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

If inflation goes wild and mortgage rates shoot up you'd be screwed.

Both of which happened in the 1970's (at one time, our mortgage interest rates was well into double figures). I think we may be heading there again so now might be a very bad time to extend yourselves to the very limit.

There are other possible ways to fix the parking issue; perhaps rent a parking space from a neighbour who has a drive but no car?

Apologies, you do work. I didn't read subsequent messages. But do you mean you hate working and it affects your mental health as in you may have a quit one day?

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.

Nobody died of not having a parking space, & I think you are hanging your hat on the wrong hook here.

I'm with DH. You'd be insane to move now. You are currently in an enviable (if parking-space light) position of having savings & over-paying your mortgage.

If you max out at a £2.7k monthly payment, what happens when inflation hits, & interest skyrockets? Or you lose your job? How will you afford the high costs of having children when your budget is so tight you "cannot put a foot wrong"?

The hunkering down for 2 years & saving like crazy is a great plan.
Keep a keen eye on the market, maximise your careers while you are childfree, & then make another plan - but one that doesn't involve spending up to your maximum.

We aren’t currently saving as we over spend every month and live like idiots.
You need to buck your ideas up & prove to yourselves that you can comfortably manage £2.7k a month. So subtract whatever your current monthly mortgage is from that, & put the remainder aside.
If you can do that for 24 months without fail, you'll be on the way to genuinely understanding your optimum top spend - that means what you can afford, not necessarily the currently £880k house you aspire to.

If in those 24 months you have a month where you cannot set aside the (£2700 minus mortgage payment), congratulations! - You've just shown yourself what a risky move you are considering. Chalk that one up to a hypothetical letter from the mortgage provider, warning you to make up the shortfall & fining you for falling out of your agreed terms.
Do it 3 times in 24 months? - congrats again - you are on the road to a hypothetical repossession procedure warning.

For a couple who are currently not saving a bean, you are being naive to imagine you can suddenly afford £2.7k a month, all the usual bills on top, plus the cost of reduced maternity pay. both parents going part-time, & then childcare fees.

Don't let that thwart your excitement though.
You are going to need a lot of positivity & optimism, to keep saving & make this dream happen eventually. If you knuckle down & save, you can do it - just maybe not in the timescale or budget you are currently hoping for.
And keep overpaying that mortgage, it's the wisest thing you can do - every jot off the capital is a jot toward your next deposit.

The current company I am in is 6 months paid maternity at 100%. In my head I’d just have to go back at 6 months - it’s very lucky. It tapers down after that but I’m not sure on the % by weeks. I haven’t asked.

@CSJobseeker I read that thread. I completely understand. But to put it in perspective, we’ve never had a leased car, I recently bought my first ever car (couldn’t justify it previously as I get a train to work) which is a 2008 and DH just upgraded to a 2010! We will hope to keep these cars for at least a few years.
DH rarely buys clothes, I only buy second hand for environmental reasons. I am definitely the bigger spender but this is only since COVID as I found it a way to cope. Before I was very frugal and we were saving for the house we live in now.

We will wait 2 years but it’s more just deciding a life plan on feasibility. Of course we could be in a completely different place in 2 years. Could even be divorced (hope not!)

If you’re the higher earner, if you buy this house you will essentially have to work in a similar paying job to your current one for the duration of the mortgage term (unless you sell the house), with all the stress and responsibility that entails. Is that what you want? I suspect it isn’t from your OP (and it’s something I’m struggling with in my career too).

@NCFC4now

I obviously don’t understand the free childcare hours by a few comments here. My understanding was they get 30 free hours if you earn at least x amount and below NET £100k. We earn below £100k on net income.

I think it's important to realise (unless you are on universal credit) then the 30 hours only kicks in the academic term AFTER your child turns 3, so if they are born in May, then not until September. Also the 30 hours is over a 38 week school year. This might be okay if you DH is a teacher, but otherwise it equates to 20 hours a week - or 2 days a week - over 52 weeks.

I haven't read all the replies but we were in a similar position to you - smallish house (we owned it outright), no parking, tiny garden, one child and wanted more, and we moved to the suburbs to a bigger house with a great garden, but we had a mortgage and we had to drive to get to school, shops etc. I got pregnant again almost straight away so we then just had one income whilst I was on mat leave and it put a huge stress on us both.

If I had my time again I would never have made that move. We were stressed about money, it turns out I hated having to drive everywhere, and I wished I was back in the old house.

I wouldn't get a big mortgage again, ever. It was way too stressful.

6 months @ 100% is amazing maternity package, but I can almost guarantee you that when that baby were to hit 6 months you would not be wanting to go back and would kick yourself for having to because of debt

I'd have said go for it until I read the words you overspend every month 'like idiots' and don't save

This means you're CLEARLY compensating for something (maybe the fact you hate your job?)

So don't do it until you're happy in your career - you have no idea how many people I see (couples counsellor) who live in that type of house and have to do financial service jobs they hate - just so many at breaking point

I would say get the big house now if you really really want it and can just about afford it, as it could increase in value more then your incomes, savings and equity, and be out of reach forever more. But then the opposite could happen, it’s just a gamble.

However with kids on the horizon I would be looking at making your outgoings as low as possible. Parking is annoying but not as much as drowning in debt from childcare costs, having to go back to work sooner then you want or moving out of a home with young kids in tow because you can no longer afford it.

• Do you have a front garden you could pave over, or is there a garage or drive way you could rent that is nearer then where you typically park?

• Do you think it would be possible to negotiate some trimming of the trees blocking light from your garden. Maybe offer to pay for it for be done

I want to make it clear that I would not stop working to have children. That’s the plan anyway, even if money was not an issue and I became a millionaire.

