Upsizing mortgage in this economic climate

[sst1234]

Hi mumsnetters

Looking for perspective on an upsizing decision. You could say that I am needing to be talked out of it. I should add that I am not at all a compulsive spender, very careful about making purchases of any scale, let alone a house. Even the hubby is on board though he is usually even more sensible than I am.

Current situation is that by early 2020 I could be mortgage free using savings that I have built up painstakingly over the last 4 years. Savings were built with this intention. The plan was to move by late 2020 to a larger forever family home with a mortgage that could be paid off in 8-10 years at current repayment levels. Current house is a 4 bed semi detached, no garage and two of the bedrooms are singles. So more space, a garage, utility room would be nice. Basically a family detached house. Budget being around £400k-£425k - Yorkshire.

It feels like now is the wrong time to buy anyway given all the economic uncertainty with a possible no deal Brexit and/or GE. So, to then see a new build in our current area where we want to stay, for considerably more than I had ever intended to spend and to really really like it makes it uncomfortably tempting. This would be a true forever home, just affordable if not a stretch at £600k with a 25 year mortgage. Low interest rates make it possible and I would look to overpay a little and cut down the term by about 5 years.

I don’t see the home as investment, of course it to live in. But it feels like a very uncertain time and a huge huge mortgage commitment even though it’s affordable.

Am I overthinking it or is it really too big an upsizing leap in this climate?

No one knows what is going to happen with the UK economy, house prices, or interest rates. If they did then they would place the relevant bets in the markets and make money for nothing. The only thing you can concentrate on is you own personal goals and whether the new mortgage is affordable. One aspect that is under your control is the type of mortgage. Assuming that you have a good amount of equity to carry forward to the new property, you could possibly consider a 10 year fixed rate (which offer good rates at lower LTVs) to accord with your risk averse nature.

It depends - if it’s your forever home then a potential drop in price won’t be an issue.

www.theguardian.com/business/2019/sep/16/brexit-uncertainty-triggers-first-september-fall-in-house-prices-since-2010?CMP=Share_iOSApp_Other

New houses seem to be very over priced. There are some pleasant smallish developments around here, beautifully designed, but they want over £100,000 more than our house - which has a double garage, bigger gatrden and bigger rooms - and is in very good nick - is worth.

It is a bit dispiriting approaching retirement and still paying a mortgage, we paid ours off out of a pension lump sum, (DH took early retirement and got a new part time job) which was a huge relief, but if we hadn't moved at 40 we would have been mortgage free for years.

i think you probably should move to get a better house, but do be very certain that this new build is what you want, 15years on it will need a new kitchen and bathrooms etc. and won't look quite as special.

@higgyhog

New builds are eligible for help to buy loans which pushes the prices up.

@Danmor

Yes, that’s what I’ll be doing if I buy. 60 per cent equity and 40 per cent loan. Means I can get a 10 year fix at just over 2 per cent interest and make over payments.

@Mackerz

I am a mortgage broker and can help you with this, if this is of interest. I am fee-free, whole-of-market, and have access to numerous 10 year deals. A 60% deposit will give you access to very good rates, as you have already pointed out, and I can send you a product list with options.

I am not encouraging you to buy the house, BTW. This is a personal choice, but I might be able to help of you move forward with it.

One thing’s for sure, the house I am talking about is overpriced. It’s a case of waitijgnit out to see how long the developer is prepared to wait before dropping the price. Although I really want it, I am not prepared to pay asking price.

I would wait, the thing that would concern me though is not what is going to happen with house prices, but job security. I wouldnt want to have a massive mortgage and be made redundant as my employer struggles due to the outcome of brexit.

Yes that’s the biggest concern. I considered taking out mortgage protection insurance. But know I am waiting to see what happens with Brexit and if this developer drops price (regardless of Brexit)

We are doing exactly the same thing. Going from mortgage free to having a mortgage that will take us 10 years to pay off so finishing when we are 60. I do worry that we are taking on something that will cause us problems if either of us loses our jobs, dh has been made redundant before, but I can afford it on my own if needs be...

We have savings pensions though.

It’s what we are choosing to spend our money on.