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

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

I was the same age as OP when I bought (early 30s now). There is time and place for risk. There is time and place to be sensible. This is the latter situation imo.

• Anyway = anyone
• own = down

Let’s hope she doesn’t have to learn the hard way, eh? - you sound like the sound of oldie who likes bad things to happen to others so that you are proved right about everything!

OP - have you and DH discussed this yet? Any conclusions? We'd all to know!

I think your extreme response speaks volumes @TataMamma. Clearly a nerve has been hit. The economy goes through cycles. Not only is a recession due, but all the signs are there - do you seriously think there was no demand for property in the 90s?

Obviously some people will be able to ride the storm but many won’t.

By the way, my son is single!

@Blossomtoes
Thank you but I have a degree in economics. Really don't need to be patronised by you and your degree in life. Think about what you have said to me and how arrogant it is.
The evidence looks pretty good that OP would be able to "ride the storm" and that's why I think she should do it. They have 3 sources of income, currently spend "like idiots" (hardly essential), and not insignificant equity. For others it would be different, of course, and not such a good idea. For OP, I think it's a good investment.
Not surprised your son is single.

You are extremely rude @TataMamma. How is it arrogant to disagree with you? Clearly your degree in economics didn’t have a module in manners or mature debate. Incidentally neither my bachelors nor masters are in “life”.

@ Blossomtoes
You keep hoping people who disagree with you and would make different decisions to you, suffer terrible consequence and learn their lesson! WTF is the matter with you?
(And just to be clear living the life OP does is about as likely for me as winning the lottery. I still think she should do it, and wish her the best, even if she doesn't do exactly what I tell her to!)

Yanbu.

We had a bigger deposit but did basically the same. We didn't want to mess about climbing the ladder and throwing money away on stamp duty.

We got a 10 year fix and 2 years in it works fine for us. We both have had promotions and payrises since buying. we know things can change and so have saved a fairly substantial amount and this will cover mat leave and 2 years of mortgage payments. We can also sell if its unbearable so we are fairly chilled about it all.

@TataMamma It is posible to disagree without being insulting and rude you know.

And you know nothing about economics if you think a market crash, which may be just around the corner, is avoided by " supply and demand". Demand does not mean wanting a house, it means being able to raise a mortgage or other funding for it and being confident that you will be able to mainatain that affordability into the foreseeable future, which depends on job security and a healthy economy. The latter will also drive how willing banks will be to lend.

We are on the brink of unprecedented economic uncertainty, and people who have lived through financial shocks have learnt the hard way what that can mean.

You keep hoping people who disagree with you and would make different decisions to you, suffer terrible consequence and learn their lesson!

I don’t. In fact I quite specifically said I hope they don’t. 🤷‍♀️

@wewereliars
It is possible to disagree without being insulting and rude you know.
That's my point. It is somebody else you should be saying that too I think!
Demand means being wanting and being in a position to buy. It makes no sense to say "demand and supply won't matter if..." which was what I was objecting to. There is low demand for multi million pound yachts, which isn't too say lots of us wouldn't mind one for a tenner.
Yes there are general problems, but focus on OP. She has 3 sources of income, substantial amounts wasted, and the mortgage is not much more proportionately than what she is paying. All the uncertainty etc and banks getting more unwilling to lend in the future, is therefore I think a good reason to do it now whilst she can. That must of us could never do this - and I doubt right now I'd get a mortgage for a quarter of what OP is talking about - isn't the point.

Yes. Interest rates will rise eventually.

Personally I think that stretching yourself on a mortgage (to an extent) is underrated, we did it and I don't regret it for a second. I also think people on MNers are often at the extreme end of caution when it comes to financial matters.

Having said that, this would be a step too far for me and I wouldn't do it.

Crazy I'm sorry op.
We moved from a three bed to a four bed and our council tax has doubled , heating bills obviously higher and we pay for childcare too. I didn't realise how expensive children were until I had them. I have three and they always seem to bed things at the same time, for example they'll all need new clothes as they've grown . It's expensive.

