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?

I'd echo those advising caution with interest rates rising, and possibly a recession coming.

The question is do you easily have an extra £1k a month now given you are paying £800 a month?
Your current salaries and bonuses are huge at the moment compared to your mortgage.
How much is left over at the end of the month currently?

How much would you be borrowing?

Surely 1.8k month is a mortgage of about 380/400k which is less than 3.5 x the OPs salary. I don't think that's a massive mortgage compared to salary.

Will the bank even give you a mortgage which extends past retirement age? Even with a good pension this can be an issue.

Also, is there a compromise? Is the only choice staying put or this hugely expensive house in the country?

We would be borrowing 485k

Many lenders lend past retirement age if the pension income and equity is sufficient.

After all, its probably the most secure type of income as its guaranteed unlike a salary.

Thank you, these are my thoughts exactly

Can't seem to come to a compromise he's fallen in love with this house, me not so much I have never had that house feeling ever but I do think it's beautiful. The bank will lend, intact we could borrow more than what's needed 😯

What do you have in pensions and outside investments? Opportunity cost is also a risk. The move you pay for a home, the less you have to invest and save for retirement.

if this is your “forever” home, then you won’t be be downsizing to release equity to fund your retirement.

What about university for the kids? Do you plan on helping them?

So many factors. We’ve just done it at 43 and 39, taking out a 25 year mortgage but for us the following were relevant:

-We needed to move because we needed more reception/bedroom/work space and for various reasons, extending wouldn’t work.
-I am currently PT due to very young children (3.5 and under 2), but will likely be going back FT (or very close to FT) when eldest starts school in 2023 which will be more money each month.
-DH likely to get significant promotion, not sure when but within next couple of years.
-Our nursery fees are currently the highest they are ever going to be (1800 a month), but will reduce and then be zero in sept 2025.
-We fixed for 5 years at 1.29% (bought earlier this year) - so if mortgage rates are through roof in 2027 we know we will have the comfort of the 1800 a month no longer needed for nursery fees to Chuck at it.
-Our jobs are pretty secure but if the shit hit the fan and I lost my job or DH lost his, I could go back to doing what I did pre-kids which would double my salary overnight.

Maybe write a similar list to see if brings any comfort? Also sketch out any worries and then see where balance lies.

All of the above said, I do worry about the future/cost of living at the moment and we are actively making cutbacks, particularly as our house needs a lot of work.

if it’s going to give you sleepless nights it might be better to wait for the world to calm down.

also, think about the cost of petrol/time ferrying the kids round off you’re out in the sticks. Most rural properties are also oil central heated (though with gas prices the way they are at the moment I’m not sure which is worse!)

good luck and let us know what you decide to do

We would be borrowing 485k

That's a better rate than I expected tbh.

by my very basic calculations

£800 per month on the current house x 12 months a year x the 19 years you say is outstanding = around £180k current outstanding mortgage.

you could be mortgage free in 6-7 years if you used your £30k per year bonus’ to make lump sum payments. Keeping all £110k income to live off and save.

this seems far more appealing to me than taking on a large mortgage and also allows you both in 7 years time roughly to reduce work hours or if you don’t want to to hugely increase pension payments etc.

if it was me, I wouldn’t be buying the larger, more expensive property. It’s easy to dream how lovely it would be but the financial burden would be a lot of stress I feel, into relative old age.

Thanks you for this, it makes complete sense to me and I will talk to DH once hew cheered up. We've had a good chat today and he's agreed it's to much of a financial burden, he's gone off in abit of a sulk but says he's just disappointed but knows I'm right

£485k is a bit more than I expected to be honest. <£400k would be ok on your income I think (unless you’re anticipating school fees for youngest) and more than that I’d be very cautious too

Presumably 50%ish of the bonuses is immediately eaten up in tax and NI so I don’t think this calculation is anything like realistic. Even if the bonus was right at the max of your (quite wide) range every year this wouldn’t clear the mortgage in 7 years.

Yes we get around half of the bonus, we are putting it all into DH pension as i cant bare to give so much to the tax man

The proposal to pay back til nearly 70 instead of nearly 60 sounds awful
This and this again. At 40, the idea of working and paying until 70 didn't seem so impossible. At 55, OH and I are so massively grateful that our mortgage is paid and we can start to consider retirement at 60. The idea that we had to pay a large mortgage for another 15 years would be just horrific.