AIBU to give up being mortgage-free to buy our dream home?

[Dreamhome4]

We’ve been offered what feels like our dream house — it’s spacious, in a great location, and ideal for our young family. The current owners are relocating abroad and have offered it to us for £50k below market value.
Right now, we’re mortgage-free, which I know is a rare and lucky position to be in. But to buy this house, we’d need to take out a £275,000 mortgage over 35 years. Monthly payments would be £1,220. I’m currently a stay-at-home mum to our toddlers, so we’re living on one salary. After all bills, we’d have about £500 left over each month for the next two years — but we’ve also got a £20,000 emergency fund as a safety net.
In two years I’ll be going back to work, and we plan to start overpaying to bring the mortgage down.
We could wait until I’m working again to buy, but honestly I don’t think a house like this will come up again — it would give the kids so much more space to grow up in, and really feels like a forever home.
AIBU to even consider this when we’re currently mortgage-free? Or is this the kind of opportunity that’s worth stretching a bit for? No matter what, we will definitely have to move in the next five years for more space.
Would really appreciate your thoughts.

Only you know your financial situation and whether this is the right decision for your family. If it’s only $275K mortgage, and you love the house, I’d do it!

I did it and am so glad we did. I can’t imagine living in the old house now, especially with two children.

However we both worked and my career was on the up so less of a risk financially.

Honestly I think you'd be mad to take on £1200 per month of mortgage when you have 500 left per month for two years. What if you can't get a job? Or a Health issue comes up? Filling the shortfall from savings will cost you nearly £17,000 of your savings and leave you nothing left at the end of the month. That's quite a precarious position to be in.

There are always other houses and there are always other things to do with the money.

Get an independent valuation ( who says it’s below market value? The vendors will be saving on agents fees, are they going to split that with you?)

This is one gift horse Whose teeth I would inspect very closely.

Couldn't agree more with this.

However this is Mumsnet, where people exhort others to stretch themselves far beyond what is financially reasonable, because, and I quote one poster, "property is a one way bet", as if no life circumstances will ever stop repayments of mortgages.

Not for me. Personally I would much rather be mortgage free and not have that extra financial burden. Money is the root of all evil and having to live cautiously sucks. What if your circumstances change? For me financial stability trumps everything. Even a supposed dream house. Just my opinion.

Unless your current house setup is making you unhappy I have no idea why you’d consider stretching yourself financially thin like that especially when you are not currently working

My answer depends on what you’ve factored in as “bills”, have you allocated money out of that for things like petrol, bus/train fares, food shopping, clothes, shoes, toys, birthdays, christmas, hair cuts, toiletries, some money into savings etc?

If you’ve already allocated money to all of those things and so your £500 is basically just for extras, fun days out etc, then maybe I’d do it for my forever home.

But if you literally mean that you’d have £500 a month left after just paying your household bills then no I absolutely wouldn’t do it, £500 to cover absolutely everything else for 4 people would be too tight, any unexpected bill could see you struggling and the worry of that would spoil any house for me.

If it's your dream home, I'd jump at it, you only get such a chance once in a lifetime. I never understand why people find somewhere they absolutely love and then don't go for it because they have to have a mortgage or whatever.

You've looked at the finances, you plan on going to work in future years, you have some back-up money anyway, you could always go back to work earlier if things got a bit tight. Honestly, what are you waiting for? I wouldn't be thinking twice myself....

In two years I'm going back to work.

The future isn't promised. What happens if you don't get a job?

Try living on 500 for the next month, see how it works?

When you say 'after all bills', are things like birthdays, Christmas, clothes included in your bills, so you have 500 after this? And how tight is your budget, have you allowed for eating comfortably with potential increasing food costs again? What about holidays/mini breaks?

If you have 500 disposable income after everything such as the above has been taken into consideration, then I would absolutely do it. I live in my dream house and it makes me happy every single day.

How old are you both?

Absolutely not. Unless you at least get a part time job. There are sacrifices all around that have to be made when you have a single income family.

I wouldn't in a million years do this - being mortgage free with 2 small children takes away so much stress. There is so much fear of missing out these days. Another will come along, you are letting the £50k below asking price cloud your judgement. And how do you know it's below asking price? Have they had it valued - have you seen this?

There will always be other houses, wait until you are in a better position financially

We are both 37. However, despite being mortgage free, we don’t live like we are mortgage free as every penny we have at the end of the month goes into savings for a bigger home. So currently we live off roughly £1500-£1700 a month. The rest of my husband’s salary goes straight into our savings account.

How old are you?

If you are mortgage free and young enough to be having kids you probably earn okay and its probably doable... But it's not without risk- would you be willing to go back to work early?

£1,220 mortgage isnt the full picture. We moved from a 2 bed to a 5 bed semi and our bills were x2.5 maybe even x3 higher

On the flip side I know a few people who have bought homes in their 30s with no intention of paying the mortgage off. they intend to live in them for 10/15 years paying minimum poss on longest terms then sell.
Ie raise their kids in a fancy house then sell up before mortgage is paid off.

I disagree, you are being sensible in managing your bills with one salary, very few people do this anymore. You are also in a position to take up work and increase your income to be in a better financial position, which may be an option sooner should you require?

How confident are you about being able to get a job, either now or in two years time?

No way would I do this. Monthly payments of £1220 for 35 years, but you don't know what will happen to interest rates during that time. Could you afford the repayments if in 5 years the interest rates skyrocket and you've either not found a job, or you find one paying a much lower amount than you expected, or if one of you has to give up work for unforeseen reasons?

£20k is not much of a buffer if you find there are any unexpected expenses which you can't cover on your £500 per month.

It's a big stretch and whilst the house might look perfect, personally I'd not be able to enjoy it if I was constantly worrying about money.

Even if you will definitely need to move in a few years you'll be able to do that knowing for certain what your job situation will be.

I'd go for it, assuming your calculations are correct. Things will get easier as time passes.

If you’re saving for a bigger home, then isn’t this the plan, to buy one?

Isn’t this the epitome of buying things we can’t afford, with money we don’t have? You’d need to borrow money on a 35year (!!?) mortgage. Have you looked at how much interest you’d pay on that mortgage over 35years? You don’t know how rates might change. They’ve been up to double figures in the past.

It’s crazy talk to me, to go from a nice mortgage free financially stress free situation, to a 35yr (!!?) mortgage with maximum £500 spare cash a month (at most, if rates don’t go up). With no back up if something untoward happens. £20k is ok for eg boiler / car / vet whatever but nothing much in the situation if you lose jobs / get ill for eg.

You’re currently being astute by saving spare cash for a house in future, with money, that you Can afford. So there’s no horrible pressure on the single income earner.

Take your time, there’s no hurry. ‘£50k off’ mv isn’t a reason to uproot your current mortgage free, stress free luxury, is it?

@LivingLaVidaBabyShower With the new house, I have made a budget to take into account the fact that the bills will be much higher. I have overestimated too, just to be on the safe side.
If we did go for this new house, I think we would live in it until the kids are older, then sell up in order to give them money towards their house deposit. I think it would be a much better idea than having the money sitting in the bank, which we have currently. I feel that it’s depreciating there.

Does the £500 a month include food?