Stretch for forever home or accept moving?

[Maybeforeverhome]

We have a combined net income of circa £10,000 pcm. We’re in our thirties, DH isn’t a FTB but I am and we’re currently renting. Our rent is £2200 pcm.

We’re currently TTC which means my income is likely to fall but DHs will increase over the next few years (for unrelated reasons) so it should balance out but it will mean more expense/outgoings.

We can buy a house for £750k with a 15% deposit and mortgage payments will be circa £3500 pcm. We will likely outgrow this house in 5 years. This means the expense of moving but also the stress and difficultly in trying to find a “forever home” in that area.

Alternatively we can buy a house for £950,000 with a 15% deposit, which would mean maxing out our savings. Mortgage payments will be circa
£4300. This would likely be our forever home.

Bills in both houses will be expensive due to poor EPCs.

What would you do?

The houses both have double glazing already. It’s just the nature of them being old houses and both three story. Both are recently renovated and don’t need any work doing.

What are you getting for your money?

2 beds? 3 bathrooms, large garden?

Can you explain the ‘extra’ features?

The house we can get in the area we want for £750k is too small to want to stay any longer than 5 years. Small kitchen, small living room (fits a two seater sofa plus armchair), one double bedroom, one single and then an attic room with very low ceilings which we’d use as an office. One bathroom, no downstairs loo. No drive on a narrow road that will be difficult to park on. But it’s the right location and the best we’ve found at that price point. The only way to get something better that we’d want to stay in longer term is by spending significantly more. The difference in house is huge, it’s just whether we stretch to that or wait and accept living somewhere that isn’t ideal and then moving in a few years.

Not in my area! These houses have gone up circa £200k in the last three years.

Where have I suggested I’d expect holidays etc as previously? The concept of stretching means cutting back discretionary spending in other areas. I haven’t said anything to suggest we wouldn’t do that.

Ok, so what you need is the bigger house, which % wise will raise in value more quicker - this should not be the deciding factor.

I think of you want the bigger house, then you are more likely to return to work once the baby is here - that in itself will take 12 months -
Then you take maternity leave and you have childcare fees for at least 4/5 years.

what you won’t have is impromptu nights out, take always and weekends away - fancy clothes, top of the range cars etc - have a think about that! You can live quite cheaply if you put your minds to it -

What are you prepared to sacrifice for the next few years to get what you want?

Once paid, you are back to two incomes.

4 bedrooms, 3 of which are double vs one proper double bedroom, one single and an attic room office. An en suite rather than one bathroom. A driveway. A bigger garden. A good sized living room which would mean we could have a few friends round at once and have space to sit! A bigger kitchen which fits a good sized dining table. All round much better house.

I think the concept of a "forever home" is really unhelpful.

We can't see into the future and circumstances can change dramatically.

I have always approached buying a home by considering what I can best anticipate our family needs will be for the next 5-10 years, whilst also being realistic those needs may change (and so will the property market).

Yes the cost of buying/moving is high but so is being in a home you can't enjoy due to the financial stress of ownership, then finding you sell anyway due to a new job opportunity for example.

On the flip side I've also never been ultra cautious in buying a home that didn't stretch us in expectation that (due to careers) our income would likely increase.

In short I think planning beyond 5years is optimistic and 10 years pretty futile.

Buy the home you need (a good house in a good area that has been consistently desirable) and you are unlikely to lose money on it especially if you can add value (as we did through extensions/major renovations).

My last "forever" home was 2 homes ago 😂but we didn't overreach for it. Now mortgage free and in a house that "should" last until we are ready to downsize for "the last ever house aka care home" but circumstances have a habit of changing and given where the DC's are choosing to live post Uni, we can see that post retirement we may look to move again.

Despite 4 moves in 20 years we've gained a lot of equity to the point of being mortgage free by being careful about buying desirable (not necessarily the most expensive but period homes and not estates/new builds) properties and adding value to them.

