Did you buy the biggest/best property you could afford?

[Heatherbell1978]

Just wondering....DH and I will be looking to sell my flat and buy a house in Edinburgh next year. We both have good jobs and although I'm on mat leave at the moment, our combined full time salaries are around £95k. On this we could borrow between £350k and £400k according to mortgage calculators. We probably have around £55k equity in my flat so the size of the deposit is more of a challenge for us than the amount we could borrow. Our ideal home in a nice area, good schools etc, would be upwards of £300k, which we probably could get a mortgage for. But.....I just can't get my head around paying so much of our net income on the mortgage payments. We have a few debts (car and loan) and will have childcare costs in the future too so this needs to get factored in too.

We're used to being able to save every month, go on a couple of hols each year and generally not worry too much about money as I don't have a huge mortgage on the flat (£600 p/m) so part of me thinks we should just move away from the city, buy a cheaper house and still have that financial comfort...but I'm so torn as I would also like the nice house in the city. I have a few friends that I guess spend a lot of their net income on their mortgage, more than me, but it's just not something you ask. So what did you do?

No, similar income to you and bought for £260k with a £90k deposit. We were looking at houses up to £325k.

I'm glad we did. I've worked intermittently and we can comfortably afford it here on DH's salary. It's comforting to know...

No, but it doesn't sound like you'd be stretching yourselves with the figures you've outlined OP. I think this is a question of perspective - in London, a mortgage of well over £1000 a month on your level of income is the norm and not really considered to be a stretch at all

Firstly, I'd check with a mortgage broker as those online calculators can be a bit misleading.
I'd then buy the nice house I could afford. We spend so much time at home, especially when you have children, and I find so much pleasure is derived from my surroundings. Being in the catchment for a good school is so important too, and that comes around quickly.
Is there an area near your ideal location that you could get a slightly cheaper house, that maybe needs renovation, that is likely to gentrify? You often find in a city that you can look a couple of streets away and the prices go down a bit. Perhaps there's a compromise between your two scenarios.

And what banana pie said too, you do have a healthy income and would still be able to save and have holidays etc.

No. We spent about £100k less than the mortgage companies were willing to lend us. We wanted to have the option of one of us being a SAHP when we had kids. We also knew that if we spent the extra £100k it still wouldn't get us the forever house, but it would affect our day to day quality of life in terms of having to budget really tightly, no eating out, no treats etc.

The way house prices have gone in this area we would have made more money on paper had we stretched ourselves, but buying the cheaper house has given us a less stressful life, and the flexibility to make other life choices without worrying about money. At one point we were looking at having to pay for fertility treatment (thankfully not necessary after all) but we could not have afforded that in a more expensive house. And you only need to read some of the threads in this section to get an idea of how horrible it is to have to budget really tightly, no treats, worrying about unexpected bills...I don't want that sort of life if I can possibly avoid it.

I think the points about future career prospects and interest rates are really good ones. Interest rates are only likely to go in one direction and that's up: you'd be crazy to buy at the top of your budget with no wriggle room, unless you can get a good long term fixed rate or you are confident that your salaries will go up and your living costs will stay the same (unlikely if you are planning kids).

We spent about 85% of our max budget when househunting (based on what the bank would lend), but as we're in London we still ended up borrowing a lot. We're lucky as we didn't have to worry about school catchments though as DD has a statement, and we also have no childcare costs. We can still afford a nice standard of living, lots of eating out and holidays etc, live centrally enough that commuting costs are low, and we have a comfortable pot of savings so we don't worry too much about anything going wrong with our health or jobs. I wouldn't ever stretch our finances so far that we were actually worrying about money and giving up the luxuries that matter to us.

Where we did compromise was the size of the property and the fact we have a flat, not a house. But we have a small family, and stuck to one dc partly so our finances wouldn't get too stressed. It means we also don't have to worry about sizing up further down the line which is good as well.

No, though we have a house that is big enough for our current and future needs. Also, we like our holidays too much and it is very nice to be mortgage free.

