To buy sensible house, not dream house?

[Breadcakes]

Looking to buy our first home and can't get my head around what's realistic/normal mortgage-wise. All the houses that would be ideal for us seem to be around £600-650k.

We have a £150k deposit. We could borrow a max of £480k and just about afford the monthly repayments. But that seems a ludicrously big mortgage?

Our options locally seem to be:

1. Buy a small 2 bedroom house for around £450k that's not much bigger than the flat we're living in now, but has outdoor space which I'm desperate for, and an easily affordable mortgage. Keep saving for a few years and hope to afford bigger/forever/dream home eventually.

2. Buy a bigger, 3 bedroom £600k+ home with more living space that fits our needs. A long-term home, potentially a family home. Max our borrowing and get what we need now. Drawback is higher monthly payments and less money to save.

A problem as old as time, but any advice welcome!

Suppose it depends what type of 2 bed.

I doubt whether you are going to get much outdoor space in your average new(ish) build 2 bed.

Postage stamp size bit of turf and enough concrete slabs to plonk a barbecue on is standard.

In your position, I’d go for a cheaper house that needed improvement. Put down £100k deposit, retain 50k for renovations. Sell house for a profit and buy £600k dream house with a lower and more affordable mortgage.

Personally I’d def go for no 2 IF salaries were going up

I can't see me or DP's salaries increasing significantly at all in the future. We both have public sector careers and may get small yearly raises in line with inflation. We're undecided about kids at the moment, but would like to keep that door open.

but given the situation I’d look for a poorer condition 3 bed if you could so improve as and when
or an unusual 2 bed that could be extended later on…

This

But I'd find a compromise, your current dilemma seems very all or nothing.

Are you planning to buy new build for the bigger house or second-hand? Just remember that some second hand houses take lots of work etc. Can you absorb these costs if you go with a big mortgage for the bigger house.

Personally in the situation you describe I would go with the two bed option but one with the possibility to do an attic conversion.

Can't see me or DP's salaries increasing significantly at all in the future. We both have public sector careers and may get small yearly raises in line with inflation.

In which case I'd get the affordable house. If mortgage rate sky rocket again and your salary doesn't increase much you're going to be buggered if you're already stretching yourself. No one needs that stress in their lives

A couple of PP say small house, big life. But it depends on the life you want. A friend just spent every penny she has on a smallholding, with a big, big house. She will be paying it off for ever!

Her big life is growing her own veg, using logs from her wood to feed the fire, keeping chickens and having friends round for home cooked dinners. Not big holiday's, expensive hobbies or even eating out.

If you and DH are homebodies get the house, if you like to live outside of the home, get a smaller mortgage.