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

That's a huge amount of debt. How would you manage it if one of you lost your jobs? How would you manage to pay childcare (£1k a month usually) if you had children and needed to work to cover the mortgage as well - or just wanted to work, of course?

I think your DH is right.

@RashOfBees that's all good advice, well balanced and expressed.

We all take risks in some way, every day, but when they're major risks it's good to look at the very worst downside and then work back to the amount of sacrifice and the gamble that we're comfortable with and if that risk is worth the potential gain.

Kids and a massive mortgage just to get a parking space? Which is what this seems to come down to. Don't do it. If you do this and anything should go wrong you are sunk and could lose the house and everything. If parking means so much, move to an area where prices are cheaper.

Wow, OK so lots of views here and a lot I should explain.

Would like to thank my mortgage broker @buttermutt (I joke)

So I am not risk averse with property, if it’s the right one. We were paying almost 4% on our first mortgage because we were struggling for affordability (long story).

I suppose that past has encouraged me.
DH’s job is secure, however, if he lost it then his side job could take over. They do not need to go hand in hand but do well.
My job is in finance, it’s fine. I have only been in my current job 2 months and I took a pay cut for it - this was because I faced racial discrimination and needed out (I am awaiting a settlement).

I know that it is possible I’ll hate work after a child. The reason I’m so blasé is because I am so uncertain about children - it’s another thread in itself but I have no maternal instinct but know I want children. It’s strange and confusing. DH is on the same page.

I spoke to my mum today about childcare, we discussed costs based on what I’ve been told here and she thinks I’d be better using her and paying her a small amount. I’m happy to pay my parents for things and currently do, they are still not at retirement age and it makes me feel comfortable knowing they’re ok.

Somehow the posts on here seem to have made DH less on the other side. I should preface this with the fact we are both in Economics. Whilst he doesn’t believe we will go back to historic high interest rates, he’d argue this is now the time to overstretch. He’s just worried.

Thinking it through I’ve penned scenarios for 2 years time when we move house, this would only happen if fixed on a large mortgage for 5 years. This means in the beginning we’d have little childcare issues. We can assume our salary will be a lot higher but for this exercise I will not increase it:
£3,000 mortgage
£1,000 bills (they do not need to be higher, they’re not this high at the moment and we aren’t going much bigger)
£1,500 nursery fees according to this
£1,000 on baby related items and expenses

That means £6,500 spent of which £1,500 remains free for savings?

This is why I’m so convinced I’m not taking a risk but maybe I’m being silly again.

^£3,000 mortgage
£1,000 bills (they do not need to be higher, they’re not this high at the moment and we aren’t going much bigger)
£1,500 nursery fees according to this
£1,000 on baby related items and expenses

That means £6,500 spent of which £1,500 remains free for savings^

I'm not sure the £1000 bills will cover everything, but £1000 monthly baby related items over and above nursery/childcare sounds like a lot.

Your £1000 bills seems to have to cover

council tax
gas/electric
water
broadband
TV licence and services
mobile phones
prescriptions/opticians/dentist
food
travel/car costs

Which doesn't seem like much. Remember that utilities are on the rise and you're planning to move to a larger house which could mean that bills will rise. Also what about holidays, home improvements, car replacement?

Plus also there's personal spending money clothes, haircuts, meals out, hobbies, leisure etc. Many couples who are used to buying lunch, having haircuts and beauty treatments etc could spend £1k pm or more on those things alone.

I'm not saying you can't afford the big mortgage, just that you might not have as much spare as you think.

In London, our nursery for 1 child full time was £1750. That was a few years ago

You can't have everything you want. Your dh is a keeper, listen to him.

If you are both in economics this should be straightforward. You talk about future plans, but they would have to be cancelled if you took on this mortgage. You cannot count on your parents for childcare as you would lose the house if your mom got sick. You would not be able to both go parttime as you will need your incomes. You will be very unlikely to be achieving your expected double triple income if you went part time, and possibly even if you went on mat leave (very unfortunate but certainly happens)

Mortgage rates- are at an all time low. 3% extra is the basic bank stress test for whether you can afford the loan so if that’s your stress limit then it’s a bad idea. Agree 12% is very high but globally rates are starting to pick up, nz lifted rates this week. If you can’t pay 7% you risk being highly stressed. You mention your mental health, another reason not to overstretch. There is no stress like financial stress! I can assure you parking is nothing compared to the stress of trying to keep the house if something goes wrong at work or if your child is sick.

