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

@NCFC4now

Childcare is £50+ per day for the first 3 years, after that if you are both full time you will get 30 hours free but don't factor in much of a saving, after school care from age 4 is typically up to around £25 a day, cheaper if school based. Also factor in reduced income during maternity leave.

Could you go for a 40 year mortgage and over pay.

If you work in finance you'll see that inflation and taxes plus supply chain problems and much higher energy prices are squeezing the economy here. I'm not sure that "normal" life is going to available for much longer.

In fact the fact that you are suggesting an £800k mortgage suggests to me that the top is very close. It's pure insanity.

What happens if you lose your job? And the City sacks 100,000 people, like they did in some of the previous recessions?

A friend wants to move to Dorking out of SW London. She was told on the weekend not to bother coming to see a house as they have 30 couples already viewing that weekend and 6 of them with cash lump sums.

Again, something says to me that the property market is in its final stages before a collapse of some sort. I could of course be wrong but I've watched the markets for 3 decades now and this sort of excess is usually followed by a blow out of some sort.

The only flip side question is inflation. That's the only caveat. But then as you work in finance I'm sure you know all about that already.

If you want to hedge your cash, but the property builders like Persimmon - that way you'll grow your cash faster and still have money in 'property'. Not my way personally but that's one hedge against inflation. I'm not convinced personally. Things feel weird right now. Money lost its value, as far as I can see and I'm not sure where this ends now.

I think you'll find struggling to pay a huge mortgage whilst on mat leave and then nursery fees far more stressful than the short walk from your car to your front door with a baby. I'd say really bad idea. If you were to do this you'd be better to get your maternity leave and paying for nursery out the way. At least then you know you should have 2 full incomes coming in and childcare fees are behind you.

Don’t do it don’t do it. What happens if you do want to go p/t as DH suggests? Or take career breaks or sabbaticals? For reference, our childcare bill from age 1 to 2 was £1,500 a month – minus a £166 government contribution. Eye-watering.

Looking at the US, interest rates will be going up there in the next 6-12 months. It will come here too. Economically its not looking good in the future. Stay, overpay your mortgage, squirrel away what you can. Stay put

Whilst I think caution is advisable many posters on here seem unnaturally risk adverse. It's not normal to buy a house valued at 2 x your income or be mortgage free at 45. A lot of people stretch themselves because it's cheaper then renting not because they want to keep up with the Jones'.

Savings are prudent but the OP has 50k in case of twins, etc.

Looking at the US, interest rates will be going up there in the next 6-12 months. It will come here too.

To 12%?

Debt causes stress. Don’t do it.

Is there any way at all you could move somewhere else that is cheaper that will give you more room, without getting into more debt?
If there is a way then do that but do not get into any more debt! It’s a huge mistake and you should also take out serious illness cover for yourselves now if you don’t already have it. Good luck.

I was the higher earner. Husband dropped and dropped his hours - but wouldn’t do childcare.

So I was paying £1900/month childcare - AND he was bringing less money in.

Anyone care to take a guess at who had the mental breakdown?

One of the children has SEN and I’ve not been able to work outside the home for nearly 10 years because of that. Not so much that he needs 24/7 supervision - more that barely a day goes by without a call from the school meaning I need to drop everything- or good old-fashioned school refusal.

You never quite know how things will work out.

@buttermutt

Whilst I think caution is advisable many posters on here seem unnaturally risk adverse. It's not normal to buy a house valued at 2 x your income or be mortgage free at 45. A lot of people stretch themselves because it's cheaper then renting not because they want to keep up with the Jones'.

Savings are prudent but the OP has 50k in case of twins, etc.

She says stamp duty will wipe their savings.

Again, something says to me that the property market is in its final stages before a collapse of some sort. I could of course be wrong but I've watched the markets for 3 decades now and this sort of excess is usually followed by a blow out of some sort.

It should have been corrected prior but there isn't the government will. Many people in their 40s & 50s will have hundreds of thousands of pounds in equity because they bought early. It's likely we will have stagnation for years.

When you have kids it won’t matter if you are that bit further away from the independent shops and cafes, you won’t have the time to spend leisurely frequenting those as you do now.

How many taxis can you get for the difference in price of moving just that bit further out?

@gogohm childcare in London much higher. I was being £90 per day a few years ago.

CLUELESS

If at 27 you have earned enough to secure you a £800k mortgage, you are not clueless. You need to do some research.

[quote NCFC4now]@Butterflyfluff the £2k includes overpayment, it’s £1.3k normally.

The £2.7k is what Barclays repayments would be on £800k mortgage 80% LTV[/quote]
Just looked on the Barclays website and the closest you can borrow £800k on a £1m property is £2,730 over 30 years at 1.32%

As soon as the rates go over 2% it’s moving to £3k per month

And 2% is nothing, even in recent times

@buttermutt

Looking at the US, interest rates will be going up there in the next 6-12 months. It will come here too.

To 12%?

Interest rate rises are absolutely certain and there’s a recession on the horizon. Anyone who mortgages themselves now is crazy. Particularly for a parking spot. Absolute madness.

We almost did this. Bought a house that we could just afford. We'd honestly be in so much shit right now if we had. We'd probably still have the house but we would be so unbelievably stressed. And there's no way we'd have been able to have DS. We'd be living shit depressing lives in a house we grew to resent.

As it is, we bought a house that we can afford as easily as breathing. We have had amazing holidays, an amazing wedding, and we were able to reduce our working hours to have DS. We live an amazing life, in a comfortable house I love because it's so dependable.

Mortgages themselves to the hilt.

@NCFC4now

We have already passed affordability for £800k. We have £200k in equity at present and joint savings of £50k which would cover SDLT. We aren’t currently saving as we over spend every month and live like idiots. *@Wazzzzzzzup*

In general; my salary SHOULD increase two more times as a minimum between now and then, however I am not confident in myself and don’t want to rely on this.

You make 8k/month between you and you're not currently saving?

Definitely don't get a mortgage that huge then.

I think you'd be better to wait longer before going for the really expensive house. Save the amount you'd be paying in mortgage, and then after a couple more years you'll have more cash to put in, you'll know how well you can do living on less, and you may even know that a child is going to happen. Then you can re-do the sums.

If you sink everything in mortgage payments, you've no slack when something unexpected happens. If children might be a possibility, you need to think that through carefully. Pre-school childcare may cost more than you expect - because the government funding does not really cover the cost of providing childcare, you might find that everything over those hours is charged for - which might include the lunch-hour! Once they're in school, you'll probably still need before/after school care. Grandparents might help, but that's not guaranteed - their circumstances might change.

Consider sticking to a 3-bed, too - you don't have to find your forever home right now.

How much is your current mortgage

Check out nurseries near where you live. I'm paying £60/day in London, but I think your area is a lot posher than mine so prices will be higher. No point looking at general prices, just look at 2 or 3 places very near where you live to keep a ball park. Although these will probably increase more than inflation (staff wages/fewer immigrants, etc).

Given the state of the economy I think it's bananas.

Even though you can lock yourself into a low mortgage now, inflation will eat into your income.

Stay put for the foreseeable future and wait until things calm down before you move on. Your current property may be worth much more by then.

You would be INSANE to do this