800,000 Mortgage

[CollegeDoctor86]

In need of some advice on what to do next.

So DH and I have come to logger heads on what to do next. I thought i would consult the all seeing eye of mumsnet. As the advice I've had on here has been ever so helpful in the past.

Dh and I have a joint income of just over £270,000. Currently living in West London in a 2 bed 2 bath flat worth £520,000. No kids at the moment.

DH is fixated on the idea of moving house before we get any dependants as he says it will greatly affect out affordability and we both would love a big family house out side of London. Either Herefordshire or Bedfordshire.

We already own a second home, which we let out to a relative and are hoping to keep the flat we own now with 25% equity in it and rent it out. While hopefully moving to a new home with a rough price range of 800,000 - 1000000, with a 15% deposit.

Now after DH laid these plans out to me, I just cant help but feel that they are, for want of a better phrase, wishful thinking.
I accept we'll have to pay the higher rate of stamp duty as we already own a second home. But am I right in thinking the sums just don't add up.

With a home of roughly 900k and a mortgage of 765k our lender has said we on a 3% mortgage for 37 years would pay 3k a month. This coupled with the 63k we'd have to pay in stamp duty. The total cost of moving would be 135k deposit and 63k stamp duty so 198k.

We have £273,000 equity in the flat we own and could only take out £135,500, to help with the move.

I just feel like we should sell up both properties and just make one move and have one house as it's so much easier.
But he is fixated on assets and feels we can make it work.

My questions are

1. Do kids make much of difference to affordability?
2. Would having a second rental property really be that much of a ''money move'' as he likes to call it?

3 .What would you do ?

@GreySkyClouds

A decent deposit from saving, and not living in London. I'm not really sure I understand what you're after though - all I was saying was, even though DH earns substantially, we'd never take on a mortgage that size. Your salary gives you a guide for the maximum you can borrow, but it's not a target to reach .

The long mortgage term & the amount wouldn't necessarily concern me. You can always overpay or sell later.

Most of our friends earn 6 figures & have to do similar because like you haven't benefited from the boom as we are all too young. Most 30 something couples in London earning good money have big mortgages if they own a house it's not possible otherwise.
What are the replacements vs your income?

I would potentially look at selling the other properties though or at least 1, quite a bit of agg.

Our household income is 200k and i'm still trying to work out if we want to buy something that would require a 300 mortgage.

To me that is incredibly risk adverse & if the majority of homebuyers were like this no one would actually buy.

However we have always had our mortgage at no more than 30% of take home after pension & that one person could cover it.

@ruckis

yes it's terribly unfortunate for us that the housing boom took place 1 generation before were able to buy. But I can only hope there will be other opportunities in future for millennials.

To me that is incredibly risk adverse & if the majority of homebuyers were like this no one would actually buy.

However we have always had our mortgage at no more than 30% of take home after pension & that one person could cover it.

If I lost my job my OH's salary would only just cover the mortgage, so it wouldn't pass your second rule. If our household income was a 50:50 split I'd feel quite differently.

Also don't assume every one in the past was quids in on property. We bought in the 1980s for a supposed boom but the 2 buy to let (lose) flats we had to sell in the 1990s in London at about 50% losses and also our then family house at a loss in 1997. Selling those 3 despite the losses did mean we could put the remaining money into my current house but I just wanted peopel to remember lots of people lost money on property in the 1990s *(and during other property crashes and recessions - in fact in late 2019 my son was told his house bought in 2016 would sell at less than he bought it for - we decided to keep it to help his brother buy a first property and now it is worth more than 2016 but he could easily had sold in 2019 for a loss). It has not been a one way only piggy bank in the past for everyone (never mind if you divorce like I did and your husband gets your life savings and a huge chunk of a fairly random then valuation of the house)

On risks people differ. I always know I can work even harder and try to earn more even now in my 50s so I have never been risk averse with property hence why at one stage after the divorce I had £1.3m of mortgage debt, £90k a year interest only mortgage and no savings. All came good and I hope to live in this house until I die now.

Also with young lawyers as I was in the 1980s in big firms you know there are pay rises unless you get sacked as in the first few years the pay is transparent and published and doubles both in the 1980s and now in the first few years.