to mortgage ourselves over our heads?

[NCFC4now]

DH will read this so I suppose your opinions will help settle a debate.

DH is 32 and I am 27. We currently own a 3 bed semi Victorian house, it is in a desirable area we love, in the 18 months since we’ve moved in the value increased £75k (bank mortgage valuation) because of the housing bubble.

We over pay our mortgage every month and have a growing amount of equity (especially with the increase!)
However, whilst I love our house, it doesn’t have parking and I find the garden just a bit sad (neighbour has huge trees that block out a lot of sun because the garden isn’t big). Due to the area, parking is difficult and you tend to have to park down the road from your own house.

Because of our location, which we won’t compromise on, a 4 bed with parking, nothing fancy will be £1m. We can get a mortgage for £800k. In my mind, we should wait 2 years (fixed rate ends) and save as much as possible and go for it.

Using present rates available to us, our mortgage minimum payment would be £2.7k a month over 30 years. We can afford this but would mean we can’t really do a step wrong. It would also mean our savings are wiped out due to SDLT so would need to replenish those.

I grew up in poverty and we have achieved everything without any help so I suppose a big house has always been a symbol of achievement to me.

Is it a dumb idea? Tell me your thoughts! I am a bit scared about losing our jobs and whilst DH is a teacher so safe, his extra income comes through a business he runs which I think is stable but you never know. I also hate working and have some mental health issues. Also this could be made worse financially if we do have kids as planned in a couple of years…

DH wants the house but doesn’t want the debt and thinks we should stay put. My argument is simply that having a child and no parking space will cause a breakdown at some point if I’m already stressed whilst fit and childless about the situation.
Thanks

I think that kids and a massive mortgage will be more stressful than a lack of parking. Keep overpaying and see where you are in two years and factor in £1k a month for nursery.

If you plan to have DCs keep in mind childcare is f* expensive.
It is making a HUGE difference in our budget.

I think the stress of being mortgaged to the hilt could have a negative effect to your mental health.

@marykitty it sounds so stupid, but how much is childcare and for what? And how long do they need it (I’m assuming the free childcare gov hours eventually kick in) CLUELESS!

@nellyburt

I think that kids and a massive mortgage will be more stressful than a lack of parking. Keep overpaying and see where you are in two years and factor in £1k a month for nursery.

Yup.

I strongly believe people should be much more reasonable about this. What happens if something happens? You would be fucked

It really depends on your outgoing and income and how much of a stretch you would find yourself in. What is your joint income?

I would do a table of all your outgoings and also future potential outgoings (i.e monthly childcare costs for nursery) and see whether you would be confident taking on a bigger mortgage.

We have recently bought a house and did not stretch ourselves (similar ages to you both) as we wanted to live comfortably, go on holiday, if we have children in the future take a long maternity leave etc and didn't want to be tied down by a large mortgage taking up most of our income.

If one of you lost your jobs could you afford the higher mortgage?

Would it be sensible to save for a longer period of time (i.e 5-10 years) work on building more equity, increasing salary etc so you can make the move more comfortably in the future? You are both young and have time on your hands

Would you be able to afford the mortgage if you factor in maternity leave and then nursery fees?

Just to be clear, at present the £2.7k is 34% of our total monthly net income.

[quote NCFC4now]@marykitty it sounds so stupid, but how much is childcare and for what? And how long do they need it (I’m assuming the free childcare gov hours eventually kick in) CLUELESS![/quote]
Depending where you live, anywhere from £50-80 a day for a nursery place, free hours only kick in the term after child turns 3 and it's 30 hours a week term time only

I'm with your husband on this one. Is your front garden big enough to have off road parking?

Tbf I don't think you would pass affordability. The stress tests ate there to stop people overstretching.

Absolute madness, if you ask me.

Really bad idea. It's miserable to be house poor, and if you hate working you might wind up having to work anyway to keep from losing the house.

How many people really like working?

@HalfShrunkMoreToGo I genuinely have no idea how much nursery / child care costs. My mum is a baby person so would definitely help but not sure how much - probably 1 say a week. I’d need nursery for 2 days a week then.

DH wants to go part time when we have children and wants me to also go part time so that we have equal care of our children but he could increase his business hours if this happened to increase his income. However we would definitely suffer.

Would also need to factor in the possibility of getting a good fixed deal mortgage and then the interest rates being much higher once the fixed deal has ended (I'm sure you've seen in the news about the expected rises).

@Mamamia7962 nope, none of the houses have parking. The front doesn’t qualify for a dropper kerb by 0.3cm and it’s also a bit of a feature out the front - it’s a traditional Victorian with the slabs etc (I am bad at explaining!)

[quote NCFC4now]@marykitty it sounds so stupid, but how much is childcare and for what? And how long do they need it (I’m assuming the free childcare gov hours eventually kick in) CLUELESS![/quote]
Nursery fees are about £1k a month and .more. the free element kicks in the term afte their 3rd birthday but only covers 30 hours in term time so you still have outgoings even if reduced.
On top of all the other child expenses and it doesnt necessity stop at school if you need wrap around care.
Plus what about holidays and trips out. Nothing worse than feeling trapped and tied to a big house if you cant afford a holiday

Remember the 70s and 80s where interest rates went up to 11%. Absolute stupidity IMO.
Stay put. You can't afford it.

I wouldn’t risk it myself, but I am a risk-averse person. I’d be worried about all the things that could go wrong: house price crash; interest rate rise; job loss; ill-health etc.

But you don’t need to make the decision now, as @nellyburt said. Things can change a lot in 2 years.

You would be mad.
The cost of children alone would make a huge difference to your finances short term and long term.
Interest rates can go up, probably will go up. That alone might make it unaffordable.
Reckless to leave yourselves with zero savings.

There are many, many places in the UK where you could get a 4 bed house for a fraction of £1 million, teachers can work anywhere.

Full time childcare ( nursery ) for 1 child is £60 a day here ( Scotland ) so £300 a week

You sound like you are in the south East with talks of a million pound house so your nursery cost down there will be more a day , could be £80 a day so £400 a week

So factor in nursery of between 1200-1600 a month depending on your area

( could be less if you work less days obviously )

I’m sitting here wondering how a teacher can afford an 800k mortgage
Must be some income coming in on his side hustle business

We have already passed affordability for £800k. We have £200k in equity at present and joint savings of £50k which would cover SDLT. We aren’t currently saving as we over spend every month and live like idiots. @Wazzzzzzzup

In general; my salary SHOULD increase two more times as a minimum between now and then, however I am not confident in myself and don’t want to rely on this.

I think it’s highly unlikely that interest rates will remain as low as they are now for long. Think about whether you could afford it if rates went up 1, 2, 3, 4%.

Full time nursery will be £1000+ a month depending on where you live (assuming it’s somewhere expensive given the amounts you’re talking about housing wise, may be a lot more). A nanny would be more again.

Maternity leave usually means a significant drop in earnings. How much would you as a couple have to save to cover the mortgage and other bills over that period?

I really, really wouldn’t overstretch yourselves like this if you want to have children.

I would just suck up the parking situation.

We don't have off-street parking and it can be annoying at times, but there is usually one space to be had on the street.

You are absolutely bonkers and oddly entitled. Have you need seen the financial devastation wrought on some sectors by Brexit and COVID?

Do you really think you can foresee what might happen in the next 30 years of your huge mortgage payments? The fact you don’t know anything about childcare costs highlights your inability to plan for the long term.

Live within your means, consider compromising on area, maybe grow up a bit.