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 wouldn’t do it. So many things could go wrong:

Interest rates rise
Health/mental health issues for you and husband - granted, you have insurance, but would it cover ALL your mortgage - and then what about supporting you to live afterwards (eg if you need adaptations to house or cleaner/carer)
Health or learning issues with children - one parent may need to take time out to support child and take to appts
House problems - subsidence, essential maintenance not detected on survey
Redundancy or sudden business downturn

I’d also hope to spend more time with the kids when they were small - if I had a choice (not essential for everyone, but your husband sounds like he would value it). Although your house seems good for you now, would it work for your kids? - sometimes good schools for kids can be in different locations (depending on what your kid is like).

I think I could cope with parking issue better than the above potential stressors. Good luck!

We were in the confident position of having my fit and able parents nearby to help with childcare.
Then my Dad had a life altering accident and brain injury just as our youngest DD was turning out to have some complicated medical problems. I stopped working altogether for 2 years and 4 years later I still haven't increased my hours to what they were.
It can happen to anyone.

I'd say go for it.

Yes it's a risk, but if you get into problems you can sell, or cope, or rent out a room (pr 2!) for £700+ a month.

People who don't live in london /SE just dont get how ludicrously expensive it is. Lots of people have stupidly high mortgages (and incomes too). And the "can you build a garage?" Question almost made me spurt my tea out. where I live a garage is £70k to buy, minimum and miles from the house. In the SE /london we are all squished in.

If you save now and get used to the added cost you will be in a better place if/when you have children.

The bigger mortgage will force you not to fritter as much. I'd start getting into stricter habits straight away as a practice run and to give you a bigger cushion of savings. (You should aim to have 3-6 months of savings to cover current spending level as a minimum) .

Yes you could get ill, yes you could lose your jobs, but that can happen anytime to anyone and living in fear and under that threat is bad for your health. Assume everything will be fine, envision success and cope with the inevitable shit that hits most people periodically through their lives. Ive lost people close to me who regretted not going for it. You never know what's around the corner so live fully for today.

It's scary, it as with all mortgages that lessens over time. Your are young. Lives your lives in your lovely bigger Victorian house. Be happy

So you’re risking bankruptcy, mental health breakdown and everything you have for parking? Plenty of people manage with no parking right outside their house and a child I think you are being unreasonable.

You say you wouldn’t have much wriggle room financially? As previous posters have said childcare can run into the thousands and the cost of actually raising a child is a lot. Clothes, equipment, food, extra bills etc.

Not often I say this but I agree with your husband you should stay out and wait until after you’ve had kids and reassess your finances

We're already seeing inflation and interest rates are likely to rise soon. I wouldn't budget on the basis of your existing rates OP. Please factor that in (unless you can find a fixed rate mortgage before that happens).

I'm not going to comment either way except to say you're doing really well to have a house in a nice area (even with the parking and garden issue). And you are managing to over pay. All that bodes well fir the future and you are to be congratulated (gosh dont I sound like a patronising old git?! I don't mean to!)

We bought our first house when both DH an I were on good salaries. A couple weeks after We moved in I was made redundant. I was also pregnant at that point. I had such a bad birth it took me two years to recover enough to return to work, and because of childcare costs etc it taken 8 years to return to my previous income.

I am so so so glad we took on a modest mortgage well within our means even on one income.

Do t mortgage yourself to the eyeballs if you’re planning kids. Kids are expensive. Nappies, prams, slings, car seats, beds, blankets, toys, books, gifts, more clothes, more good, kid days out, more gifts, school uniforms, hobbies/activities, swimming lessons, more petrol to drive them places, yet more clothes…. It all adds up to a lot of money. You can’t rely of family for childcare - they might move, be too busy or become unwell.

Be careful of not having a backup for emergencies. I thought everything in the garden was rosey, but was informed on Monday that I am being made redundant. I have enough savings to help for 2-3 months, but if I didn't have that it would be disasterous (not that its not anyway!)

So you’re risking bankruptcy, mental health breakdown and everything you have for parking?
Massively overstating things. There are risks either way, and although I don't understand why parking matters so much, there are clearly other issues - the garden, bigger house, potentially forever dream home - that OP is also motivated by.
Bankruptcy an mental health breakdown can happen period. A bigger house is a bigger risk, but bearing in mind the equity they have in current home and the three sources of income (at least one of which - teacher - is very secure) bankruptcy is not seriously on the cards.
Some people are more risk averse than others, and this is basically what it is about. Those who are younger like OP are less risk adverse than those who are older, but that is not to stay at all that being risk adverse is better.
All this talk of interest rates rising and the economy going to pot.....to me these are arguments for moving when you can. You may not get another opportunity if things all go wrong, and you can lock yourself into low rates for some time, and if the worst happens you have a substantial home you can almost certainly sell for at least some profit. (Too many doom mongers here - house prices are a function of demand and supply, and there's not enough being built - even yesterday the Tories basically said they are not building too many more in the SE where they are needed most.)

Wouldn't rely on family picking up childcare - my MIL said she'd have ours (as she had had SIL's for 5 years each child) and did, for a bit. Then dropped us in it and said she couldn't. So we now pay 1600 a month in childcare.

oh and that's only for 2 x full days DC1 and 2.5 days DC2

@JustMarriedBecca

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

Ours went up to around 15% in the mid 80's. After going through the news headlines last night I would be very wary of taking on a top end mortgage. Massively increased gas prices, increased council tax, chocolate shortages. Anything could happen in the next year or so and I would recommend caution.

