To stretch with a bit mortgage or be happy with a modest home?

[Clementiness]

London based; DH and I are in our 40s, first time buyers and have DC. We have the option of buying a nice (albeit small-ish) house in the home counties at the very max of our budget (which will be a stretch due to current rates but doable) or a cheaper flat nearer London, where we live now. We see the house as a place where we'd stay much longer whereas I fear the flat will be a cheaper option but somewhere we wouldn't want for the next 20 years, iyswim.
I don't know whether at our age we should just be more careful with our money and just accept life doesn't sometimes work out the way we want and go for the cheaper flat.

AIBU thinking I'd prefer stretching for the house?

Are there any middle ground options?

@TrashedSofa not really... the house we'd get is a 2 bed so not much in between. I wouldn't consider much cheaper areas as location is important to us

Do you have the difference in mortgage payments spare each month? If so I’d go for it.

As your dc get older costs for them will go up! Ime this is the best place financially you will be.... Spend what you can easily afford now. Does the flat have outside space for the dc? Will your neighbours hate you? Flat plus dc noise....

Have you stress tested your budget on what happens if inflation increases by 7%?

You need to plan for this scenario when looking into these purchases. I know many people who never did and now are facing the possibility of loosing their home now their fixed rate deal has ended or having to work well into their retirement.

Get the house you want if you can afford it. It’s a forever home and saves you moving.

Stretch yourselves because you can downsize if it doesnt work and because of your ages the younger you are the better the mortgage deal. It seems like you would move anyway when you outgrow the flat so if you end up moving because it got too expensive then you will also be paying moving costs anyway, too. As long as you can actually afford with your wages albeit it on a budget i would rather live frugally in a lovely home in a great location. So not just the size to me choose a good quiet location.

We can afford the house and still have spare income left for savings, it's just more expensive. We are still paying for childcare for one DC so when that's over, we will save a few £££ (although still need to pay for afternoon clubs and slightly more expensive commute).

Rough figures are:
£6500 take home pay (combined)

House would cost us £2500/£2650 per month with current rates, depending on deal
Commute for me would be around: £300 per month

Flat would cost us £2300£2400 per month ish (so not that much cheaper)
Commute from the flat would be around: £170 per month

Currently spending £1300 on childcare but in a couple of years that will go down to £600

The more expensive house will likely be more in value than the flat you are investing in your retirement to skrimp and save now for the better property.

I'd definitely get the house.

House!
flats are hell- service charge or share of freehold there are always issues imo.
I also think, given U.K. flats, houses are better to raise children in.

When we were FTB flats were selling for 30k small terraced houses for 40-45k.
We went for the flat. I wish we'd gone for the house.

I'd go for the house. If only 2 beds is there scope to extend and add a third?

Another vote for the house provided you are happy with the commute. A house is much better for a family and a better financial choice in the long term.

Go for house it's not too big proportion of joint salary.

Given the current climate, you need to do the sums for potential interest rate rises and make sure you can still pay in the event they go up. It is a positive that you think you can afford the house even with higher childcare costs so as you said, you will have a bit of spare cash to play with in the future. Do you both work in sectors where you will get decent pay rises in the next few years? That will also add to your income.

If you are happy with the above then I would try and go for the house.

Good luck x

As the difference is marginal I would go for a house with a decent sized garden if you can with potential to extend out the back in the future if you need more space, or into the loft.

A massive deciding factor here would be schools, your local catchment school, is it decent. Is it walkable. And Secondary too and colleges as this will impact the next 15 years or so for the whole family. Commuting costs can change / you could change jobs / work more from home etc so I think that’s not a big factor to base the decision on. Also will you all be happy with the change in lifestyle from city to suburb. There are a few threads on this worth a look!

Also don't forget that with a house you will have bigger maintenance costs than with a flat (even if flats come with a service charge). You need to work out if you have enough money after paying the mortgage if you need to fix the roof, upgrade the plumbing and so on...

Of course a house sounds better long term as long as you are able to cope financially. Good luck with your purchase!

The house.

Looking at your figures the house doesn't seem that much more of a financial stretch than the flat.

Personally I would buy closer to London if the commute time and reliability would be more consistent. When we had a DC in London I felt so much more comfortable knowing I could easily uber home from the office if the tube broke and be on time for nursery pickup. I had a colleague who lived in St Albans who found it much more stressful!! I guess things are slightly different now with more WFH but remember this isn't guaranteed forever.

I'd go for the house. Not much difference in the mortgage payment but much more benefits.

Do you have to pay management fees and ground rent for the flat?

Thanks all. It's interesting to see other people's point of view on this; it seems like a massive mortgage to us but we never openly talk about money with our friends so we didn't know whether we were overstretching ourselves with this. I seem to understand that the amount we'd be paying is not unreasonable for our take home pay (obv it would have been much less when the rates were lower :( )

Those figures are shocking. Not your fault obv but what a brutal time to be a FTB.

I’d go for the house. It’s not that much more and is more future proof.