I have been where you are and appreciate the parking can be a nightmare, I would challenge you to see if this is something where you can decide not to be bothered about it. That stress rise every time you are looking for a spot? You can control it, think of it as. A mental health exercise. I part managed it by not driving a lot with children, as it is even harder when you have to get bags and child and pram out of the car and walk two streets to home.
That said, wait the 2 years and reassess. A lot can change in that time.

@NCFC4now

Wow, OK so lots of views here and a lot I should explain.

Would like to thank my mortgage broker @buttermutt (I joke)

So I am not risk averse with property, if it’s the right one. We were paying almost 4% on our first mortgage because we were struggling for affordability (long story).

I suppose that past has encouraged me.
DH’s job is secure, however, if he lost it then his side job could take over. They do not need to go hand in hand but do well.
My job is in finance, it’s fine. I have only been in my current job 2 months and I took a pay cut for it - this was because I faced racial discrimination and needed out (I am awaiting a settlement).

I know that it is possible I’ll hate work after a child. The reason I’m so blasé is because I am so uncertain about children - it’s another thread in itself but I have no maternal instinct but know I want children. It’s strange and confusing. DH is on the same page.

I spoke to my mum today about childcare, we discussed costs based on what I’ve been told here and she thinks I’d be better using her and paying her a small amount. I’m happy to pay my parents for things and currently do, they are still not at retirement age and it makes me feel comfortable knowing they’re ok.

Somehow the posts on here seem to have made DH less on the other side. I should preface this with the fact we are both in Economics. Whilst he doesn’t believe we will go back to historic high interest rates, he’d argue this is now the time to overstretch. He’s just worried.

Thinking it through I’ve penned scenarios for 2 years time when we move house, this would only happen if fixed on a large mortgage for 5 years. This means in the beginning we’d have little childcare issues. We can assume our salary will be a lot higher but for this exercise I will not increase it:
£3,000 mortgage
£1,000 bills (they do not need to be higher, they’re not this high at the moment and we aren’t going much bigger)
£1,500 nursery fees according to this
£1,000 on baby related items and expenses

That means £6,500 spent of which £1,500 remains free for savings?

This is why I’m so convinced I’m not taking a risk but maybe I’m being silly again.

Buy it then. You are determined that you're right, but I'm going to point out you are in finance and your husband is a teacher, yet you've turned to an online forum of strangers for advice on money. If the pair of you can't use a calculator and/or excel, you're screwed.

Buy it then. You are determined that you're right, but I'm going to point out you are in finance and your husband is a teacher, yet you've turned to an online forum of strangers for advice on money. If the pair of you can't use a calculator and/or excel, you're screwed.

Wow....and people have been saying I'm rude! Jees she knows about her own life and hasn't made the same decision you would. Calm down dear!
And OP didn't turn to an online forum of strangers for advice on money - her and her DH had different views on whether something was too risky or no (ultimately a matter of opinion, based very largely on your personal attitudes towards risk), and she sought to see how others viewed the whole thing. Clearly she wasn't asking for financial advice, but gauging how her feelings of risk were compared to others, and seeking info about childcare and other related costs.

I have no maternal instinct but know I want children

😵‍💫

I might be wrong but if your parents are going to be paid to look after your future children then I believe that they need to be registered.

Hopefully someone will come along and put me right.

@DroopyClematis

I might be wrong but if your parents are going to be paid to look after your future children then I believe that they need to be registered.

Hopefully someone will come along and put me right.

Nope that's not the case. If OP wants to get the £2000 per year tax thingy then grandparents need to be registered, and if OP wants to use the Government 30 hours thing then yes, but simply to use grandparents and pay them, then no. It seems like OP is hoping to combine professional paid childcare with (presumably) lower paid grandparent care. She will therefore be able to use all her governmenty help things on the private care, and then reach a separate arrangement with her family. It's a risk, but if OP manages this, it should make things much more affordable particularly when her DC are eligible for the 30 hours. It presumably helps a lot that her DH is a teacher and therefore they don't need as much childcare as many.

I wouldn't stretch. Having children make you reassess anyway. Your giving yourself no flexibility with mortgage payments. No chance of one of you working part time. You would be a slave to the mortgage.

Any reason you can buy a 3 bed with parking?

Thank you for clarifying @TataMamma

We stretched and I’d do it again and would in your shoes if you’re confident the income from the business is relatively safe. You’ve effectively got 3 salaries coming in which provides a degree of protection and it sounds like your maternity arrangements are excellent. But, if only do it if you can overpay and build a buffer. Although we took ours out over 35 years we have no intention of running the mortgage past our mid 50s as don’t want to have the risk of meeting a large mortgage when older.

