Can we afford this house? What would you do?

[Enessie]

A bit of background: me and dh are in our 40s. We have 2 primary school aged dc in state school. Our joint income is 155k so roughly £8600 post tax per month. Current mortgage is small.
Our current house is fine, and can be easily extrnded to create another room or two. During the lock down we suddenly need to create 2 home offices in the house and this nudged us to move to a bigger house, plus we got caught up in this house craze and FOMO as we witness house price increases week by week.
So, long story short, we put our house on the market and sold quickly. However the hunt for our next house hasn't gone so smoothly. When we started looking, we had in mind the budget of of 500-600k, but this has been pushed up many notches after we lost a few bidding wars. Houses that fit our requirements don't come up often in the small area we are considering.
Sorry for being long winded. So after many months of searching, we are committed to buy one at 750k, it is much bigger than what we set out to buy but is a real beauty. It still needs about 150k of renovation
So my questions is:
If we buy this house, the estimated house related bill (mortgage payment + council tax + utilities + home insurance) will be around £2200. Both me and dh only started working in early 30s so our pension is not an encouraging sight. We started in recent years to put everything over £50k into sipp. So effectively our salaries in only £50k each, i.e. around £6300 in total per month. So the house bill is over 1/3 of our income. Do you think that is manageable or a bit tight?
Our other household expenses amount to about £2+k, so technically, if nothing goes wrong, we should have about £2k spare each month. As mentioned, the house needs renovation, we only have £40k for renovation now so the other £100+k will need to be saved over the years to carry out the work in stages. Meaning that we won't be able to overpay the mortgage for at least the first 5 years. The renovation costs could also rise as material and labour cost rise.
Our mortgage term is 30 years. Meaning that if we don't overpay, this will take us into 70s. My question is, are we too old to take on such a big debt? 30 years is a long time and anything can happen. We have never been our of work but hey who can guarantee the same for the future.
If we don't buy this house, we can be pretty much mortgage free in 5 years time. Dh has to go back to office soon and now only need 1 wfh day. So, we could play it safe and stay and extend. However, my house is a bog standard 1930s house and after the extension would have reached the ceiling value of the street. The new house is oozing with features and characters. I am also thinking if it makes more financial return if we buy the big house. When we are old and want to downsize, the big house would have appreciated more in value.
Sorry for being so long winded and rambling away. What would you do? Bite the bullet and buy the new house, saddled with a 30 years mortgage but gained a dream home, or stay and be mortgage free in 5 years?

@SoundBar

I've done a full reno on a Victorian house, NEVER AGAIN. Because it's so old it's just never quite right. Always some weird damp or smell or wonky bit that can't be fixed. Grade 2 listed I would run for the hills!

The relief of selling up and getting into an outdated 1960s semi was physical..!

this is what we worried but hope we get lucky. the house seems to be in good condition, afterall the current vendor have lived there for decades. we are expecting to do upgrade (to modern comfort standard) but not expecting major repair.. did you know your house need that much reno when you bought? how much did you overspent?

@Embracelife

You want to continue to spend 5K a year on holidays which is an awful lot compared to many people

5k is only one week skiiing for the middle class
Who may then have two weeks in Devon and mini breaks in Italy....
Look on the ski ing thread.
It s not a huge amount or huge holiday budget comparatively to the income.

we always do budget holidays as we didnt have much money left after 2 lot of nursery costs etc.. we are able to have saving now that the kids are in school and we earn a bit more. I do notice that the inflation of holiday costs in recent years is real

@arootintootingoodtime

Ah, grade 2 listed. You're going to need at least a cushion of 30 per cent on any quotes made for renovation on the property as the vast majority of the time with listed properties, large costs are going to be incurred both because of the time delay (waiting for permissions) and that extra work will emerge as they start on jobs.

I did a listed property renovation and would not do it again.

why? did you have many nasty surprises?

We went for the bigger house in our 40’s with the plan of never repaying all the mortgage but selling when the DC leave home. Our plan worked well, we have the perfect house to live in and it’s gone up in value way more than our previous house. We borrowed the additional money as interest only so the extra mortgage amount is incredibly low. We recently cleared the original mortgage so now just pay £189 per month.
We do have a much higher holiday budget than yours and were able to pay a high amount into pensions each month.

afterall the current vendor have lived there for decades.

I love this naive faith that this means the house is sound
My father has lived in his house for decades...New owners will need to gut it

why? did you have many nasty surprises?

Well, even the surprises that didn't seem particularly nasty or big would take ages to get the right permissions to do the work, you'd have to pay extra for a specific company to do it with the "right" materials (i.e. acceptable for the listed status) and all that would add time on to the rest of the work, so you'd lose your other tradespeople in the meantime (who'd go off and start another site), etc. etc. and it'd suddenly all cost 20k extra.

