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

How is your DH a teacher but runs a side business which earns his 2.5k every month around a full time teaching job? Shouldn’t he be looking at doing that full time ??

But in all seriousness i think it’s worth having a real think about everything, for example you mention your DH doesn’t want his current lifestyle to change - bars, independent shops, lovely holidays etc, have you really thought about how different your life will be with children? Because those early years do not look like that!

I think you should also consider the possibility that when your child is here you may not want to return to work, in which case working full time because you have to will be absolutely soul- destroying.

Plus the usual life caveats - yes there are plenty of teaching and finance jobs out there, but I also know many teachers who burnt out /had to leave, and I imagine finance has a similar burn out rate ?

For various reasons me and my DH decided to get a mortgage which only needs one salary to pay (and even then it could be paid on an entry level salary) and honestly it’s the best financial decision we’ve made, I only work part time and he will be moving to part time too in a few years and we are only early 40s.

Don’t tie yourself into such a big debt for bricks and mortar.

She says stamp duty will wipe their savings.

As it does for most but she can start saving again. Plus she has separate investments?

@vickyc90

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

Does anywhere even offer a 40 year mortgage? And lenders assume retirement at 67, so they would be unlikely to get one anyway, before we even get to the part about how dump it would be to pay that much compound interest

£800k is conservative in terms of lending - Barclays is a very cautious lender.

HAVING SAID THAT - I don’t know why you’re insisting it’s 4 beds or it’s ‘not worth it’. In your case I’d look for another three bed, with what you need - parking and more outside space - and consider the potential to expand later on.

When do you think you'd like to have children? Of course it may be out of your hands (either way!), but is it 2 years, 5, longer?

@SW1amp most offer 40 years now. Most lenders have agreed lending past retirement age for years so long as it’s only about the final five years and the customer has a repayment vehicle in place - most often that’s selling the property.

I think having to take kids down the road where you have parked to the house will be less stressful than having a massive mortgage and no slack.
If you were through the childcare years OR loved your job it would be different. Keep saving, or paying down your mortgage.

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.

You think they will get to 12% next year? I don't. The OP could fix a the rate offered for 5-10 yrs.

@buttermutt

Yeah, so we bought a house with a mortgage payment low enough that I could drop to part-time post-baby or we could survive on one salary plus savings for a few months.

But that isn't normal is it? Otherwise we wouldn't have shared ownership, help 2 buy, 30 yr mortgages, interest only, family platform mortgages etc

Yes, it is normal, we did Help to Buy! We had a £750 mortgage on a net of £4k a month between us. 4 bed townhouse. You have a really strange attitude to this (and clearly haven't been reading the OP's posts properly)

@buttermutt

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.

You think they will get to 12% next year? I don't. The OP could fix a the rate offered for 5-10 yrs.

Not 12 but unless I misread OP said 3% would be an issue so the poster isn't wrong really

I had a similar decision to you. Decided to stay where i am. Extended the house a bit, put the kids through private school etc. I pay my mortgage off this month.

I saw people stress about COVID unemployment which nobody could predict. I'm not bothered as with mortgage paid and savings there's no real worry.

You never know what life is going to throw at you whether it's a global pandemic, poor health, unemployment, high inflation.

A good wage can insulate you from all this and allow you to enjoy the finer things in life. Or you could chain yourself to a mortgage on a big house which comes with big bills, for what??

10 year fixed rates exist, obviously, but they are high and have high fees plus enormous Early Repayment Charges even in year 10.

Exactly

Does anywhere even offer a 40 year mortgage?

I think a lot of posters have no idea what the current landscape looks like when buying or when today's young will be retiring!

We've never had off street parking and it's been fine with kids. It's a thing I find a bit annoying but never found it far worse with kids or anything.

As others have said, the financial overstretch would be far more stressful than the parking. Once you have kids you can take advantage of current position to help you afford childcare when they are little, and then think about moving when they are older.

@buttermutt

Does anywhere even offer a 40 year mortgage?

I think a lot of posters have no idea what the current landscape looks like when buying or when today's young will be retiring!

This is true. Some lenders go up to 75 and beyond as a retirement age. Depressing.

or when today's young will be retiring!

Never😂 made my peace with it

Yes, it is normal, we did Help to Buy! We had a £750 mortgage on a net of £4k a month between us. 4 bed townhouse. You have a really strange attitude to this (and clearly haven't been reading the OP's posts properly)

It's isn't normal if buying today to borrow tiny multiples of your salary because house prices are so prohibitive.

I also think it's weird to chose to buy a help 2 buy property when most are overpriced instead of a cheaper property without a loan.

We did exactly what you're describing OP, we moved for a better garden and off road parking. The difference is, we prioritised area and parking over bedrooms and period features so got a 3 bedroom new build that ticked every one of our boxes and still managed to get within catchment of the best local schools.

Our reasons for not doing the extra stretch, which you are is simply, childcare costs. £1200 per month per child. Plus,you don't know what the future holds, you could get Ill and not be able to work. Could you afford income protection insurance? Could you afford the mortgage if it went up 1, 2, 3 or more percent?

In my life time of having a mortgage I've seen rates as high as 9.5 in the late 90s and that doubled our mortgage over a course of 6 months. You think it won't happen, but look at the state of the UK right now, anything could happen.

Sure, upgrade your house, but don't stretch yourself to this level. You may have passed affordability now, but you're not factoring in childcare. No lender would lend you anywhere near as much if you told them you had two children..

You have great incomes. I know you have your heart set on this expensive area, but there is a whole wide world out there that you could live with loads of parking and loads of room and not be chaining yourself to an expensive mortgage for life.

You could be living debt free in a few years, imagine the freedoms that would bring.

Widen your net!

Debt = stress.

Prices are going up all the time - food, fuel, utilities.
It won't be long before interest rates follow, IMHO.
There's absolutely no way on earth I'd be mortgaging myself up to the hilt in the current economic climate, it's far too risky.

@buttermutt

Does anywhere even offer a 40 year mortgage?

I think a lot of posters have no idea what the current landscape looks like when buying or when today's young will be retiring!

Indeed. It won't be long before we are doing what the Japanese do and are offering mortgages your children can inherit....

[quote Bobsyer]@SW1amp most offer 40 years now. Most lenders have agreed lending past retirement age for years so long as it’s only about the final five years and the customer has a repayment vehicle in place - most often that’s selling the property.[/quote]
Which proves the point entirely that there are 2 types of people in this world…
Those who understand compound interest, and those who pay it

Is there nothing you would accept between what you have now and the 1m house you have set your heart on? I seriously counsel you not to get "symbols of achievement" mixed up with the housing that you need and can afford.

Indeed. It won't be long before we are doing what the Japanese do and are offering mortgages your children can inherit....

I will not be surprised