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.

Freehold is a good investment. Leasehold less so.

We would have been utterly stuffed had we bought the most expensive house we could afford. We had good well paid very secure jobs. But life happens. In our case a child with additional needs. It meant the money we hadn't been putting into a vast mortgage and were saving instead ( at the time for school fees ) can now be drawn on to support me working part time and paying for my child's therapy.

How much difference is therebetween the house and flat when you take the service charge into account? How quickly do flsts sell in normal market conditions? How long ca you realistically stay in the flat - your dc is growing so look at older kids and try to imagine it. What restrictions would you have for friends visiting or sleepovers? Arw there any 1 bed houses that might be affordable and if you went for a house would you have to push to your max, which I wouldn't want to do. Are any affordable houses liveable just not how you would want it or would you need to do major work?

Do a SWOT sheet or list of pluses and minuses for each option considering how you would cope if interest rates rose. Also what if house prices fell sending you in to negative equity meaning you couldn't move.
Everyone has different priorities so only you can know what your best option is but you are already thinkong about it sensibly so I'm sure you will come to the right decision.

@Coulddowithanap

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

It used to be the norm for people to be told this back in the 1980s when I was first buying, partly because there was tax relief on your mortgage in those days.

It was nonsense then and it's nonsense now. I bought an easily affordable property each time and was entirely mortgage free (paid off the balance of the mortgage) by the time I was 42. I cannot begin to describe to you how incredibly freeing that is!

I've owned flats since I bought my first property in 2002.

I'm now mid 40s. I find myself googling houses all the time.

I'm just getting a bit sick of living in close proximity to other people and their (or their tenants) selfishness). I would think about this when looking at flats.

We went through a phase when our bin store was a total disaster with people piling recycling up on the floor and we got rats.
Last week someone got their new kitchen delivered and the delivery blokes dragged all the stuff across the natural stone floor in the foyer which has scratched really badly. I'm prepared to bet that they weren't allowed to drag the kitchen units over the wooden floor inside the flat and damage that...

However, knowing that your home is truly within your means is a good place to be. So I'm basically sitting on the fence getting splinters in my arse.

In your shoes I'd go for a ground floor 2-bed flat with its own front door and sole access to a private garden.

If it had knobs on, it would have two bathrooms.

That will give you and DD security, each has a private bed and bathroom and outside space; plus suitable for a cat/dog.

That would suit you both right through her childhood, teens, and young adult years when she's a student or has a job.

You can have guests to stay by doubling up, or a sofa couch.
Look for a kitchen big enough to eat in.

OP I am a mortgage free single parent but with a large semi detached house. It is an old house and is shockingly expensive to maintain. I would have struggled with a mortgage on top but I receive no maintenance and never have. I would personally go for the cheaper option knowing I could handle a short period of unemployment or illness or the maintenance stops. I would also save the difference between the cheaper and the more expensive option every month to build up some savings to help handle potential problems like prolonged illness. This has massively helped me have some peace of mind as a long term single parent.

I would never mortgage to the max, life isn’t guaranteed and all sorts of things can and do go wrong. Plus we wanted to save for the children’s future and for them to have opportunities as children to do activities, travel etc.

Based on what you've written i'd go for the flat.

We went £300k under max budget and we manage, but its a bit tighter than i expected and i am happy we bought under budget. We were in a flat which was easy/cosy. Our new house is edwardian semi and is about 4-5k a year in maintanance. The garden is also w.o.r.k.

Yeah I agree with your idea OP, don't stretch yourself to your limits. What happens if interest rates rise etc? Some leeway is really important for piece of mind.

We did not stretch ourselves anywhere near the maximum limit we could borrow; we still bought a place that is ultimately home.

This is all very helpful, as it seems like most posters agree that my preferred course of action is a sensible one.

No, there aren't any houses within price range which would be suitable. I'm determined to have a 3 bedroom property.

I do worry about whether there is enough living space in this flat, but my daughter is getting older and she will have a reasonably big bedroom to play in, plus the outdoors when it's nice outside.

We lost our stupidly large house when I was growing up in the 90s recession. I would never want to be in that situation with my kids. We have a modest house and a great lifestyle knowing the lifestyle can be given up if needed.

I think you're using your brain.

@idontlikealdi this is basically my nightmare

I would ditch a third bedroom for a garden for my kid.

I would never borrow to maximum
Budget. Always allow for real life. Personally I’d stick with the flat

Tough one. I'd probably keep looking as a flat is generally much inferior to a house (noise, communal area repairs, leaseholders, service charge, shared or jo garden, etc).

I need a third bedroom. It's not negotiable.

@TiddleTaddleTat there isn't going to be a reasonably priced 3 bedroom house in walking distance which isn't a project.

I would buy a house every time rather than a flat. Neither option sounds ideal, I would compromise on something other than type of property.

I'll be honest op, I would never buy a flat at present.

Give it a couple more lock downs and it will either plunge in price or be impossible to get rid of in future should you want to.

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

I haven't heard this, is it perhaps a variant of "Buy the worst house on the best street rather than the best house on the worst street?"

I would say to buy the more easily affordable property. Circumstances change, not always for the better. I do know people who have pushed their finances to the limit for the most expensive property and have lost it (and their relationship) when times got harder.

A small child is not going to give a hoot whether they live in a house or flat

This is a kind comment and no doubt meant to be comforting to someone unable to live somewhere with any outdoor space.

However it's not really true unfortunately, as anyone who's experienced having small children without vs with a garden would say.

Theres not much I wouldn't compromise on to be honest to ensure a private garden. Especially during current times when no one knows if we're all about to be locked inside for the next 6 months again.

It sounds like you are looking at it with a pragmatic mind, what can you manage now for this phase of your and DD's life and what might give you options in the future while having a reasonable quality of life in the meantime.

Just because you CAN potentially afford a bigger house, doesn't mean that you SHOULD, if it is not what you need at the present moment in time.

Taking on renovations might make good business sense, but is a lot of hassle and expensive. And if the flat means you can live in your means and decide whether or not to take on extra work rather than it being a necessity, then that seems sensible.

But is there some green space nearby that dd can play if you have no garden?

That's the only thing that strikes me as a point against the flat.

Buy the most expensive you can afford made more sense when house prices just went up and up.

And if the person has just started on a professional career where salaries rise quickly (ie lawyer/doctor/accountant) so you are only stretched for a short bit.

Also moving costs are big so you don't want to keep trading up.

I'd get the flat. I've had a flat for 20 years and it's fine. Now paid off as I haven't kept moving.