*You want to continue to spend 5K a year on holidays which is an awful lot compared to many people

5k is only one week skiiing for the middle class
Who may then have two weeks in Devon and mini breaks in Italy....
Look on the ski ing thread.
It s not a huge amount or huge holiday budget comparatively to the income.*

We have 2 teens and spend a great deal less than 5K a year. It's not a great deal compared to a 155K income but that's not the point. The OP wants to continue to spend this much on holidays. She could spend less - many people do. This tells us that holidays (e.g. more expensive ones like skiing) are important to her and/ or her family. Taking on a very large mortgage could threaten those holidays and that is one reason to recommend caution with taking on the grander house. It doesn't mean the OP is doing anything wrong by spending 5K on hols

You won't need the home offices as much now you aren't working from home, do you want to make them a priority now they are no longer required?

Do you want the work required from a renovation, and the ongoing work and costs from having a larger house? Or do you prefer spending your free time on experiences?

I'm not sure what will happen with house prices, it seems like a bubble at the moment, no one knows if it will keep going up or settle down. Covid has pushed many people to consider upsizing, or brought planned upsizing forward a few years.

Think about how much being mortgage free would mean to you, or how much you would enjoy the new house. I would be cautious about going for a Grade II listed as they can be complicated and any larger house can be a money pit. You need to decide what is more important to you, being mortgage free or having a larger house. You could go for a middle ground with a slightly larger house requiring less renovations.

I don’t think I’d go for it. It’s a big expense to take on when you’re getting older and don’t know what’s around the corner. I guess I’m more wary of that as I developed a serious illness out of the blue in my 30’s. If you don’t even really need an office anymore it’s such a big expense for something no longer even really necessary. Of course more space is good, but I’d probably keep looking for something smaller personally.

Those 2 posters (maybe more didn’t read every single comment) making remakes about your income - this is a money page. Everyone’s income is different. Sounds like the OP and her husband have studied for many years to be in this earning potentially. Jealousy is ugly.

Our joint income is a bit less than yours, around 142k but we're in our early-mid 30's so a bit younger than you. I would absolutely hate to have that mortgage hanging over our heads, not to mention the commitment to renovation costs for 5 years. Our mortgage is 551 a month but we've started overpaying by 300 a month to get it paid off in 10 years. We probably live beneath our means housing wise more than most but we had much much lower incomes when we bought and see no reason to move now.

I guess it really depends on how important your house is to you, for me it's just important to be comfortable, warm and safe so I'm not worried about having a huge impressive house. Low maintenance is important too, keep life as easy as possible! I'd rather have the disposable income to be able to enjoy life freely and all the spontaneity that that affords.

Wouldn't be keen on the idea of using housing as part of your retirement plan either. You say your pensions are poor but if you're putting in 55k a year as you say in your 40's then you're well on your way to having good pensions by the time you retire.

Have you priced what it would cost to do an extension on your current house? A couple extra rooms could make a huge difference to how the space feels.

It sounds like you can afford it, but listed buildings are expensive to renovate. I'd get proper advice.
In your situation I'd also think about provision for one of you not working . I've had this nasty shock recently and am glad we are not overstretched. (Even though we cannot pay everything on my salary, at least we didn't double our mortgage)

Also. Builders have massive waiting lists and material prices have increased about 30%. I would not want to start a project now.
I work in construction and some estimates have doubled.
You will need very good tradesmen for your building.

You absolutely can afford it but recognise it may be at the expense of an earlier/more comfortable retirement and helping your kids with uni (which is definitely expected in your income bracket, loans are not enough to live on if they’re not getting full whack).

Only really you can answer this! We are on a bit less than you but similar ballpark and our residential mortgage is £1400 monthly. We manage it pretty easily and also have been investing £100pm/child for uni since they were born but we only have one car and spend less on hols and started proper pension saving about five years ago. It’s a case of you can have anything you want, but not everything you want.

I'm in my 60's and have several friends who were reaching retirement with an outstanding mortgage. The amount left to pay off is small by this stage, through inflation and repayment so most of them have paid it off out of their retirement lump sums or inheritances. DH and I paid ours off early when he retired from his full time job and started a part time one. We only owed £7k but it was good to see the back of it and actually own the house.

Hi Enessie, sorry I forgot to come back to this. The house was rendered outside and plastered inside so the surveyor can only see the finishes, not the structure. That's normal but a brick/stone exterior is a bit easier to see any issues.
As for the damp, the previous owner (or their "damp proofing" contractor) had made a great job of hiding it with waterproof dry lining and polystyrene insulation glued to the wall. When it was all removed the wall behind was wet as a sponge.