To not want to borrow maximum amount? Mortgage with DP

[LuDa4]

Can I ask for views on this please.

DP and I
Mid 30’s
1DC, not having more
Joint earnings - c.£65k
Joint monthly take home - c.£4200
No other debts or car payments etc
Deposit a c.£150,000

We can borrow up to £380,000 but would look at needing £250k which would mean a monthly Mortgage payment in the region of £1300-1400.

DP thinks we should push ourselves and get as good a house as possible within the budget.

I am more cautious and think we should leave some breathing space and be a bit more cautious.

He says the banks won’t lend us what we can’t afford.

After mortgage/bills, I think we will have around £2000 left each month not accounting for food.

Any thoughts on what we should do?

I decided that I would rather have security of savings and more options in life rather than the big house. Don't get me wrong I do look at some people's homes and think if only. But now we're at the other side and one child has left home, one only a couple of years to go and we've virtually paid the mortgage off in my mid forties. Life here we come!!!!

I'd leave a bit of breathing space. Maybe you can afford it now, but you never know when interest rates will shoot up again, or energy prices will get hiked, and then you're stuffed. Factor in critical illness/life insurance to the mortgage if you can. My DH got cancer and the critical illness insurance gave us a £50k payout. When it came back and was terminal, the life insurance paid of the remaining mortgage when he died. I'd have been homeless otherwise as I couldn't afford it on my own.

My DS and his partner, don’t earn as much as you, but have similar £235,000 mortgage that’s £1,400 per month, it’s a flat so with other utilities and maintenance that’s one salary gone. Food and extras come to around £200 per month. Partner was out of work for 5 months in the past year and it did get close to having to use their savings. My first property we borrowed more than we could realistically afford and were basically just covering our costs for over a year, but it was so worth it, just to get on property ladder and live together.

I went into psychosis and was in an elite profession but overnight lost the ability to work. its complicated and ive not been able to work for the last six or so years

It depends if the compromised amount gives you what you need in a house to not have to move within a few years. We bought about 60k less than the max but it still gave us the school zone we wanted plus a decent house and garden, definitely the more sensible choice. Within 6 months we just paid for a new kitchen and that week the boiler broke plus the electrics needed sorted so that wiped out all savings! Its been very tight for a few years but starting to feel a bit more affordable now, so glad we were sensible and didn't over extend ourselves.

Don't max yourself out - DH and I thought about it but went for the smaller more affordable house. Couple years later Liz Truss hit. If we had gone for the bigger house the payments would have crippled us. You need some wiggle room for uncertain times.

I wouldn’t max out unless it was absolutely necessary to get a decent house. Obviously it’s area dependent but it doesn’t seem like you are in that position so get the mortgage you need to buy a house that is suitable.

I think being able to enjoy life, to not be constantly worrying about the boiler going or the car breaking down, to be able to travel - all those things that come with having disposable income, are far more important than having the fanciest possible house in the poshest area.

Apart from the good points made above who does all the housework in your family? The bigger the house the more there is to clean and maintain. I wouldn't go big for th sake of it with just the 3 of you living there

Usual recommendation is no more than 30% of take home pay which is £1260

It’s the approach we took and I’m glad we did. 8 years on our household income is more than double what it was when we bought the house, so now we have the house (which has appreciated in value) and the extra income for the nice lifestyle (and mortgage overpayments).

Yanbu at all @LuDa4

For any given household income, there is going to be a range of potential borrowing levels, within which the more you borrow, the higher your risk and more vulnerable you are to future market forces.

The maximum you can borrow as told you by the lenders is the very top of that window. That's the level of borrowing at which the lenders are reasonably sure that they won't lose money on you in the event of a sharp change in the financial landscape because if things deteriorate to the point that they reposess your home, they will probably be able to auction it for enough to refund the outstanding debt plus their fees, leaving you penniless. They don't care about avoiding leaving you penniless. They just want to keep the risk they are taking to an acceptable level.

It is absolutely sensible to self-impose a borrowing limit of an absolute maximum borrowing that is 10%-15% less than the maximum the lenders would agree to. If you limit what you buy to meet this level, then firstly you hugely reduce your own risk of everything going horribly wrong and secondly if it does all go horribly wrong you are less likely to be left utterly destitute afterwards.

