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?

Well obviously, I'm not writing a budget sheet out on here 🙄.

Council tax takes nearly £300, food £800, savings £200, fuel £200, so yeah, it's pretty month to month. Happier now? 😂

What is your school plan for DC. I would have this near the top of my pro’s and con’s list as time will fly by so school and associated wrap around care would be key for me.

Definitely the house. I moved out of London 5 years ago to Surrey and have never looked back.

Id probably for for a shorter mortgage deal at the moment as rates will go down

@Plankingplanks we have a similar mortgage, we do earn more but have higher childcare costs & I would never call us cash poor. Although granted I assumed you included CT & fuel in “other house expenses” as 3.8k on bills is pretty high. I’m fully aware I have the option of cutting back on savings, treats & food shop etc.

The house 100%. I’d never buy a flat unless I had no other option. I always remember my friend at work being so stressed because the owners were all arguing over how to use this fund to fix the roof. Landlords didn’t want to pay out etc
Flats also seem to be the first to drop in price too.
Then you’ve got service charges which you may barely see a result on. Go for the house!

Schools all the way. Which option gives the best access to a good school within walking distance

Schools are good in both areas. The are closer to London (where the flat is) has more amenities and it’s overall an easier walk to most schools and then station, whereas the other one is a longer walk to both (doable but not as easy as the other).

@Plankingplanks sorry to ask but how are house expenses more than £2500 per month on top of mortgage???? I’d assume bills are something around £500-£600, then insurance, some maintenance etc, maybe £1000-£1200 max in total. That amount seems incredibly high unless you live in a mansion?

I did the opposite - moved to London as a young adult after trying a couple of other UK cities, now live in a tiny flat in zone 4 as it’s all I could afford as a solo buyer. I know some people with 4 bed houses outside London and honestly their kitchens alone are bigger than my flat but I wouldn’t swap it. Been here a decade now and no plans to leave.

With the cost of everything rising the way it is, that mortgage just feels too high for your salaries. It’s over a third of your income. I know that banks will loan 5 ish times your income but I really wouldn’t be keen. Do you have savings in case one of you is laid off unexpectedly? How would you save for a new boiler, heating system, roof repairs etc?

What rent do you currently pay? I suppose if you’re used to paying that out already then maybe it’s less of a risk.

Personally, I’m not the greatest in terms of money (tend to generally work to live) but I always need to know that there is never any risk of our home being in jeopardy. Our mortgage (only taken out last year) is around 15% of our take home pay. Yours is going to be close to 40% and that would worry me.

@Throwaway1234567890000000 not sure where you are based and when you took on your mortgage but if you are a first time buyer in London and nearby areas with a 10% deposit, it’s not very realistic to think you can take on a much cheaper mortgage. We have dc so cannot buy a tiny flat

@TedMullins I would also rather a flat in London that a 4 bed much further out. I suppose we are trying to find a compromise with a smallish space but close enough to the city

To be fair things are different for people trying to get on the property ladder now. It's a shit situation. My mortgage is also 15% of take home pay but I'm mid-40s, fairly advanced career wise and bought first home in 2004. So it's different. I imagine people with much bigger mortgages cut their cloth appropriately because they have to.

if you are open to widening the search to other areas of London that are cheaper you could find a property big enough for your needs that’s close to the city. Crystal Palace, Penge, Forest Hill, Sydenham, Beckhenham, West or South Norwood, even some parts of Croydon (Addiscombe and Purley are less grim) are all quick transport wise into London without being in the back of beyond. I’m sure your budget would get you something decent, even a house in some of these areas.

I’d go for the nicer smaller house as you might not be in a position to upgrade in the future and moving house is expensive and a lot of hassle. We bought at the top of our budget and I don’t regret it. Different if just buying big house for sake of it

Go for the more permanent move. We did that 10 years ago and haven't regretted it. I wouldn't want to move now with prices the way they are; to get an extra bedroom, keep a similar size of garden, same area and not too much work, i'd have to easily double my mortgage.

If I was going to get into that much more debt, i'd rather spend it improving this house to my taste. I probably still will never get my ultimate dream home as the thought of spending that much money is horrible, I know that this house does what it needs to do and has many good points.

Our mortgage (only taken out last year) is around 15% of our take home pay

Most people can’t hope to buy a house with a mortgage so low due to salaries vs prices & for many a mortgage even an expensive one will be the same price or cheaper than rent!

As someone who bought a 2 bed flat in London and then struggled to sell it when we had children and wanted to buy somewhere bigger further out, definitely buy the house now. It took us 18 months to sell our flat and it was a nightmare. You have to factor in ridiculous service charge costs with a flat. Plus moving can cost up to £10k depending on stamp duty, removal costs etc. Its really not worth it if you’ll want to move again soon.

I moved from Norwich to London when I was 18 and moved out when I was 33. I loved living in London for many years but couldn’t wait to see the back of it in the end. London is not a great place to bring up kids at the moment.

Will the two bed house be a permanent/long term move if you have more than one child? If yes get the house.

I also am struggling to see how this is affordable. Our take home pay is £5800 a month, mortgage £900, bills £500, childcare £750, food about £500 a month (two hungry boys!) and we seem to barely have any money left over every month. What you’re saying your costs will be are crazy! But I I guess that is how mortgages are at the moment.

Haha yeah I knew that poster would be someone who lives somewhere cheap or bought ages ago. People just have no idea what it’s like now or what the alternative in London/SE is.

Our mortgage for a 5 bed house is approaching 4k in zone 3, about 30% of take home. Rents are so insane now that we would probably be spending >2.5k a month on rent for a 2 bed flat in undesirable zone 2 not near the tube if we hadn’t bought. Tbh I think we have a good deal.

Starter flats aren’t worth it anymore because leasehold is so shit that either you have issues with the freeholder or can’t sell easily at the end, and you would have to pay two rounds of stamp duty, which for us for was >35k. Fed up of people giving totally risk averse advice who are totally oblivious as to the current situation.

@MrsAzza Your numbers don’t add up… if you take home £5800 per month and have under £3000 per month of fixed expenses, where is the remaining £2800+ going? How can you say you have nothing left, am I missing something?

@Eigen I also think people who have bough ages ago or that live in cheap areas have no clue of what it’s like now

I have worked in the mortgage sector for 23 years. I completely agree with what you just said.

I have the same argument with my parents who moaned about 15% mortgage rates on a mortgage of 1.5x Dad's income and Mum worked too! I know it felt painful to them, but we're now looking at 5 x joint salary just to buy a small family home now (or more of a multiplication).

After paying for our car, adding to savings, paying for two children, and general life expenses there really isn’t much left. I don’t know how someone could afford a £2,500 mortgage (plus fees for a flat) but if you can afford it then it’s no bother to you. It just seems like a crazy amount of money. However we were lucky to secure a 5 year mortgage in 2022. But honestly don’t buy the flat! Flats in London aren’t a great investment despite everyone telling us it would be. We lost £10k when we sold ours and we had it 6 years. Plus service charge was £180 a month!