I hate working but I hate not working (I was on gardening leave recently and there were perks but I did get very bored). It is depression.

Mental health issues = diagnosed OCD, it’s not going anywhere but it’s under control!

Don't. I have a similar income/mortgage salary and am trying to bring it down. Too many variables that could go wrong or increase and with such a high percentage of your income going towards your mortgage you wouldn't have a buffer.

I have second hand anxiety just reading this. It's utter madness.
There seems to be a huge emphasis on status - are you comparing yourself to your colleagues who also work in finance? 4 bedrooms for one couple, a complete change of lifestyle and wiping out your savings...and for what? A 'happier' garden and not having to walk down the road to your front door.
You sound disatisfied and the parking/garden is something concrete to hang it on, with a seemingly 'simple' solution.

Definitely not, parking with a baby will be the least of your problems if you’re flapping around for cash, babies are bloody expensive and if you already have a 3 bed why do you need 4 ?
Look for a smaller house than a 4 and then you may be better off.

[quote NCFC4now]@Lucifersleeps 12%!!! Oh god. In my head I just can’t imagine it happening but I know I’m purposefully being naive. I’ve just done a quick calculation and we’d stop being able to afford the payments if after a 3% change.

You’ve convinced me I’m an idiot.[/quote]
Also like now, my energy company went pop and I was on really cheap gas and electric of £55/month. Almost overnight that has doubled. Always leave yourself breathing room for the unexpected expenses that come up when you're least prepared for them. I agree with the poster that said to ask the neighbours about trimming back their trees :)

Sorry also forgot to say, I worry about interest rates. If we stay here we are in a fixed for another 7 years. By which point we will have (hopefully) paid the mortgage off. That was ultimately why we wanted to stay here, because taking on about 25 year mortgage with the unknown of interest rates was too scary for me. And seen your DH is against public school. Forget the big mortgage then. Especially if you plan on having more than one child! Really think you need to sit down and do the maths including childcare fees, factoring in the part time working and school fees. Something will have to give somewhere I should imagine.

YABU in my opinion. I'd be utterly miserable having no spare money to do anything other than pay the bills

The mortgage is 2.7k of 8k!!! Bills will not be 5.3k & living on 5.3k will not be poverty.

It's interest rates that will catch you out. My first mortgage was 7.79% interest and that almost doubled over the following years. We are so lucky to have such low rates at the moment but everyone expects them to start to increase over the next few years.

Btw it sounds like your DH doesn't really want his lifestyle to change just yet.

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.

I don't think this is a normal reaction to your situation, especially if you are living in a lovely Victorian house, close to a vibrant town centre. You have to count your blessings.

We have managed with five children with no OSP, but were just so thankful that everything we needed was on our doorstep, rather than living in a modern estate without so much as a bus service.

Our children are very thankful too.

If you fix now for 5 years (or longer), then you are obviously not going to be paying 12% for a very long time (and probably never) - your equity and salary will both probably be higher then.
I'm obviously in a minority, but I'm self employed with a baby and it is so hard getting a mortgage, compared to paying it which feels like a doddle in comparison.

You are absolutely crazy to get yourself in that kind of debt especially with the bleak outlook due to covid fall out over next couple of decades

No garden or parking space is worth that kind of stress in my eyes

Even without stopping work to have children, there’s a CHANCE you’d want to take longer maternity leave than 6 months. Could you afford the £3k mortgage just on your husband’s salary? Going back to work when you WANT to is much better than going back early because you NEED to service an outrageously high mortgage (which is likely to be much higher by the time this situation is happening).

I also don’t really see the point in being house poor, servicing a huge mortgage and having to think carefully about day to day, holiday, savings etc.

I’m not particularly risk averse, and we took on a (relatively) high mortgage, but all of our living expenses CAN be covered by 1 of us, which allows flexibility for having a baby. Which we are unexpectedly now doing!

@NCFC4now

The cost of living seems to be shooting up too. Have you factored in increases in gas / elec, council tax, NI, food and petrol?

That lot is making my costs go up by about £150 a month.

@anonymousanne

Sorry also forgot to say, I worry about interest rates. If we stay here we are in a fixed for another 7 years. By which point we will have (hopefully) paid the mortgage off. That was ultimately why we wanted to stay here, because taking on about 25 year mortgage with the unknown of interest rates was too scary for me. And seen your DH is against public school. Forget the big mortgage then. Especially if you plan on having more than one child! Really think you need to sit down and do the maths including childcare fees, factoring in the part time working and school fees. Something will have to give somewhere I should imagine.

This makes no sense. In Britain public school = private school ie paying fees. OP says her DP is opposed to this (good on him), hence the same area for catchment reasons (which wouldn't be an issue if planning public/private schools). In US public = state. In UK public = private. Don't ask me why :) But they need to factor in child care fees, but not school fees.

Ok a few things to consider. I’d want to retain some savings in your position rather than max out and wipe them out. Would you be able to save based on your new outgoings? Taking increased fuel, council tax into account? Budgeting for moving costs and initial contingency work to the house? If yes then go for it.

Also you want to do it I’d do it now. Your new place may well increase in value. If you want a family in five years you’ve got five years mortgage payments behind you and at least one remortgage normally.

Do some research about nursery etc and have a rough idea but if you are young and it’s not imminent then don’t make it a deal breaker.

People have been talking about interest rates rising and the 70s for 10 years since I bought my first house and if I’d have been cautious I’d have been much worse off at this point in time. If rates went too high half the country would lose their homes.

If it’s a long term house and you have good secure incomes (and good income protection in place) you are well placed to ride any economic turbulence.