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.

I think it's very wise to buy a cheaper home, just the peace of mind knowing you can afford it will be nice. And 800 sq ft is fine for two people especially with a thoughtful layout and clever storage. Tbh a 5br house for 3 people sounds excessive.

For me the deciding factors would be enough privacy and quiet which only you can judge, and also that the outdoor space was inviting and useable.

I have heard of the ‘buy the most expensive house you can afford’ sounds like it was made up by an estate agent! But the just I suppose is the property is an asset and therefore as long as u can pay the mortgage your asset rich but potentially cash poor. I’d prefer a balance, myself.

Flats won’t appreciate as well as houses and like you have already highlighted, scope to improve is limited.

Personally I would likely go with the house as you sound like your financially stable and can earn more if necessary. The house will give you a better return all round but like a pp mentioned, the costs of materials at present is absolutely ludicrous! We’ve just applied for a mortgage and the rates are really low at the moment so that maybe something to consider!

I think you are right going for the flat if it will suit you size wise until your DD is a teenager.
It's three bedrooms so not going to fall into that "trapped in lockdown" bracket for resale and hopefully by the time your thinking of selling lockdowns will be a distant memory.
Also the utility of gardens depends very much on personality of adults and children in the home.
I live in an area with lots of young families and most of the children play out on the green space with their friends.
It's only in hot weather that paddling pools etc are put out in the gardens.
I'm in the garden a lot and only a handful of days in summer do I hear children in their gardens.
I can't physically do much gardening so if I was very house/garden proud the long grass for much of the summer and patio with weeds growing up would bother me and be just another job on the long list of jobs to sort.
Also money managers recommend thirds, a third of your income for housing, a third for living and a third for the future.

Land is what goes up in value not bricks and mortar so I would buy the house if you can afford that without a stretch.

The flat is share of freehold btw

We’ve never bought the most expensive house we could afford. If we had, we’d be working another 20 years to pay off the mortgage. As it is, we can retire very early with no mortgage & plenty of money to travel.

@Coulddowithanap

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

I have heard it alot but haven't done it. Too worried to not have a really comfortable buffer and we overpay instead

It depends on individual circumstances & don't forgot lending legislation changed after 08 so banks will only tend to lend you what you can actually afford. If your mortgage is 30% of your income it makes a difference if that income is 2k or 6k.

Have you taken into consideration the ground rent and service charge payments on the flat? How long is the lease? Are the maintenance company reliable and do they maintain the flat and grounds to a high standard? These are all very important things to take into consideration when buying a flat. You will never stop paying for it - if the flats need a new roof, for example, your payments will increase.

@Lipsandlashes it's share of freehold. Service charge is £1600 per annum. I've asked my solicitor to enquire about these types of issues, but the buildings generally are in decent repair.

[quote libertybonds]@Lipsandlashes it's share of freehold. Service charge is £1600 per annum. I've asked my solicitor to enquire about these types of issues, but the buildings generally are in decent repair.[/quote]
Unfortunately with flats these type of issues won’t come up until it’s too late - your solicitor won’t be able to protect you against an increase in service charges, new roof, installation of security gates - basically anything the maintenance company decides on. Just be careful.
DH and I lived in a flat for our first home and the service charge doubled over night to £500 a month. We were ok because we both had a decent wage coming in but many were absolutely fucked. One young guy who lived there was at our door shaking and asking how he was going to afford it all.

I would buy the most expensive house I could afford if there is add to add more gains in the future.

Personally if you can afford the house buy it.

I'd always buy a house over a flat.

If the choice were between 2 houses then yes I'd buy the cheaper one.

I think the buy the most expensive house thing is currently outdated. As others have said materials and cost have drastically gone up. However I wouldn’t think a small flat is less likely to have issues. A flat doesn’t know it’s a flat . It’s a very large house with certain rooms allocated. So will have all the issues that come with a house. Potentially at a cost split between multiple people but not always.

Hmm based on your updates OP I'd be even more wary of buying a flat if you could afford a house. Surely there are options that aren't complete doer uppers ?
Flats can be much harder to sell in future. Relative of mine has been trying to sell hers for 2 years even at a loss. No luck and had to rent it out.
The service charge increases are inevitable. Freeholders can change.
There can be huge bills that seem to come out of nowhere for roof, windows etc.
If you had a house you could decide when to do these repairs, negotiate cost etc.
What if there is a dispute with other shared freeholders re repairs. Could be a legal nightmare.

I mean, all the above is irrelevant if you can't afford a house. But if you can, I think I would be very wary of buying a flat.

Ours is quite a lot less than our max budget but it gives quite a lot in security knowing that if needed I could cut down work or take a pay cut or some time out if I wanted to without being forced into debt

No I won’t buy a flat having bought a flat.
Service charge, ground rent, lack of personal garden, no storage, noise from other flats.

I think the buy the most expensive house was valid years ago when jobs where secure and people bought young. Now days with house prices so high and job insecurity I would not buy the most expensive

I think the whole "buy the most expensive house" thing is a baby boomer hangover when they were guaranteed pay rises/pension/job for life and stuff that doesn't exist today.

Is there not a happy medium house that doesn't stretch you to the limit but offers more space and development opportunities than a flat?

That would be a better investment... I'm temporarily living in a flat and there's not much space for dc (obviously depending on the flat!).

@Randomuser9876

I think the whole "buy the most expensive house" thing is a baby boomer hangover when they were guaranteed pay rises/pension/job for life and stuff that doesn't exist today.

Is there not a happy medium house that doesn't stretch you to the limit but offers more space and development opportunities than a flat?

That would be a better investment... I'm temporarily living in a flat and there's not much space for dc (obviously depending on the flat!).

Yep this.

Find a medium - a bit further away for a terrace/semi house w a garden or a garden flat will be better with your child, but don’t go giving yourself no wriggle room.

No, there are no middle options. The very cheapest 3 bedroom house in walking distance i can get my hands on is £535kish, quite small, and needs loads of work. The flat is £470k. There is basically nothing in the middle, I have been looking for over a year.

I've always bought the most expensive I could afford, saves moving every few years, which in itself is very expensive.

I did me ok, in fact more than ok, interest rates went from 8% to 1.5%. Mortgage free at 50 with a big fuck off house

@VeganVeal unfortunately, interest rates don't really have anywhere to go but up at the moment

Stretching your budget to the limit is rarely wise. If the home meets your needs and you will be happy there that is what matters.

We could easily afford a more expensive home, but we just don’t need one. We have a wonderful neighborhood, access to great schools, and plenty of space for our family. We also have savings and can afford some luxuries.