@knittingaddict
chocolate shortages - defo should be a major consideration when considering a big mortgage!

Suck up the parking and do a loft conversion instead?

In same region so I understand the issues. I’m worried about the looming increase (or reform) of council tax. Would seriously look at other outgoings associated with the slightly bigger house (assuming Victorian/Edwardian): our gas&elec is now £500/month and council tax £300 at moment, obviously will increase more depending on whether they go with size of house/value of house/area of land you occupy. At least the mortgage is “fixed”.

to me these are arguments for moving when you can. You may not get another opportunity if things all go wrong, and you can lock yourself into low rates for some time, and if the worst happens you have a substantial home you can almost certainly sell for at least some profit.

The OP is talking about 20% LTV - she does not have a large equity cushion. Do you remember the 90s? The number of people in negative equity? When you're in negative equity, you can't sell up.

Too many doom mongers here - house prices are a function of demand and supply, and there's not enough being built - even yesterday the Tories basically said they are not building too many more in the SE where they are needed most.

Supply and demand is linked to the economy. If interest rates go up there won’t be any demand because mortgages will become unaffordable by today’s standards. Some of us have seen it all before. When I bought in 1991 nearly every house on the market was a repossession.

@CSJobseeker
20% on a house worth a million is £200,000 - enough to buy a home outright in most of the country! Chances of negative equity are therefore small. And the fact remains that house prices cannot sink massively in London simply because of supply and demand. Obviously nothing is risk free, but with such high incomes they should be able to manage. Yes, they might both have a brain haemorrhage tomorrow and never work again, but that's not too likely and, seriously, you cannot live your life assuming things like that will happen. For starters, no one would ever have a children and then they'd be no mumsnet......
OP has admitted they spend like idiots and the new mortgage is only £700 more than they are in fact paying at the moment, which on their income is very little. Providing they always pay the mortgage before spending like idiots - and a high career in finance and a teacher are hopefully not complete idiots - then the risks are very low.

Your gas and electricity is €500 a month?? That’s mad!

I wonder will the op come back or did she collapse when she looked at childcare prices. All the best to her anyway!

@Blossomtoes
Inflation is on the increase, and therefore interest rates will increase (so why not lock in now, which is kinda my point), and yes therefore demand will decrease. So far, so obvious.
However, there is a massive shortage of homes in the SE, and a massive shortage of homes coming on the market in the SE, with yet a bigger and bigger population. Prices coming down hugely are therefore remote. With their income and background, OP is very very unlikely to be facing any repossession at all - if nothing else she would surely sell herself if facing such a situation.
Remembering the 90s doesn't give you a veto on everything, or make you an expert on the economy.
OP is 27, hopefully not a complete risk averse frightened oldie like so many on this thread......

And the fact remains that house prices cannot sink massively in London simply because of supply and demand.

I really hope those words don’t come back to haunt you although I suspect they will. Supply and demand is irrelevant if the economy goes tits up and mortgages become unaffordable. It’s pretty obvious that we’re heading for recession, rising inflation and consequently interest rate increases. The property market is unlikely to implode but it could slowly deflate over several years, then people just won’t buy,

I'm very pro stretching yourself for climbing the property ladder, I've done it and also took a few calculated risks regarding our investment properties too.
However this is a step too far for me. £800k mortgage? No thanks.

OP is 27, hopefully not a complete risk averse frightened oldie like so many on this thread......

Ah, the triumph of hope over experience. Let’s hope she doesn’t have to learn the hard way, eh?

@Blossomtoes
I really hope those words don’t come back to haunt you although I suspect they will.
Ooooh don't we always know more than everyone else, particularly if they are younger than us and disagree with us. I suspect you are one of the MILs others complain about on here!

Supply and demand is irrelevant if the economy goes tits up and mortgages become unaffordable
Anyway who says supply and demand is irrelevant knows nothing about economics and the economy and should be ignored totally. It don't matter what else is going on if demand and supply keep up. Duh. More importantly you acknowledge house prices are unlikely to implode, and this is particularly true in the SE BECAUSE OF DEMAND AND SUPPLY! Therefore OP is not really risking negative equity, repossession, death and damnation as everyone who lived through the 80s and 90s just knows. She's the one who came from a very modest background and has a brilliant well paid career in finance aged 27. Even if house go own slightly for shortish period which is certainly plausible, there's no long term risk to her - she's looking for her forever home not a short term investment.

No no no.

OK with childcare, do not under any circumstances be hoping your parents or anyone other paid people will look after your kids. It's nice if they do, but you CANNOT expect it. It's just stupid. You factor in how much they will cost you every month. If you end up less than that, great, but you have to factor in 1k childcare fees at minimum. Maybe bump that to 1500 because by the time you have kids, that fee has probably raised. You also can't look after your kids while working from home. Not going to happen. You need to do way more research on how much kids cost before having them. You don't seem to know a lot at the moment, they cost a ton of money.

You can't afford it. I doubt you could even afford a slightly less expensive one to be honest. I'd bet you'll probably struggle with what you have, nevermind more expensive.