House purchase - WWYD

[Animallover87]

Myself and Fiancee getting married next month. Planning on each selling our flats and buying a house together. I love going on holiday/eating out regularly and would like to hopefully have a baby soon so I think we should buy something quite modest and still have plenty of disposable income. Also I would like the freedom to go part time after baby. DFiancee thinks we should stretch ourselves to the max to get the best house we can as it's an investment for the future and will be worth it as we could get a nice house with lots of space. I just worry about having to worry about money and that I might resent the lack of freedom it will bring. The more we buy the more tied to work we are! AIBU to want to live well below our means so we can enjoy more of life?

300K is a very reasonable budget. You'll presumably have a chunky deposit from flat sales.. meaning that you'll only need to borrow 250K at most. I thought your DP wanted to do something ridiculous like buy a 500K property!

It would be different if you have to scrimp and save for a deposit.

You may also find that by the time you get around to buying... a few months from now... house prices may have rocketed, although hopefully the rise in your flat prices should mirror this.

Property markets are very localised. Where I am, desirable houses have become 20K more expensive over the last 3 months. Houses are going for well above asking. We can't afford anything in a 'naice area with good schools' anymore, which we could just about have managed 2 years ago, so it's now a question of what we want to give up. Space? School/city distance?

You need to sit down, make lists of what you want, and work out the figures.

We did the 'buy a modest house' initially and for the same reasons. 2 years later, a baby in tow in a very cramped house that was totally unsuitable and had to wait another 2 years to buy the bigger house we needed until the 30 hours free childcare kicked in and our childcare dropped from more than #1k a month to £400.

There's no right or wrong answer. Can you afford the larger house if you get pregnant and are on maternity pay, followed by eye watering childcare costs/single income.

Can you stick with living in a modest house' if a baby does come along and all their shit.

I don't envy your decision.

What would the difference be in monthly mortgage payments between the 280,000 house and 300,000 house? What would that mean re: standard of living for you both; how much of an impact would it have on you and would you be severely limited in how you live?
What % of your disposable income does it represent?

Also (although I'll probably take a flaming for this) it can be difficult to get used to budgeting if you had lots of disposable income.
I used to be able to buy whatever I fancied without thinking too much about it. Like a takeaway on bad work days, or impromptu drinks with mates.

However having kids changes all that... they cost so much, and there's ALWAYS something that needs buying. Also, you'll hardly have time to do all of these days out, in the money sink years when childcare costs a fortune. so it doesn't matter that much really.

"Only 250k at most" you are correct with your figures (hopefully deposit wise) but to me that seems HUGE! Especially when our incomes aren't going up (no promotions on the horizon etc) and we will (hopefully) have a baby today for on less income than we have now. It's useful for me to get other perspectives on it though so thank you for responding to my post 🙂

@Singinghollybob about 1300 per month as opposed to 750ish. Better LTV with the smaller house so better interest rate.

He has quite a lot of stuff and wants a whole room for an art studio.

This is what would worry me. Is he saying ‘More space is a better investment’ when what he actually means is ‘I don’t want to get rid of any of my stuff’? Would he regularly use and get genuine pleasure from a full-time alert studio - or would it end up as overspill for junk, like so many formal dining rooms people convince themselves they need (and end up frantically clearing out a couple of days before Christmas)?

I get his point about the importance of investment value - but remember, added value isn’t just about space. Would your four-bed budget for the areas where you are looking buy you a three-bed in a nicer area, or one predicted to grow in value? Could it get you closer to good schools, seeing as you’re planning on having a child?

By all means don’t dismiss extra space - but make sure you’re paying for it for the right reasons.

@Treacletoots This is the dilemma 😭

Your mortgage of 250k will be a small
% of your salary. Surely you live in a relatively cheap area if 300k buys a big property. Cheaper areas tend to have lower salaries so you also must earn above the average for the area.

Oh and DH is an artist! He built himself a studio in the garden of our last house and has taken over the garage in our new one. He doesn't need a spare room

One thing that we both agreed on when we mortgaged our souls was that we needed to insure ourselves up to the hilt. Life insurance, income protection and Illness insurance. You can't predict everything but this will soften the blow in a few circumstances!