DH and I have been always fanatical about keeping our outgoings low.

We're on our 3rd home that we've owned, and for our current house and the house before this, the bank clerk was able to approve our mortgage on the spot without having to send it to an actuary - because we wanted to borrow so much less than they would lend us.

My motto has always been "Buy the most affordable property that I'd still be proud to call home".

I've recently had a spell of very bad mental health and have been able to quit my job (£75k salary), as our fixed costs are so low. We only need 1.5 full time jobs on minimum wage between us to cover our mortgage, bills, council tax and £100 food shop per week. Once I'm feeling a little better, I can look to pick up a couple of bar shifts a week, and that's all I'll need to do for a while.

I would strongly recommend under committing. Although I recognise it's harder now for people starting out - we bought our first place in 2010 when prices were so much lower.

We are on this side of the argument too - live in a (big) terrace but the mortgage is £750 and we will have paid it off in 7 years age 48. Joint income is 75k. One child.

£380k on that joint income is crazy
I'd say £1400 a month would be the max id go for still quite a high percentage of your net income

We took put a mortgage 20 years ago, before the huge hikes in interest. At the time we made sure that we could afford it on one income. Perhaps I’m naturally cautious but it has meant tgat we were able to pay the mortgage off early.

I mean - it’s risky but at your age - me and my husband maxed out what we would be able to borrow - we were still middle management then but I knew that we we would both be promoted within the next 2/3 years - as predicted, we did and we managed to comfortably afford the mortgage - we ended up going for a 4 bedroom house and eventually we had two kids (we knew we would always either have one or two children hopefully) so it worked out well. We’ve just moved from the house and have done the same with this new house.

In 2007 we had friends who effectively got a 110% mortgage with Northern Rock. They said "well the bank wouldn't lend us that if we couldn't afford it". We said "you can't afford it, you are leaving yourselves financially vulnerable position. It's not a wise thing to do because you don't know what is going to happen with interest rates and right now the financial outlook isn't great".

Never borrow to the limit because if the economic climate gets worse you are fucked.

It's that simple.

Trump and his ruddy tariffs do not make for market stability.

In the past, we were protected by ever increasing property values and low costs to move house. Going for the only just affordable was OK then.
Right now it costs so much to move with high Stamp Duty. This is slowing the market. House prices are falling. (I know because I am selling)
Jobs are being lost, Wage growth is stalling.
You will sleep easier with a buffer.

I would never borrow the maximum amount. It makes life so much more stressful knowing you don't have a safety margin. Of course the bank wants you to take out the maximum amount, that's how they earn their money!

I’d do it the house during need much/any work.

Do a proper budget so you don’t just think you have 2k left including food and allocate equal spending money.

I thought that too.

Same. Absolute maximum should be 325 with a generous lender and squeaky clean credit.

This seems a good illustration of the fact (I think there is solid evidence for it) that men are greater risk-takers than women.

You say your DP wants 'as good a house as possible'. Do you know what he means by that? Is a good house big, solidly built, in a safe area or what? Are any of those things, or others, for your family's benefit or to impress others? Is it a status thing? Drill down into what he means.

I'd be wary about taking advice from anyone like parents unless their experiences are recent. If they're talking about when they bought property thirty or forty years ago, don't be swayed by what they tell you. Now is a very different world.

Been there and didn't max out. A wise decision as our circumstances have changed somewhat. I'm glad we have the luxury of affording what we have on one salary as I earn a lot less than I used to!

If luck is on your side, maxing out will pay off £££ long run. But honestly, who knows when we'll experience a curve ball. It's not being negative. It's just realistic to expect over 25yrs you might need some wiggle room.

Once all your house wants/needs are met and you're in a good area, that's money you could divert to savings and having a really good time.

This is my parents advice too. DDad was a financial advisor. I just wonder if this advice is up to date?

Not really because the housing landscape is so different now but a lot of people have reaped the reward of maxing out.

Im fairly risk adverse & would say not to max but having said that I feel I should have maxed for my last purchase. When you account for the stagnant market, stamp duty & renovation costs & the fact I fixed my mortgage at a good rate I should have just bought the bigger house.