London FTBs with a DC - to stretch for a mortgage or review my expectations?

[Somethingsgotthagive]

Properties we could have easily afforded a while ago are not at the very top end of our budget and would imply we need to compromise to very high monthly payments and cut on other lifestyle expenses (such as traveling and day outs, which for us are important).
I begin to wonder whether being an adult also means I should stop fantasising about the perfect property and instead settle for something more modest and keep our mortgage payments low in this time of high rates and instability. Would it be a mistake in the long run?
We are a family of 3 (1 DC pre school) in the London suburbs, we don’t want to move too far away from current are for a multitude of reasons.

Monthly repayments at top end of our budget would be around £2750ish whereas if we settled for something less “nice” or smaller, it would be more around £2200 (still a lot but feels low in the current rates climate).

We are FTBs in our 40s so not exactly expecting to climb the housing ladder much if ever.

There is no perfect property.

It's very hard to predict what is the best thing to do in the long run property wise.

At the moment with high interest rates and a tough cost of living I personally wouldn't be stretching but it depends on your jobs, promotion expectations, risk of redundancy etc.

For our first property, we bought an ex-council house in the roughest part of Bristol (Knowle West for any Bristolians who may read this thread!) It was literally at the top of the budget and all we could afford. Our plan was to overpay like mad to build up equity and it worked because 3.5 years later we bought our dream house in a different area which we could never have afforded otherwise. Think long term and consider a strategy like that.

BTW, Knowle West is so popular with FTB so it sold within a week. Is there an area like that where people possibly do the same thing?

No point fantasising about what you could have afforded several years ago. Best get on with choosing the nicest thing you can for your budget, allowing for a bit of life flexibility.

What would your £2750 mortgage cost at lower interest rates? If you could manage them for 2 years is it worth the risk that rates will drop and you'll get a better rate when you remortgage?

I would be realistic.

Look at what happened at the stock markets this morning. The world is so fragile ATM - and that has economic repercussions on so many areas. That’s on top of the existing pressures that aren’t going to go away (COL). You don’t want to stretch yourself and end up unable to afford your repayments because the markets crash.

@GracefulGrandma but with mortgage rates being what they are and a DC that will still need childcare for years (after school clubs etc) and general cost of living, we can't easily overpay an already incredibly high mortgage.
Plus we are settled in an area we love and that is unfortunately expensive. Our compromise would be to get a small 2 bed flat instead of a bigger house somewhere else

@PineappleTime well technically we could but who knows what can happen? Also the £2750 is for a 5 yrs fixed, it would be even higher if we fixed for 2 yrs

@Talipesmum yes I am definitely starting to think like that. I'd have liked a specious flat or maisonette with a garden but looks like we would most realistically have to settle with a small flat (like 65-70 sqm max) with no outside space and that potentially needs work :(
It would be a no brainer if it was just the two of us but as we have a DC, I feel like I am failing a bit as a parent in not being able to give them the best home I could afford

@Octavia64 our salaries will hopefully continue to increase but we are not in very high paying industries that will see our wages double in the next 5 years. We are almost 40 already and we still have a small kid. We live comfortably and have a good combined income but don't think it will take us far unless we decide to move much further out, which we don't want to do in this stage of our life.

When buying property there will always have to be a compromise, you just have to decide what is - location, size or cost being the main ones.

Personally I’d never stretch myself to the absolute limit: so many things can happen that might affect your ability to pay and if there’s no wiggle room in your budget you might find yourself in trouble very quickly.

Maybe write a list of your “must haves” and then try to whittle it down to no more than 3 or 4 things. That will help you focus on what is really important.

Where are you looking? Perhaps there are some less well known areas that are still nice but just not on your radar?

Very few first time buyers can afford their forever or dream home. There’s no point in looking back at what you could have got years earlier, that’s passed. I would get on and buy a property and plan for at least one move in 5 or 7 years to get you to where you actually want to be property-wise

You need to work out which element you'll compromise on, house or lifestyle, and run with it. If you wait much longer you will be too old for a mortgage.

As you say, the notion of working your way up the housing ladder has all but gone now. Buy the best house you can afford.

The best home is the one with the least stress... Dc need love n ideally security they don't care about fancy /big homes ...so def not a fail

I would not top out mortgage at the moment.... Can you stretch your location area a bit? Even a few steeets /5mins makes a difference where i am and i would to have some outdoor space .. shared ownership???
... are they in/near school age yet ..
Where i live in London a lot of people stay renting/small flat until dc at school then move a little bit..

This may not be such an issue with declining birthrates in most areas..

Lots of references on this thread to high interest rates. I wouldn’t make any decisions on the basis that interest rates are coming down any time soon, or ever going to be as low again as they have been in the last decade.

I would buy the biggest house you can afford because moving costs a tonne ( especially stamp duty which is just wasted money) I wouldn’t get a flat tbh, just move a little bit further and get a house. Our mortgage is just over 3k per month. I can be in central London in 35 minutes but the house is just over 2100 square foot. So really really think about location - could amazing schools and more space take you further?

Can you consider moving further out? You may be able to get the maisonette or spacious flat then. Wherever you buy should do you for a few years so you don't end up stuck with moving costs/stamp duty again for a while.

@Youcannotbeseriousreally there is no way I could afford a house that big anywhere around London where we'd like to live. And £3K mortgage is too much for us, I also want extra money to enjoy my life and go on holidays.
I do value space but I value location more than that. All the options we'd consider outside of current area would only get us a small house with a garden, not twice the size of a 2 bed flat in terms of internal space. Plus a longer and more expensive commute and with DC in childcare/school is more of a pain to manage.

@MiniCooperLover yes but even a bit futher out, those type of properties are at the higher end of our budget. We wouldn't consider moving much further out as we'd have a much longer and very expensive commute

@averythinline I wouldn't want to continue renting for the next couple of years just for the school, I am really eager to buy and get on the "ladder" asap after decades of renting in London!

Where is it you want to live?

I’ve never understood living in London when it takes as long to get to work as when you don’t live in London lol!

there is always a compromise , even with all the money in the world no house is ever going to be perfect.

So what are you asking then? If you are not willing to consider moving out of the area then you have no choice but to buy the small extortionate flat?

I suppose the key questions are:

• what are the two house options like?
• will you need to compromise on location?
• what is £2750 / £2200 as a % of your take home pay?

What is your commute like at the moment? (Price and time) You can move to very nice parts of the country outside of London on your budget (or even half that) and have a very similar commute to what you'll get inside of London. The money you'd save in the mortgage would be offset in travel costs but you'll get a house not a flat in many areas.