I would go for the more expensive house. Stamp duty and other costs of moving are high at that price point - and it's also much more stressful once small children are involved. We've moved into our "forever/20 years" house where we plan to stay until dcs finish secondary school (both under 6 now) and psychologically it's also nice to feel settled, to know that any improvements we make are things that we'll be benefiting from (not the next owners), our dc will have their childhood memories here, we will build a network and community in the area. It is not just the finances to think about, but how your family will experience it.

Your DH's income will increase, and yours doesn't have to fall. I would try to plan ttc to avoid 2 lots of expensive nursery fees at once. My experience has been that solid family homes in good areas are a good investment over a longer period.

”Forever” is a figure of speech rather than a literal statement. My point is more about whether the house would meet our needs long-term, for example with children and then teenagers and the more expensive house would. I’m not committing to never moving until we die! The other house would only meet our needs short-term so it’s inevitable we’ll need to move in a few years.

I think that’s quite personal on how much your circumstances are likely to change.

We have very secure careers. We’ve moved around a lot in the past and are now settled in this area where we plan to stay because it’s close to family and convenient for work. There’s no real reason for us to move. Financially and in terms of our careers it wouldn’t benefit us to relocate anywhere else. It therefore makes sense for us think long-term.

I also think”forever home” is an unhelpful phrase, but I understand it to mean it will meet your anticipated family needs, as you hope they will be in future.

The issue is - you can’t predict that far with any certainty. You may have difficulty falling pregnant (or may not be able too). You may have to spend a lot of money on IVF, you may have a child with special needs that requires money and/or your or your DH’s time, so one of you can’t return to the workforce.

Interest rates and housing rates could change. And whilst you say your jobs are extremely stable, any job can become unstable the longer time you need to consider. Even if the job is stable, the mental health of you or your DH could mean you can no longer do it. Or even your relationship may end.

No one ever wants to think of these things happening, and I sincerely hope they don’t happen to you. But the more I read Mumsnet (and see of life) shows that everyone thinks it won’t happen to them…..and then it does. And you only need ONE of these things to occur for you to be in a difficult
position. You need all of them NOT to occur to be fine.

it’s a big gamble to take, especially as first home buyers.

We started with a 35 year term. It sounds ridiculous but allowed us to get the house we wanted (our “forever house”, enough bedrooms, playroom etc) whilst also considering the expensive childcare years - I’m on mat leave now with baby 2 so income is down but my partner just got a promotion. We’ve kept our minimum payments affordable and have just about managed on a single income (and using a bit of savings), but when I go back to work we can overpay (although our rate is so good at the moment we will likely just put the extra into savings for now). Baby will be going into nursery so we can overpay even more when he starts at school in a few years. These are the most expensive years coming up for you.
How far you can stretch the term will depend on your age. I know that MN doesn’t like longer term mortgages but if you’re in a position where current affordability is important but you expect incomes to continue to rise then it’s a good solution. We have no intention of still having our mortgages when we are 70, it has just allowed us a lot of flexibility. I’d speak to a broker if it’s something you are considering.

I'm currently buying our forever home and selling our first so in a chain. The chain has collapsed twice so third time lucky. Moving house is a massive ballache in this country OP plus 2 lots of stamp duty in that bracket isn't something to be sniffed at plus the thousands in EA fees to sell, moving fees, surveys and solicitors fees. I vote to go for forever home if you can get it all out of the way in one foul swoop and on these salaries, you're not going to be on the breadline. xx (I also have a 4 year old and it's bloody hard work getting your house viewing ready with someone who's main objective in life is to seemingly make mess lol)

Although I will say before you go on maternity leave start saving heavily and make sure you have a year's expenses including mortgage payments in the bank. Also have a good talk about shared finances before you have kids if you're going to take a wage hit and facilitate his higher earning potential.

Good luck OP. Xx

Hmmm tricky one. I think that the smaller house is just not that practical and you will basically feel unhappy in it from day one. You don't sound as if you like it now tbh.