Yes cheap(ish) area and we are both full time teachers at the top of the salary scale.

Actually OP, I'm going to say go for it. If we'd only been a bit braver previously we'd have paid less for our perfect home, and in fact would have managed another step up the ladder which we can't now really afford. In our 40s as well makes us a little more risk averse than say 20s or 30s.

Properties generally speaking are a good investment and if the worst should happen you can always sell it. (Negative equity is very rare, although I accept it does happen in extreme circumstances)

Yes I would insist on all that too, absolutely.

A garage conversion/summer house type thing would be fine for his art but he wants it to at least be heated and not damp so it doesn't destroy his art or supplies.

We moved straight into a 4 double bedroom house, thinking we’d have two children and an office. We’re now stopping at one child and wish we had brought somewhere cheaper as we’re paying for, and heating, space we don’t need. We struggle to fit in going for a short run a few times a week never mind time for hobbies.

If you stretch yourselves and the worse happens and one of you dies or is made redundant would the other be able to afford the property on their own? We were only willing to buy a house we could afford on one salary

So the 250k house would be approx 28% of your take home. I wouldn't say that was stretching yourself.

As a teacher you will have a generous maternity package & have reduced childcare costs due to school holidays. Even if you went part time for a few yrs I don't think it's a stretch.

I agree with your DH prior to children buy something for the long term, that you can afford.

You need to have a serious conversation and meet in the middle.

I’m not one to take sides..but, I’m on your side!

I like to have plenty/enough money to do things, to live a nice life. If I want to buy something or take my DD out for tea or to Alton Towers or wherever, I just want to do it, I want to make memories & I want to treat myself. I want to (not all the time!) shop at Waitrose for nice teas & I want to visit places & see things. I also want to save, I like to see a bit of money in my bank, I don’t want to worry when the car/boiler breaks. I am literally terrified of not having spare money.

I could quite easily have got a bigger mortgage but I had no reason to, what would it be for? I have a little house with a nice garden/garage - it has 2 bedrooms & that’s enough.

I also didn’t want to be working 40 hours per week when I had my little girl. I work part time & can pick her up from School everyday & take her & that is what I wanted.

had I have got a big mortgage, I would now have had to stop all day trips because of the cost of living rises. No fun, no memories just sat in my big house, weeping !

Another thing to consider.. plenty of opportunity to make extra £££ if your subject is in-demand. Tutoring, invigilating, marking exam papers.
As a university student I made the equivalent of today's £20 an hour, pure profit tutoring online. I'd imagine it's even more widespread now, post-covid. Of course not easy if you're already overworked (as many teachers sadly are), or juggling family etc. But you have options.
You also both have school holidays off, so plenty of childcare savings there.

Yes, all of this! I want to enjoy life and be able to do all those things without having to worry about money.

@DeandraLove yes that is absolutely an option and something we could do in the evenings while the other is at home with the baby. I wouldn't want to rely on it though!

I’d be concerned about maxing out with potential rises in interest rates coming

@StarDolphins aye, I'm the same. We're used to rent a house that was a bit too big (not much choice when looking). It's a pain to clean, we spent most of our time in the same few rooms anyway. ESPECIALLY the DP, who prefers big houses but was in his home office all the time, and never had any guests!

Having said that... when buying a house I do want good sized bedrooms, kitchen and decent distance to our nearest city. Cheap houses are cheap for a reason, and IME it's because the fabled 3rd bedroom is a box, it's in the arse end of nowhere, or something's very wrong with it. No point in having spare money to go out... if going out takes you ages anyway.

Why won't you have any disposable income after the 250k house?

You're both right for different reasons. DW and I are having the exact same thought processes except both of us can see the pros and cons with neither of us leaning either way.

Maxing out is financially more responsible in the long run but puts a strain on things in the short term, especially if you're planning on children in the immediate future.

Buying smaller means more money to play with during mat leave and early childhood, as well as more potential to go part time, but long term could be disastrous from a financial perspective when trying to buy something bigger.

I don't know either!

about 1300 per month as

are you sure you can't get a better deal or do you want a short term?