Double spend on mortgage, dream house vs. Smaller mortgage with more spending money?

[Sunnydays888]

Posting for traffic. I’m interested to know what people generally think is ‘stretching’ too far when it comes to mortgages and house purchases. We have just put our house on the market as really keen to move to a bigger house, out of town/semi rural but the two houses we are interested in would essentially be double what we pay now, per month.

This isn’t a humble brag, I know we are in a privileged position but I’d like a bit of perspective from those in a similar circumstance. Take home of ~£9k per month between us, 1 DC in full time nursery, currently paying about £1,600 a month on mortgage. Houses we are looking at would be around £3k - £3.5k per month mortgage payments. A big jump, obviously.

We could afford it, but I know we would need to be more careful about spending (obviously bills would be higher and we have things like commuting costs, some finance we are paying off etc.)

Question is, I suppose, what’s the maximum you’d pay on a mortgage a month in proportion to your salary before you’d feel over stretched?

And what do you prioritise, big, spacious house in ideal location but less able to be frivolous with money (which we probably are at the moment) or stay in smaller house for longer (until more of mortgage paid off or pay rise) with more scope for spending, holidays etc but feel dissatisfied with the house?

I don’t think anyone can answer this without know the details of your lifestyle and spending commitments etc.
Surely anyone buying a house will do a detailed look at expenses anyway, which you must have done.

If you’re certain you can afford it, including in unexpected circumstances such as illness or redundancy, then surely it’s just a question of what your priorities are. I don’t think what anyone else’s priorities are should really come into it.

Redundancy can happen at any time. For me, I would make sure we could pay the mortgage and living costs if one of us lost our income

You've got good income between you but how stable are the jobs ? What level of savings do you have ? Personally I've gone for the option of paying off mortgage earlier and having more cushion in my finances so if something happened tomorrow and I couldn't work, I'd be ok and would manage.
If you have demanding jobs, bear in mind that DC expenses go up from nursery! School is a headache, I had to have a nanny to do pick up and tea time as well as cover school hols. If you go private then that's a huge cost too for school or if you don't would you be wanting tutors, extra curricular activities ? Do you want another DC?
Basically don't base it on your current income and expenditure but fast forward a few years and do the maths

Of course, apologies I should have made clearer I’m more just looking for experiences where others have made this leap or not, rather than actual affordability!

We went for the bigger house a few years ago for the purpose of starting a family. The house felt huge for a long time as our fertility journey didn’t go exactly to plan. In that time mortgage rates increased and we eventually fell pregnant.

Our little boy is 18 months now and I’m back at work part time. Yes there is a big part of me that wish we’d of stayed in the smaller house a bit longer but neither of us knew how long it was going to take to bring our little one home.

I would say we are living comfortably, we never go with out and holiday twice a year. I guess we are just more careful now of the unnecessary spends. I’m really hoping our mortgage rates come down again in June as this will obviously release an extra chunk of cash. But granted it might not happen either! We are both able to save a percentage of our wage (for emergencies) and send our son to nursery 2 days per week. We are getting married later this year so the majority of spare spends is going towards that.

We both love our family home. It feels so full and honestly I wonder how we would have ever of managed without the space! I’m proud of what we have achieved and love nothing more than coming home.

I’d go for the house, your salaries are likely to increase and childcare will decrease.
I can’t see why you can’t have the big house and holidays etc?
I did the leap a couple of times, I thought of the house as an asset as well as a home and was mindful downsizing is always an option if needed.

We bought a bigger house with the intention of staying there for many years. It was a long time ago, when the mortgage rate peaked briefly at 18% the day after we exchanged contracts on our new house. we thought it couldn't possibly go any higher than that and our mortgage was around 70% or our joint net pay. It was a struggle for some time because interest rates stayed high but it was worth it to get the house thst we wanted, and doing that enabled us to move to our current house ten years later.

We always spent 1/3rd of our take home on mortgage.

We've moved to a bigger house that doubled the mortgage. We have a lot less disposable income now but the house is big enough for 3 teens and although the mortgage payments are high (£2.5k per month) at least we get an asset at the end of it. We also still put a lot into pensions.