It is a very bit stretch to the next level up - is there nothing in the middle - I know in some areas there isn't. What could you compromise on? A few streets into the next area/no off street parking/smaller garden... If you are TTC then I wouldn't compromise on size of sitting room as you'll want to be able to invite eg your NCT group round or on a 4th bedroom as you'll want granny to be able to come and stay even though you have 2 teenagers of a different sex etc etc.

The fundamental issue I think is how the £10k pcm is split between you and DH. If its 60:30 him then things would be v tight but doable if you had to drop your hours a bit whilst DC are small. 50:50 not so much. Does DH have chunks of commission/bonuses and how regular and reliable are they? Could you delay TTC by about 3 years and commit to using most of these to over pay on the mortgage/save like fury to get that £100k to reduce it a bit? Admittedly it was a different market when we bought (as you can guess from the user name) but we did take a big step up at one point and basically saved half the value of our property over a 5 year period (paid one salary straight into savings and set very strict criteria for touching that money). That discipline paid off when we had to bridge for 6 months to buy our dream house due to a collapsing chain.

I'd look very closely at what the best deal would be - have you used an independent mortgage broker and if so have they looked at the private banking offers of some of the more niche banks - we got a deal from Bank of Scotland in the pre Halifax days when they wouldn't otherwise have crossed our radar? What level of deposit would bring an improvement in rate - if you cleaned yourselves out would family be prepared to help with a loan if something went wrong with eg the car - a frank discussion with parents and knowing that there was family support behind you makes a big difference to knowing that if something went wrong you are on your own. Can you take out eg a 40 year mortgage?

The cheaper one does sound quite small, is there an option C?

Even if the job is stable, the mental health of you or your DH could mean you can no longer do it. Or even your relationship may end.

Oh and this - get a decent income protection policy for both of you before TTC. I ended up with severe PND that left me unable to work - I'm still sitting at home on an index linked monthly payment based on my final income. Life would have been very grim indeed if I hadn't had that - and I'm not looking forwarrd to turning 60 when it stops 😥

If it was me I would widen the search area. There is more to life than worrying about houses- no pointing sitting in a dream home if you are worrying about money and can’t do anything.

Or could you buy a doer upper and just fix up over time. That’s what we did- still lots to do but house worth now more than double what we paid in five years.

Just go for stretching yourselves.
A driveway etc is worth having. Parking without one is a nightmare. Live on beans on toast.

I’d honestly buy the smaller house. Fertility issues are all too common, and if it doesn’t happen for you, would you want to be sitting in a massive house. We have a 3 bed house with 2 kids, it’s perfectly adequate. We’d rather have spare cash for experiences. You can’t plan for the future - we bought a home that suited us at the time and it’s still fine. You make it work with what you have. Don’t put all that pressure on your DH to earn loads; as sounds like you’d want to be at home or not work much.

Is that salary pre or post tax?

Personally I'd be cautious because it gives you options. That or wait until you've had the baby to move, save up in the meantime, and know better what you want and what figures you have to work with. Prices may have gone up massively the last few years but they seem to have plateaued for a bit now.

Really not a good balance of spending. Ditch the driveway eat nice food.

Older house buyer and seller here. You have no kids and are in your thirties. For goodness sake buy the forever home, this will save you so much money and pissing around in the long term. Livé be happy, take the risk. The place is renovated. Yes it’s terrifying at first but find a way to make it work. Location is everything. I would rather sit on the sofa eating beans on toast in the house I really wanted than hold myself back in the lesser house.

For me i wouldn’t touch a 30 year mortgage. 25 years max and I’d rather do a Dave Ramsey of 15 years.

Do you have 6 months of expenses saved? Have you got at least 10% of your income going into a pension? Have you got any car or credit card debt?

Despite 4 moves in 20 years we've gained a lot of equity to the point of being mortgage free by being careful about buying desirable (not necessarily the most expensive but period homes and not estates/new builds) properties and adding value to them.

The biggest factor is the fact you bought over the last 20 yrs tbf!