Buying a house: wanting to keep a very large amount of savings

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wife and I are in the process of looking for a house. We are in our early 40s with 2 primary school aged children. Our financial situation isnt great: we have a joint income of £80k and a deposit of £300k (after selling our previous home).

we are looking at a certain area where house prices are around £550k to £600k for a 3 bed house.

We have viewed a house on the market for £615k, it’s ideal but needs a lot of work to make it liveable - at least £40k.

I’d like to stick to buying a house around £550k to £600k mark which doesn’t require any work, as I’d like to keep at least £36k in savings.
I am the main earner but have suffered from health issues, so i really think we need to have a large savings pot. My wife thinks different and has her heart set on this house. It’s started to cause a lot of tension between us.

Taking the house out of the equation, why do you want £36k spare? It exceeds 6 months salary if you were laid off/medically needed time off and if you have £36k savings you wont qualify for certain benefits until you've depleted your savings. You have enough equity to borrow back from your mortgage so why £36k

Ultimately you need to agree a maximum overall budget.

especially with ill health it is recommended that you have 6-12 months worth of barebones living expenses saved this is probably less than current expenditure but maybe not by much ( no commuting possibly no childcare no need to buy lunch etc) but may need more heating if sick
if you were healthy and have a very secure job with good sick pay it's different but most people don;t have public sector 6 months p[ay then 6 months half pay for many it is statutory sick pay at about £80 a week

What a helpful contribution. Why even bother?

You’re right op - it isn’t great. By doing this you’d be maxed out on mortgage affordability if you scrape through and no savings. Disaster written all over it.

@whistleblower99 they have £300k in savings. They could easily move out of the city and buy somewhere mortgage free.

And? Why should they? If their life is there, their jobs are there. They didn’t ask to be told to move out of London. They want to stay there and they can, sensibly. Op asked which was one is the most sensible options out of the two. However, as usual the bitter jealousy of mn posters pours out from every angle. Jumping over themselves to be unkind to op when they can’t answer the question. It’s pathetic.

How long has the house been on the market for? Has there been a lot of interest? Are they looking for a quick sale? Is it work that needs doing straight away or could you live with it for now and do it up as and when you have the money?

You could always offer the £550k or the maximum you can afford and see what they say. Worst case they say no but then hopefully your wife will be satisfied you at least tried. If it needs a lot of work it may hang around for a while and they may drop the price, so just keep an eye on it but keep looking for alternatives at the same time.

If you can’t afford it then you can’t afford it. It’s really as simple as that.

I couldn’t even buy a 2 bed flat here for 300k! and I don’t live in a city!!! Ridiculous comment

And do what for work?
There is a lot of the country outside of London where you’d struggle to buy a decent 3 bed for 300k

Definitely sit the wife down and do a list of pros and cons. Why has she set her heart out on that particular house?
Maybe meet the wife somewhere in the middle and sumbit below asking value and see if the owner will bite? Also visit more houses, not that many people are buying atm in London compared to rental market.

@SignoraVolpe said this...
When poverty walks out of the door, love flies out of the window.

Heed this.

It won't just be about the cost of the house. It will also be about the cost of a total refurb, the cost of a new kitchen, a new sofa etc...

Tread carefully.

Glad it wasn’t just me who thought this.
Obviously you need to be sensible though and given the little information here, stretching that far sounds unwise.

Will you get a mortgage for the amount you need? £315k plus stamp duty, fees etc sounds like you would be looking at 4.5-5 times your joint salary. You would also have to start saving to do the work. How urgent is it? Realistically it is likely to take you years to have the funds.

We maxed the budget when buying as previously there was an expectation that prices were rising and interest was low, so it made sense to stretch for a house that would last longer term and avoid more stamp duty. However I don't think the sums add up on this one sadly. Plus with increased interest and CoL, the repayments are going to significant.

You could put a low offer in, it’s worth a try!

Quite frankly, if your wife wants a more expensive house, then she needs to contribute more to it.

You're right to want a safety net. What does she think will happen if you're ill, you stop earning and still have to pay the mortgage?

The problem is that you shouldn't even be looking at homes you can't afford, otherwise you'll never be happy with the one you buy.

It depends what you mean by liveable. For some people that would be horrible carpets, for others it could literally mean central heating and a kitchen that doesn't exist. If it's the former then at a stretch it's not the worst decision, but if it's the latter then I wouldn't. Our max mortgage has been £300k and we earn a bit more than you. Actually £80k isn't that low(!) but we've had to find well over six figures to make our decent condition 3 bed house more up to date. I'd keep looking around, it's also very likely you'd be in a bidding war so you can't get too hung up on one house

Find something cheaper and keep a large chunk of savings.

I get you. £300k doesn't even get you a flat where I live (zone 3, south).

The house is too expensive. You will have to keep looking, however hard it is for your wife to accept.

40k is a basic paint job in London! Are you sure it's only 40k?

She can add in the extra 100k then can't she

Ooh good another "I can't have exactly what I want when I want it ergo I'm poor" thread.

Nothing wrong with offering what you can afford.
You also don't say what is needed doing to it for £40k - it might help as some readers might have some helpful ideas on how to get done cheaper.

Have you looked at how much the mortgage repayments would be for the £615k house? You might find they're too much of a stretch. You're also going to have to factor in stamp duty and fees which will reduce the amount you have available for deposit (or how much savings you can keep back), and as everyone else has said £40k really won't get you a lot of work done these days, even outside of London.

I'm very risk averse, personally. I'd go for a cheaper house and have savings available for emergencies.

Having more than £16k in cash savings is daft if you ever have to claim benefits.

You can get full UC if you have under £6k in cash even if you are in a paid off million pound house.

They dont count the equity in your house but do count everything else.