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?

Go for the house if you've done all your contingency planning.

With that take home pay why have you never bought a house previously? In your forties is quite late to be ftb and you must have been earning well previously to be at that level now?
I'd go for the house also, though it seems ridiculously expensive for a two bed.

Probably for the same reasons that I bought in my 40s. I/we have been spending a lot for rent (many years well in excess of £1k a month before bills which isn't huge for the SE) so saving for a deposit has been hard especially when I've also had student loans to pay, commuting costs, salary hasn't always been high and spent periods of time living alone which is expensive. My DPs salary in particular has increased massively since we met 10 years ago.

All of my friends who bought 15-20 years ago either had a partner to buy with (so two people to combine deposits and able to get a decent mortgage) or had some money from family (or could live rent free) - sometimes all 3! I didn't have this neither did DP.

Good point, I suppose I was lucky buying young with a partner. I think for the op, moving to a cheaper area seems more sensible rather than getting such a massive mortgage with not much time to pay it off or it increase in value

Don’t forget to factor in council tax as well.

I would never ever live in a flat. House all the way for me
On your figures you can easily afford it and Im betting mortgage rates will be going downwards again

@indianwoman we couldn’t buy sooner because of everything @Princessvelour said

House! buy the house. In the future if you want a flat (we have recently bought one ) you will have far more equity and also easier to sell. We love our condo, but we retired and live in the caribean and our house equity allowed us to retire this year at 55 and 56 years old and buy outright and have a nice interest cheque every month for living expenses before our pensions kick in a 65. Buy the house every time over flat unless you are downsizing as retirees

Our mortgage is just under £2300 a month (just went up from £1800 as reached the end of fixed rate term) our joint take home pay is higher than yours, and that increase hurt!

How old are the DC? Assuming they’re still very young as your childcare costs are high and will reduce, I’d go for the area you’d feel most happy settling in long term so they can have the continuity through school.

Hmm I went the other way as a 12 year old From an Essex village to east London for my dad's work. I'd not stick my kids in dodgy schools in unsafe areas just because there's more to do for teenagers Can you tell as soon as I was grown I gor tge hell back out of London. To a commuter town funnily enough but plenty goes on here

100% the house, there’s so little in it cost wise - about £300 from what you were saying about mortgage and commute costs - you already know your childcare costs will halve soon plus maybe you will pay off your student loans soon and have a few hundred extra a month that way too? We have just moved out of London and it’s actually incredible what we are saving by not constantly getting food, coffees and entertainment out (there was just so much to do and spend on in London vs here, but we love here even more, there’s not nothing to do but less, and it’s often free like community things etc.) . Being in the house you want is important and will save you moving costs longer term too.

Also slightly morbid thought but might you one day inherit any money from parents which might mean you can set your mortgage term to a long time knowing you can probably pay off a bit more later on?

I'd go for a house, but honestly look at commute house price map as you could definitely get a two bed house in south east London for nearer £1500/1700 a month. Also depending on how far away you go you could actually also be paying less on nursery. In SE London we have to pay £1490 for 4 days further north side of London that same childcare is £1000 so also take acct of childcare costs and likelihood of space.

To add, if the house is in an area where property values will go up quickly which is sounds like it is, then at some point before long you’ll hit the 60% ltv and be able to get a much better mortgage rate so you’ll save a couple hundred a month that way too. 100% the house!

Flats come with service charges, but houses come with maintenance costs.

To offer a contrary view, I now live in a flat post divorce, and it's where all the teenagers end up because of its location.

Don't underestimate the opportunities that older children have in London.

Flats aren’t a great investment in London currently & it would be pointless buying one now to sell in a few yrs. Go for the house but maybe look at outer London boroughs

Go for the house. 3 bed would be ideal though.

Whichever is the freehold option.

If you think you are likely to get or keep getting pay rises in the future I would go for the house.

I would look at cheapest outer South East and East London Boroughs
See if you can afford a house and can you get a mortgage longer than 25 years? You can reduce the term when your childcare bill goes down.

Think about maintenance and council tax, especially if the house is Edwardian or earlier. Honestly we’ve spent a crazy amount on roof etc.

Yeah, flats haven't been a great investment in that neck of the woods in recent years. Unless they're amazing maybe, but it doesn't sound like that's what OP is looking at.

I agree with this. We take home £6400 between us. Mortgage is only £2000 and we don't pay childcare (but do pay £300 in buses etc for kids). We don't have a lot spare after bills. In fact just heating, hot water, house insurance, maintenance for the boiler, alarm, and other house expenses come to over £2500 more then there's savings, shopping and treats. We feel like we live month to month.

There is not a lot good about being property rich and cash poor.

@Plankingplanks youre not living month to month & cash poor if you have 1.6k leftover each month for savings, treats etc.

With small kids a house with a garden is always the better option if you can afford it. You’ve put Home Counties but if seaside nearby isn’t important (which some Home Counties have and others don’t) then look at Bedfordshire, there are some lovely villages not too far from train stations (if the commute into London is needed) and it’s cheaper than many of the other places around. It’s actually an excellent place to raise kids and much cheaper than nearby Hertfordshire, for example!