build up other investments with the spare money so we have longer term financial security.