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

@anonymousanne

Sorry if I haven’t been clear.

At present our take home is:
Me: £3200
DH: £2700
Business: £2,500
I’ve rounded this all though and said £8k because months do vary sometimes and it levels all out.

I invest £1k a month without realising so don’t count this money, DH saves around £1.5k a month. We split everything evenly.

I then receive a bonus which is gross £20k ish. I pay 50% deductions on this.

I also do TV work which I save the money on and has helped my savings.

We currently pay £2k on our mortgage and £1k on bills and house expenses.

There are obviously other options between the £600k house we are in and the £1m house I am talking about. But I wouldn’t see the point and it would be a waste of money. I have my heart set on a certain place.

At the moment it’s do we stay put before kids or try to leave.

I’m getting very concerned about the amount of people suggesting twins. We don’t have any on either side so I assumed it not possible (unless two eggs separately are fertilised but I assumed chances were low?)

Depends where you are. For 4 days a week we pay £1400pcm in London. Could you afford that on top of nearly a £3k mortgage..?

Don’t do it! The interest rates are going to increase significantly in the coming 12months. The country is in so much debt, Covid and brexit; we are all going to have to pay the price. Children enjoy experiences as they are growing. It sounds like you have a nice house that generally meets your needs (apart from parking)! I would suck it up for now and plan some great experiences as they grow (it keeps you sane)!

Why a 4 bed,why not just look for a 3 bed with a drive/garage.

Owning a house would be a sign of 'making it'

Is say an 800k house which needs work a possibility. Obviously somewhere with parking and a garden, but perhaps only 3 beds for now. Then whenever you are ready you can extend into the attic or at the back and build an extra bedroom. You would not be taking on such a big mortgage, but there's no reason why it couldn't be your forever home, and in time and with work by like the ones you are dreaming about.
Twins at your age with no family history and no IVF are very very unlikely! But of course you could even have sextuplets :).

People keep talking about interest rates rising....yes, and that's the reason to move now while you can and lock yourself into a decent rate on your forever home for some time in the future. Really don't understand why this is an argument against moving.

@anonymousanne sorry I mean public school as in private school. DH would never pay for education privately, he strongly believes in the school system as a teacher and thinks our kids should hopefully be ok. So no school fees!

So we were in something similar to your position

We were taking home £10000 a month

Oil and gas boom

I wanted a £750,000 house my husband would not entertain the idea (£3000 a month the repayments were at the time)

£340,000 we spent (£1200 repayment)

2 years later the oil crashed and he lost his job

It took him 1 year to find employment

In that time we used £40,000 savings the stress of a £3000 a month mortgage would of been horrid, I'm glad he had more sense than me to take on a huge amount

Instead we have concentrated on paying it off

5 years later we are now mortgage free

I would rather be debt free than up to my eyes. I realise now what a better idea that was.

Do I live on the house of my dreams .?

Absolutely not but we have financially in a great place at 42 years old and I realise now how much more benefit that is than a house.

@TataMamma

People keep talking about interest rates rising....yes, and that's the reason to move now while you can and lock yourself into a decent rate on your forever home for some time in the future. Really don't understand why this is an argument against moving.

Because they’ll be trying to remortgage in 5 years time when the fix ends, unable to get a comparable deal and with the cost of dependents taken into account affecting affordability? With a potential side of house price bubble bursting too.

I think you need to look for a different option.

Seems to be the deal-breaker for you personally is parking, rather than number of bedrooms.

I understand that - and you are right, you will be even more annoyed and inconvenienced when you have a baby, carseat, buggy, changing bag, shopping etc.

If you can afford your own driveway then you should upgrade to that. Look for something inbetween what you have now and your dream house. Or even just another 3 bed semi, but with parking.

Compromise, but prioritise what is essential to you = parking, but probably not 4 bedrooms, or maybe not even detached.