Hi,

When we got married, back in 1997, we bought a house that we could pay for with one salary. We had loads of holidays/new cars and were always very comfortable.
Roll on to 2004 and baby number 1 comes along. Due to my job in the NHS (hours), and no family to help, I went part time so halved my salary. On top of this, childcare came out as we paid for 2.5 days of nursery from when our first was 10 months old.
In 2008, baby number 2 arrived so I took another 12 months of maternity leave. I returned to work in 2009 and took on more hours (went up to 3 days). Baby number 1 had started FT school by the time I returned to work so that worked well BUT we still had after school and school holiday childcare to pay for him. in 2010, we bought a bigger house (4 bed detached) and decided to leave the mortgage running at the original term. Payments doubled and things like council tax increased. Childcare was also a lot more. Factor in the cost of 2 children (days out are more expensive) and the costs that go along with school (ours always wants money). It is tight for us these days but we do have a 25 year endowment due to mature early 2017 that will finish the mortgage off (hopefully).

Be VERY careful. You need to live. You need to enjoy life with your child(ren). You don't want a huge mortgage saddled around your neck for years and years with no money left for pleasure. In your position, I would buy outside of the city just to be safe. You really have to be careful in case one of you is made redundant etc. I would imagine childcare in the city isn't cheap either.

We have a combined income of £85k and our house cost £160k 2 years ago. We aren't risk takers, just wanted a nice family home and the option fog both of us to reduce our hours when we have a baby. I think I'd be worried to take on a big mortgage

We bought about 2006,so house prices lower than now, however we still could have had much higher mortgage than we got. We chose a house that we could comfortably afford, but once first child came along, with mat leave, p/t hours and massive nursery bills (c£500p/mmth for 2.5 days per week) then our comfortable mortgage seemed so much less so. We were overdrawn most months. I can't imagine what it would have been like it we had stretched with higher mortgage. You never seem to have quite enough money. I hate the feeling of thinking if only I could afford x or x.

Roll on 10 years, and we now have joint income bit more than yours and substantial equity. We also now have another young child and were considering moving up the property ladder, for bigger house with more space so would need to mortgage up again. There is no way I would take on a mortgage the size the mortgage calculators suggest. The max mortgage I would have gone for is about £150-200k After thinking of all the costs of bigger mortgage on top of nursery fees once more and after schools care we decided to stay where where we know bills are manageable (we pay £850p/mnth for mortgage and £650 per month childcare) and we can still have a good holiday, I can work part time for few more years, not worry about food bills etc. Children really do knock your finances.

No, we bought a house which we could (just about if we pared everything else to the bone) afford to pay the mortgage on one salary. then we overpaid as much as we could. It was a huge relief when I got redundant a couple of years ago to know that at least we weren't struggling just to keep a roof over our head. Plus it gave us the option for one of us to go part time/take a career break. One the flip side, we do have a less nice house than a lot of our contempories, but the security is worth more to me than the house.

No! We bought a house big enough for us and Dc, but we could have afforded to spend more. Now kicking ourselves now - the way prices have skyrocketed - wish we had...

No, we bought our big family home, we love it and it fits our life perfectly. Plus the mortgage is very small and will be paid off quite soon.
With savings and borrowing we could have paid lots more. But didn't have to as luckily this was the one that ticked every box.
Similar ones were at least £50k more, but this one had a smaller garden which suited us.
We like to have savings, go out a lot and have a couple of holidays abroad each year.
I'd hate to have the fear that we have overstretched ourselves.

Yes, given that I was moving to a new area where property prices are higher (so I have swapped a house in the countryside backing on to fields for one on the edge of a quiet estate - both are similar sized, but this one is three years old...)
BUT, I didn't want to increase the size of my mortgage as I know I can afford what I pay. I also know I can downsize in about five years' time which will be when I've paid off this mortgage, so I can buy somewhere in a nicer area, with a small mortgage and therefore put aside some money for my retirement.
(but I'm an old gimmer who nearly has her children off her hands)

No we didn't. We bought a house for about half what we could afford. But, crucially, we live in a much cheaper city than Edinburgh and could afford to buy a big enough house in a nice area with a choice of good schools for that budget. If we'd been living in Edinburgh, we would have needed to spend a lot more.

I'd see what you can do for around £300-350k in the areas you like. That way your mortgage would be £250-300, which is big but not ludicrous.

