Am I being over cautious?

[Itsonthestairs]

Me a DH earn decent salaries, 110k combined income with an annual bonus of usually between 10-30k. We're both late 30s with 2 DD, one 17 and the other 7, no more planned. We have 19 years left on our current mortgage and pay 800 a month (we could definitely pay more or reduce the years quickly). DH has found his dream home and wants to move and buy a property which would take our years upto 30 and mortgage repayments of 1800 a month, this is without any further interest payment rises. The house is gorgeous and would give us the lifestyle we crave but I cant help thinking its a really stupid thing to do right now, he says I'm worrying over nothing, we can't predict the future and 'everything will be fine', we live in a decent house which we like but don't love, and have very little other debt, am I being over cautious? Would you just take a leap of faith and go for it? Or wait till the economy settles down (hopefully in anotht year or 2), but potentially loose the lifestyle you would like in the longer term?

What's your future earning potential? And job security?

How much equity would you have in the new house?

Could you fix for a decent chunk of time, and ideally still overpay?

I would proceed with caution and it would depend on answers to some of the points above.

£1800 sounds like a lot on those salaries to me.

We pay £1300 on similar salaries (albeit 4 children) and given likely interest rate rises I feel this is high enough

I would also be astonished if the economy settled down in only two years

I don't think you are being overcautious.

Interest rates look like they will go up rather than down for the next few years, and inflation is definitely eating into disposable income. Plus how do you feel about paying a mortgage until you are in your late 60s? Your roles are secure now but would you still be able to earn the same amount at 50, 55 or 60? And don't forget a bigger house (i am assuming it is bigger, sorry if otherwise) comes with greater running and maintenance costs.

If your annual base salary is 110k combined.
With an extra 10k+

So take home 9k pre tax
You spend £800 on housing

How much money have you both saved to date?

How much of your monthly spend could be reduced to cover the extra £1k

The bit that stood out for me was "would give us the lifestyle that we crave". What does look like? We have a combined salary of around 75K and have a mortgage payment of a touch over £1800. We love our house and lifestyle but our is 3 DC in state schools, a few UK breaks a year at Center Parcs, air BnB and caravan parks, we meal plan and shop at Aldi, very basic TV & mobile packages. I do feel things have tightened a bit recently with energy prices but not so much that it's had a huge impact on us. What I'm saying is you seem to be looking for a different way of living altogether. I would look at how much you think you'll spend on this new life and see if it's affordable.

The economy is unlikely to settle in the next 2 years but you could fix your mortgage to reduce some stress. The concern would be job stability. As for the length of time, it's longer than I want to pay a mortgage for but lots of people will have only just repaid their mortgage come state retirement age. Could you overpay? Or consider downsizing later?

I don't think 1800 is a stretch out of at least 6k a month. I assume your LTV is good? I would take a fix & overpay.

would give us the lifestyle we crave

Always very sceptical about this phrase - you need to focus on your life, not your lifestyle.

You can clearly afford more on mortgage, whether that will improve your life or not only you can say.

We pay 1500 a month on similar salaries and it’s fine. It will be even better once we no longer have to pay for childcare (youngest DD is 3 so not long to go now).

To be honest there is no right answer to this question though, it will depend on your individual risk appetite.

We bought a house at the very top of our budget (we literally spent every penny we had and had no savings left) on a 40 year mortgage (only way the bank would agree to lend us the money) when we were early thirties. With hindsight it was a good financial decision but it could also have gone the other way. If I’d asked the question on Mumsnet I expect I’d have been told not to do it!

In your shoes I’d buy the house and overpay the mortgage but I wouldn’t blame you for wanting to be more cautious.

At your age with your income I'd have done it, but committed to using our bonus to overpay as much as allowed. I'd fix for 5-10 years & I'd make bloody sure it was a brilliant house for ALL of us, including when the youngest is a teenager & the eldest is still at home.