Could you look at 10 year fixed rates? That would give you rate certainty during the most expensive and uncertain firms during early years.

Given you’re likely to have parental help if you have children, one child is unlikely to be as much as £1500 for nursery and later down the line you’d have the advantage of your husband being a teacher and having holidays covered.

What I'd like to know is how does your husband manage to run a business while being a FT teacher?! According to MN, all teachers work 75 hours a week and nonstop through the holidays too.

I would do it OP. You can afford it now, get sorted and settled before you have kids. Learn to save and not fritter money on luxuries. It’s a good time to do it. Get a fixed term so you have a handle on outgoings for the next 5 years or so.

If the situation were to change in the future you can deal with it as appropriate, but it sounds like you have thought through most scenarios. The only thing I would question is how you are both planning to go part time when you have children, unless your DH plans to expand side hustle to bring in more income?

75 hrs? Far more than that @vickyp0llard. 16 hours a day 5 days a week + several hours at the weekend.
And they find the time to cook meals from scratch and post on MN.

@vickyp0llard haha! DH is stressed but only does the business Monday to Thursday with weekends permanently off limits - he could earn far more if he didn’t have this in place.

He finishes work every day by 330pm latest, he rarely brings work home at the weekends or evenings. He is a lead practitioner too. He is very talented at what he does, I am very proud of him.

@NCFC4now

Wow, OK so lots of views here and a lot I should explain.

Would like to thank my mortgage broker @buttermutt (I joke)

So I am not risk averse with property, if it’s the right one. We were paying almost 4% on our first mortgage because we were struggling for affordability (long story).

I suppose that past has encouraged me.
DH’s job is secure, however, if he lost it then his side job could take over. They do not need to go hand in hand but do well.
My job is in finance, it’s fine. I have only been in my current job 2 months and I took a pay cut for it - this was because I faced racial discrimination and needed out (I am awaiting a settlement).

I know that it is possible I’ll hate work after a child. The reason I’m so blasé is because I am so uncertain about children - it’s another thread in itself but I have no maternal instinct but know I want children. It’s strange and confusing. DH is on the same page.

I spoke to my mum today about childcare, we discussed costs based on what I’ve been told here and she thinks I’d be better using her and paying her a small amount. I’m happy to pay my parents for things and currently do, they are still not at retirement age and it makes me feel comfortable knowing they’re ok.

Somehow the posts on here seem to have made DH less on the other side. I should preface this with the fact we are both in Economics. Whilst he doesn’t believe we will go back to historic high interest rates, he’d argue this is now the time to overstretch. He’s just worried.

Thinking it through I’ve penned scenarios for 2 years time when we move house, this would only happen if fixed on a large mortgage for 5 years. This means in the beginning we’d have little childcare issues. We can assume our salary will be a lot higher but for this exercise I will not increase it:
£3,000 mortgage
£1,000 bills (they do not need to be higher, they’re not this high at the moment and we aren’t going much bigger)
£1,500 nursery fees according to this
£1,000 on baby related items and expenses

That means £6,500 spent of which £1,500 remains free for savings?

This is why I’m so convinced I’m not taking a risk but maybe I’m being silly again.

What astounds me about this whole scenario is the OP is ‘a high earner in City Finance’ and studied economics yet there doesn’t appear to be very much in terms of domestic financial acumen going on here.

The point the majority of people are making here is

a) Your household income of £8k per month is not necessarily sustainable, especially if you have children
b) Your outgoings will increase if you have children
c) Interest rates are as low as they will go - even a small increase in % terms would result in much higher monthly payment I.e if you secured a rate of 1.5% now, that increasing to 3% effectively doubles your interest rate, despite it ‘only’ being a 1.5% increase

I think it’s crazy. Imagine what you could do with that extra money? Nursery in London is 1200£ + per month, you can get 2k a year tax credit if you both earn less than 100k What are your long term goals? Kids college fund, retirement, investments. Having kids is expensive, what if one of you wanted to be a SAH parent? Do you have sufficient savings? Covid struck whilst I was on maternity leave and the savings I had in the bank disappeared , I was luck today have had them.

Just saw this place not far from where I live £440k
www.facebook.com/111436737351617/posts/390438406118114/
You could be mortgage free, give up work and live in a huge, fabulous house with a garden the size of a park.

@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

id ask is it better to wait the two years then see what positions are available rather than over leveraging yourselfs ?