We won't have a holiday abroad this year (last year we had 3) and a lot less takeaways but will still get a decent holiday in the UK. In 10 years time our outgoings will be a lot less and our disposable income will be high so for me it's worth the short term drop in disposable income.

Many years ago, just starting family, second house we’d ever lived in. We spent half our monthly income on mortgage to get our dream home. Never regretted it. Really had to tighten our belts but it was totally worth it, we lived our house and didn’t mind not going out any more/ no takeaways etc. ended up staying in same home for 30 years!!!

Dream house. Sakaries generally rise, property generally goes up and the more you’ve spent, the larger the impact of the % rise.

Asset rich - cash poor

this is not for me. Life’s for living and enjoying. I’d never be a slave to a mortgage its like a death grip

How secure is your work and are you insured against serious illness? Also are you likely to get salary increases in the nearish future?

We bought a much larger house but DH was a partner in a successful business which was why we were able to stretch ourselves.

We are currently moving and our buyers are definitely stretching themselves but I wonder if they have truly factored in all the costs of running a big house and think they could struggle. They have been a bloody nightmare though so I have limited worry for them.

Good luck

It really depends. We (early 40s) were mortgage free and then decided to double our living space and have a mortgage again so DC could grow up with sufficient space and we easily can host guests. We are now in our forever home.

We went with 2/3rds of the maximum mortgage offered to us, to ensure affordability. It is around 20-25% of our take home.

So we made the leap, but did not 'overstretch' ourselves. No kid is going to care about a great house if their parents are stressed out of their minds or working themselves into an early grave.

We have a similar take home pay and a similar current mortgage. We were toying with either a bigger house with 3500 mortgage or private school. We chose private school and another BTL, but outgoings are essentially the same. We were comfortable with this because we have no other finance payments so our total outgoings every month, incl food, are about £4,600. Meaning either of us could cover all the bills in the event of redundancy / job loss.

I think you just have to be comfortable with what you choose.

If you feel fairly secure in jobs, then generally the advice is go for the best house you can afford.
property in the uk has overall been a sound investment and you will have a good platform to downsize from later.
we have always busted a gut to get a good house, skint for a few years but it evens out.

Wouldn't go above 25% of net pay and much prefer to be in the 15-20% range.

If you're not planning to have another DC then I suppose your nursery fees will come to an end soon enough.

We bought a bigger house which doubled our mortgage but we were still v v far away from maxing out affordability. Assuming you have 6mths plus of expenses in savings then that's fine.

To be life is for living not being a slave to the bank. I would never sacrifice holidays, meals out, the fun things in life for a house. But that's just me. Best of luck with your decision

For me smaller house so we could overpay the mortgage . While it would have been tempting to have a bigger house, mental health issues meant that job situation changed so smaller income.

I think you need to consider the possibilities of job security and whether that high salary will last.

I wouldn’t be comfortable paying more than a third of take home but I’m cautious by nature when it comes to finances.

When it comes to having a better house vs having more spending money I think that everyone compromises, it’s just about working out where you draw that line. What is your idea of acceptable, long term budget tightening and what are your non negotiables? What really matters to you? What would you be willing to cut back on or cut out?

Definitely wouldn’t go over 30% of salaries on mortgage, even that is pushing things. But doubling a mortgage in itself happens throughout life as houses and salaries get bigger.

I'd want to maintain my lifestyle so I wouldn't overstretch myself on a house personally

I think 25% of net pay is the maximum I'd want to pay on my mortgage, TBH. Over a third sounds a bit scary, and by the time you've factored in the higher council tax and running costs, your disposable income would be squeezed pretty badly.

We went from a small sub £1k to well over £3k mortgage a few years ago. It was a bit of a shock to the system once we saw the full extent of the higher utility bills and all that.
We've actually increased the monthly payments further now to shorten the term by a few years, but as a percentage of income we stayed below 25% and we have savings/shares that we could cash in if one of us lost their job.

It depends how much you have to cut back. No holidays, clothes, etc - no. Buying own- brand Tesco rather than Waitrose, yes. Think about what standard of living you want to maintain, and cost it all out, and then decide.

We had a big jump in property a few years ago. Over double the size of the house and the mortgage was just over double.

We've made it work and we love our home. If you really love the house then go for it if you are sure you can afford it.