The proposal to pay back til nearly 70 instead of nearly 60 sounds awful; that would put me off. If the term was the same it’d be more appealing.

It doesn’t have to be like that if you can afford to overpay though. A lot of people take out a long term but then either overpay or plan to downsize in future.

How does it give you the lifestyle you crave? Surely having a lifestyle is having enough disposable income to do things you love/enjoy and you'll have less money. In fact it's not just the mortgage it'll be all the new home furnishings you'll want for the new home. In this climate I wouldn't be moving anywhere personally. How secure are your jobs?

@Galliano it depends whether they are likely to get pay rises that mean they can overpay/use their bonuses to overpay. If so the term is fairly theoretical.

Our jobs are very secure but I'm at the top of my earning potential. DH is not and is confident he will continue to progress.

We currently live on a modern estate in a town, the current house although a 5 bed detached is jam packed in amongst others, we've renovated in over the years to a high standard and with house prices climbing its given us around 185k equity.

The house DH wants is in a village, its a farmhouse with open fields a community shop, tea room and pub, lots of community events and a real sense of togetherness. Bike rides from tbe door step.

We both do save, I have a public sector pension and DH has a private one we both also have a LISA which he pays the maximum into and me around half.

Good point.

If you're not currently overpaying your mortgage then you should either have a lot of savings or you're currently spending a lot of money on something that you might have to give up to buy this house.

If you have the savings, can these go towards the new house?

Or if you don't have the savings that your income suggests you should have, are you willing to cut back on what you currently spend your money on to fund the more expensive house, which may also cost more to run, heating, maintenence, insurance etc?

As there’s no mention of overpaying the current mortgage I assumed it was unlikely they’d suddenly start overpaying the larger one! Of course they could overpay either mortgage but the fact they are proposing extending the term rather than keeping the same term and having higher repayments suggests they can’t commit to affording higher repayments

Check carefully on the local plan for the area etc that those "open fields' aren't about to become a housing estate. I know so many people who have bought their rural idyll only to find themselves surrounded by developments.

We haven't overpaid our current mortgage but have reduced the years every term instead, we have 2 LISA's and a stocks and shares ISA. We have bought items outright such as a new car. We don't borrow for holidays, house renovatuon etc everything is paid for from our salaries. I was brought up with my grandma who always warned me of debt and I think its rubbed off on my to the point were I will save for something I want and not just get it on credit!

We could definitely overpay on the current mortgage and I have said to DH, we are so wasteful with money and that discussing moving has made me realise we could pay alot more and pay this mortgage off in 10 years. Overpaying on an 1800 pound mortgage is somewhat a stretch and would leave me feeling vulnerable especially with interest rates set to rise

In the current climate, I don't think I would be wanting to stretch for a 'nice to have'.

This is my thought, pre the world going to sh*t I would have gone for it. DH has his heart set on it and is only looking at the positives, I for one don't want to be paying a mortgage for another 30 years

Does the dream lifestyle include ferrying about teenagers to and from your current area in the evenings and at weekends? That would be a massive disadvantage to me, and realistically is what will end up happening - all rural parents seem to end up doing this.

You are most definitely not being over cautious. Will the 30 year mortgage at £1800 pm still be desirable at retirement age? Will 65+ you/dh feel less burdened than now having paid far more into housing than necessary rather than other important areas of your lives? I think not.

If you can afford £1800pm why not pay an extra £1k off your mortgage (if there's no penalty fee)? Or save £1k towards house deposits/uni fees/driving lessons and cars for your DCs?

Is your eldest planning to go to university? You will have to support them financially through that soon.

Is the £1800 mortgage fixed for 5/10 years? How will you cope with interest rate rises?

Now is not really the time to be taking on a big mortgage. Interest rates are going to rise significantly. What if one of you gets a long term illness or loses your job?

I’d enjoy your comfortable lifestyle now, without the awful stress of not being able to afford the mortgage and potentially losing your house
.