No and we have bought 4 times, having moved more times than that for career progression. We've made sure that we could comfortably afford the mortgage payments on one salary which we have been thankful for since between the two of us, DH and I have experienced redundancy 3 x in the last decade. Telecoms and IT have boomed and busted along with the state of the economy. You never know what tomorrow may bring and I just could not voluntarily choose to live without some buffer.

We're pretty conservative financially but somewhat more maverick in our career paths. It has taken us until our forties to be able to earn enough to be able to buy our long term house in a good area. There can't be too many ftb out there who could afford their 'forever' house straight away. Good areas tend to be expensive wherever you live in the country and we've lived in the NW, Midlands, SW and the SE!

No, and we never will. You don't know what could be just around the corner.

I think applejack gives very good advice. What seems like a comfortable income now (£95k) may be completely different when you have children.

Couple of things - some lenders will not use your normal pay in their income calculators if you are on maternity leave (even if you provide a letter from your employer saying you're going back on the same terms etc). We had this when we last bought - I think it was Santander that refused to use anything other than my maternity pay.

Secondly, are you planning on going back full time? Do you have one child now? Are you planning any more? Do you know what your childcare costs would be? I'm sure you've factored all of this in, but childcare costs are HUGE especially when you have twins and its akin to living on one salary for lots of people.

In our case, we bought one of the cheapest houses in the best area (for schools, family, location etc). It maxed us out completely, needed lots doing to it, and we had to live with it like that, with very little money for 2 or 3 years. It was the right decision for us, we are not planning to move again, but it was harder than I imagined to be worried about money that whole time. We were continuously overdrawn / had to juggle money between accounts, take out a loan etc. We don't have childcare costs anymore (well not £1k+/month like we did previously) so its easier but think very carefully about a big mortgage and how long it will curtail how you live.

Our mortgage is £250k, we were offered £1m plus. We said no thanks and settled for going mortgage free very quickly, we'd saved a big deposit but it wasn't enough to buy in london outright. I just didn't fancy having debt for years on end, I'd worry about it constantly and not be able to spend on any luxuries at all: I'd trying to pay off the mortgage with every spare penny!

No, purposely bought well under what the bank offered us for a mortgage. I would like a house in a "better" postcode but it would mean much less disposable income. I like going on holiday, eating out, cinema trips, leisure activities etc on a regular basis and enjoy working 15 hours a week so i can spend time with my dcs. If buying a bigger/better house means giving up this lifestyle and working more then I'm not willing to do it! Many friends have maxed themselves out on a mortgage and have lovely properties but are misetable as they never have any money to do anything and have to work long hours to afford the house. It all depends on what is most important to you I guess.

No. We bought something very cheap. DH is the main breadwinner, and we could afford to keep the house on my part time salary if DH could no longer work. However I think it's different for us because we're fairly young, have no DC yet, we are hoping to pay off this mortgage in the next 2 years, then work on saving a deposit and buying our "permanent house" in about 5 years. However, I'd still only want a very small mortgage and we'll do what we can to save a deposit to get something better.

My best friend, early in her teaching career, stretched herself to the very top of her budget for her house. It's a nice house, but I would not want her life. She hates her job now, and would give anything to leave but they cannot earn any less than they do currently or wouldn't be able to afford their house. They really struggle financially just for this house, whereas I'd rather have more financial freedom.

I think it's a very personal decision however, and to each their own.

Factor in your costs and then flex interest rates and see what it looks like.

We bought early whilst our friends were running up student debt getting useless degrees (we both earned degress/became professionally qualified whilst working). I'm not saying it to be boastful, but rather to illustrate that it's a personal choice. It depends what your priorities are. I'd be reluctant to go up to the maximum - unless I had absolutely no choice, but would need to be sure that I wouldn't outgrow the house in the short term.

We moved to a comparatively cheap area (we could probably both work part-time) but to be honest, we bought a house that was too big for us (thinking we needed it) and I probably wouldn't be adverse to downizing as it takes alot of effort and money to maintain - even though the repayments are cheap.

Someone 'old money' once told me, always buy the best property you can afford, and the cheapest car you can find. Ever wonder why people on estates drive 10 year old Volvo Estates?

Property is an investment if you do it right, whilst a car will always depreciate. Those with real wealth appear to have it because they understand it, while those with the flashy cars tend to see their wealth pissed away by their children because they never understood it in the first place, and couldn't teach wealth preservation to their children.