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

NCFC4now a side bar OP, I know you've said you aren't going head, but one thing I did not consider in my 20s, now in my 50s, is that you're not the same person over time and your priorities change.

What's great now may not be in 5 or 15 years. So a financial buffer is always a good idea against being locked in a life or aspects of it you start to hate.

Also, how sustainable is your DP’s £30k per year (presumably after tax) side job?

That’s another generous salary really

A 30-year mortgage at your age would have me running for the hills. Absolutely no way.

@Tilltheend99

Later house fair enough, and each to there own but the emphasis on parking is just a bit sad to me.

It is a risky climate to take on a lot of debt in. Also, fair enough for your husband to not want the pressure as he would be the main earner if things went wrong.

What would be the problem with waiting a bit longer and building up more savings if you think you would be able to replenish them?

Based on what you said about living in poverty it seems that once you got the bigger house you would just be into the next thing. Better to deal with your feelings about your childhood and make the decision with a clear most mind.

I agree.

The fact that you feel that you had an impoverished upbringing is blindsiding you into feeling that the grass is always greener.

Programmes like 'Escape to the Country' always leave you feeling 'what if.'
House renovation programmes always make you feel inadequate about your own property.
So many folk are uprooting to find their dream house and work from home.

I've lived in a very lovely London suburb and I can relate to the parking issues , which were insufferable , if I'm honest, but I now live a fair bit away from there now, in a 4 bed detached ( previously 2.5 bed semi ) with a drive for three cars . Strangely, I have much less storage space and loathe my dark garden ( and home... lights on all the time!) and I'd go back to my London home tomorrow if I could.

As I say... the grass is always greener...

You could look at interest only mortgage options for a period if it allowed you to make a transition at the right moment, however, I’ve been the mum without a pound for a coffee (for 2 + years) and it’s fairly painful.

@buttermutt

Interest rate rises are absolutely certain and there’s a recession on the horizon. Anyone who mortgages themselves now is crazy. Particularly for a parking spot. Absolute madness.

You think they will get to 12% next year? I don't. The OP could fix a the rate offered for 5-10 yrs.

They wouldn’t need to increase to 12% to become unaffordable if you’re up to your neck in debt.

They wouldn’t need to increase to 12% to become unaffordable if you’re up to your neck in debt.

I wouldn't classify a mortgage at 34% of your income & no other debt as up to your neck in debt.

Again, something says to me that the property market is in its final stages before a collapse of some sort. I could of course be wrong but I've watched the markets for 3 decades now and this sort of excess is usually followed by a blow out of some sort.

I agree with this. The party is over and the hangover is about to kick in. So many people brought their move forward because of the stamp duty holiday, it was an absolute frenzy.

@buttermutt

They wouldn’t need to increase to 12% to become unaffordable if you’re up to your neck in debt.

I wouldn't classify a mortgage at 34% of your income & no other debt as up to your neck in debt.

Are you OP’s mortgage broker with a fat commission at stake? Ot just utterly financially reckless?

Why because I disagree with you?

Having a mortgage 34% of your income is not necessarily financially reckless it depends on many factors

If interest rates were to rise to even 5%, the repayments on £800k over 30 years become around £4,300 per month.

That’s £1,600 more than the £2,700 which is already a stretch, even after including additional income of £30k per year from a second job

OP, I'm in London and my nursery is £94 a day - my "backup" nursery was a bit cheaper but has now increased its prices to £91 a day for under 3's. I need 4 days a week, so I will be paying almost 1700 a month just on nursery fees alone.

Even when the gov free hours kick in when she turns 3, they are spread over the year & then the nursery starts charging for nappies and food etc which were previously included in the daily rate. With this it works out that I'll still be paying around 1k a month!!!

@buttermutt

Having a mortgage 34% of your income is not necessarily financially reckless it depends on many factors

34% of essentially 3 incomes though

Not at all clear how sustainable the OP’s DH’s £30k after tax business is

OK, if you are set on moving I’d advise that you spend the next two years living as if you already had that mortgage and save every single penny of that amount plus extras such as extra council tax and (dread to think) extra fuel to heat a big Victorian house.

If you can do this with ease then maybe you can afford it. Factor in childcare and also paying for additional costs such as new furniture ( yes you definitely will want/ need this) and additional costs such as renovations you will need. Literally every house I’ve ever looked at has needed more spent on it to get it how you want it.

No harm in big dreams but do it sensibly.

@RubyJam

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

@RubyJam , I was wondering that too !!!!!!!!!!!!!!

You would be more stressed if you were struggling paying the mortgage . For that sort of money where we live in South Wales you would be able to buy have a massive house with land

Absolutely no. Don't put yourself in a risky financial position for a better house you don't actually need.

We did this inadvertently in the 70's. Made the jump from 2 bed flat to 4 bed semi to accommodate 3rd child. Interest rates shot up to 12% and it was miserable. Couldn't afford to replace the washing machine for a year, so I was hand-washing towelling nappies. Every MoT was a nail-biter. No extras or treats. All v depressing.

The economic outlook for the country is dire. So many things beyond our control. Rocketing energy prices, food prices already on the up. Govt policy will likely lead to inflation. This is not the time to spend all your savings and take on higher outgoings - all because your garden looks a bit sad and you can't park directly outside your front door. Count your blessings.

I think it would be more sensible if interest rates were higher & they should have been allowed to correct themselves yrs ago however I can't see the gov allowing a significant fall. Hence why we had the SD reduction which fuelled a frenzy during a pandemic, crazy!

34% of essentially 3 incomes though

Not at all clear how sustainable the OP’s DH’s £30k after tax business is

Not at all clear how unsustainable it is though. I just don't think a blanket rule of x % mortgage of income = financially reckless.

I already said upthread that as the OP wants dc she should be more conservative.

@buttermutt

Having a mortgage 34% of your income is not necessarily financially reckless it depends on many factors

And what happens if you lose one of those incomes?

The problem is your scenario is all worked out on current finances.
Interest rates are at a 300 year historic low. They are bound to go up in the lifetime of your mortgage. How would you feel with a mortgage at 5 or 6%?

My first mortgage was at 12% then I got it fixed at 10% then enjoyed a number of years at 6 to 8%. Then interest rates started to fall.

Do the figures on 5 to 6% and see how you feel. Then factor in childcare at £1,500 to £1,800 per month as well. Then work it all out.

You would be better saving massively the next two years. Why not try living off your salary and saving the rest??

Personally I think the debt is far too high and you would regret it but horses for courses and all that.

Don't do it.
It will not be worth the mental stress.
Stop thinking having a large house signifies success,it doesn't.
Happiness is success,good health,your lovely family,peace of mind,that's success.🌈

@1forAll74

Why would you have children, if you go and put them in a nursery, or ask family to have them.

Did you just pop in from 1950?