OP, your numbers don’t seem to add up to me

• Current house £600k
• Equity £200k, which presumably includes the £75k value increase in the property mentioned in the first post

If your current mortgage is £2k, how can you borrow another £400k in order to buy a £1m house, for just £700 per month extra?

Unless you are hugely increasing the term of the mortgage

My god. We’re buying a house and no way would I have a mortgage that high. Not 34%. Nope. Nope nope

That’s a real stretch.

Our mortgage is about 15% of our income and I like to keep it that way. We could of gone for a much more expensive house. But I went for the smallest one we could live comfortably in.

I lived through the interest peak in the 80’s. When it went up to 15% interest. Or something stupid.

Fixed rates are the way to go. Keep getting a new mortgage with a fixed rate. Overpay. Get as much equity as possible in the house you’re in.

Then when you move. It won’t hit so hard. The mortgage value isn’t important. Job security right now isn’t as high as it was. It’s too much of a risk in my view.

Just to input on the buying a house big enough and with parking for kids element- if you aren't trying yet and won't for a few years, I wouldn't upsize now. Kids can take longer than you think to materialise, it can be normal to try to conceive them for a year, plus 9 months is almost two years from that decision point plenty of time to move. I would stay put if I were you. DH and I are currently trying for a baby in a 2 bed flat and will move as and when we feel we need more space as it has taken way longer than we have expected to get pregnant! We don't even have a car at the moment by the way, never mind parking

@RobinPenguins
But that's better than trying to move and get a mortgage when they've also got kids to pay for. And they will have more equity in the house and higher incomes then (probably), so if they do have to move down, they've still benefitted. And if that are very worried about this, they could always go for a 10 year fix.

Jesus, how have you even been approved for an £800k mortgage on a £100k income?
DD is a Teacher on £50k, her partner earns the same, they were offered a £350k mortgage and still didn’t go up to the limit,

their joint income is clearly more than 100k

It's odd your dd was only offered 3.5 x their income. Do they have a lot of expenses?

You seem to be discounting anyone who disagrees with your proposal or gives you any reasons to be cautious so just go for it - your mind is obviously closed to the issues

No, far too big a risk for me. Certainly not with a child.

A job loss, relationship breakdown etc would be so much harder with a huge mortgage.

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.

This stood out to me in your OP.

Because I'm from a similar background and I understand this thinking.

But I think it's important to distinguish what we're culturally conditioned to think from what actually makes us happy. The reality of living in a big house would do little for me. The financial stress of being maxed out all the time would make me very unhappy.

In your shoes I absolutely wouldn't. Enjoy what you have and see how things are in a few years.

Your DH is doing very well to be a teacher & run a lucrative side business!

@JustMarriedBecca

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

This. Inflation is taking off. Even interest rates going up to 7% which wasn’t that high back in 80’s would put you in debt. Work on the old formula of borrowing up to 3 or 3.5 times your salaries -+this then allows for overpayment now and underpayment during the early childcare phase when costs are eye watering. Be careful about going part time in teachers role or yours. This will impact on your pension quite significantly and will mean you will have to work 3-6 years longer at the other end of your lives. It seems plan daft to me for your DH to reduce hours of a secure job and good ensign in favour of a non secure own business.

@Butterflyfluff the £2k includes overpayment, it’s £1.3k normally.

The £2.7k is what Barclays repayments would be on £800k mortgage 80% LTV

One thing worth considering is that your DH can teach anywhere in the country.
If you paid off as much mortgage as you can now pre-baby then stopped working, you could survive on your DH's salary in a cheaper part of the country where you could buy a house you like, have parking but in a much cheaper area.

@mrsbyers I literally said about 4 pages ago that they had convinced me I’m being stupid?

@Ariela yes DH’s dream is to go up north.
I am born and raised where we are and very attached.

I might just move to Canada

Jesus. No I absolutely would never consider taking on such a mortgage on your income, especially if you’re then planning on increasing your outgoings by having children