@TataMamma No, I mean you. You are the one referring to "doommongers" and "oldies" in respect of people urging caution, which is very rude indeed.

I got Msc in economics. You are all wrong

@JustMarriedBecca

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

Then in the 90's it went up to 15%

[quote TataMamma]@wewereliars
It is possible to disagree without being insulting and rude you know.
That's my point. It is somebody else you should be saying that too I think!
Demand means being wanting and being in a position to buy. It makes no sense to say "demand and supply won't matter if..." which was what I was objecting to. There is low demand for multi million pound yachts, which isn't too say lots of us wouldn't mind one for a tenner.
Yes there are general problems, but focus on OP. She has 3 sources of income, substantial amounts wasted, and the mortgage is not much more proportionately than what she is paying. All the uncertainty etc and banks getting more unwilling to lend in the future, is therefore I think a good reason to do it now whilst she can. That must of us could never do this - and I doubt right now I'd get a mortgage for a quarter of what OP is talking about - isn't the point.[/quote]
Substantial amounts wasted though is the problem. Someone who is wasting money right now and doesn't even know how much childcare will cost her is not likely to stop spending frivolous amounts on crap. Loads of people do it, they live month to month. Would you agree that she should continue her current lifestyle and get a bigger mortgage and kids? She literally cannot afford it.

If they both stop spending on crap from now, get a proper focus on their finances as it doesn't sound like they have one, and figure stuff out for childcare, then they can look at getting a bigger home. You don't get the bigger home first then do the rest.

I think you dh has unrealistic expectations tbh.
Both going part time and a private school with a huge mortgage?!

We did this recently. It's tight, but we haven't regretted it. All being well, your income will increase over time and what feels like a stretch now won't in 5-10 years.

And if the worst came to the worst, you could sell the house. Even if you made a loss on the sale, you'd still have enough money for a deposit on a cheaper property.

People are concerned with financial security, but you have to think about what "financial security" means. Having a job, earning enough for rent and bills, is great. Owning a house is a step up from that. Owning a dream house is another step up. You sound like you're in a very good position to me, and if I were you I'd take the risk.

There are so many unknowns at the moment with Brexit and Covid. Stretching yourself so thinly means it only takes one thing, redundancy, interest rises, issues with your dh business to put you under.

Notwithstanding people who live alone, if you have two wages coming in, I'd always like to be in a position where one wage, could cover the mortgage and utility bills at a push. That way you can over pay or save whilst you have two wages.

I'm not sure why you'd need 4 bedrooms, surely there are 3/2 beds out there with driveways? Plus if you are looking at having kids, childcare bills can be the same price as a mortgage in most areas.

I’ve found this thread very interesting as we are in a very similar situation and wondering what to do.

The mortgage we would be looking at getting would be £740k and would be right at the max of our affordability.

We want to move for more bedrooms & downstairs living space.

The difference for us is that we have our children and no more childcare costs to consider. Which obviously helps.

Both of our salaries should continue to rise.

However it would be very, very tight for 18 months.

The interest rate rise should be ok as we would fix for 5yrs and so should be able to cope if they had gone up at that point.

I’ve always been of the mindset to push if possible and fully relate to coming from poverty and how that influences decisions.

Good luck OP, not an easy decision and one that we shall continue to stress about too!

Wzzzzzzzup it doesn't matter if you are Milton Friedman or John Milton Keynes reincarnated.

We are the first Western society in modern times with a government determined to cause economic harm, so all bets are off.

@wewereliars

Wzzzzzzzup it doesn't matter if you are Milton Friedman or John Milton Keynes reincarnated.

We are the first Western society in modern times with a government determined to cause economic harm, so all bets are off.

I thought we are making up stuff just to argue and felt left out 😂

I actually agree with more cautious (I am one)

@ballsdeep

I think you dh has unrealistic expectations tbh. Both going part time and a private school with a huge mortgage?!

No....they want state school - she's said her DH as a teacher is opposed to fee paying schools.

Do agree with the general thrust - not sure how part time work (together with costs of children) could possibly fit in with all this!