Would you consider doubling your mortgage (in cost per month) ??

[mosschops30]

We really need to move. Live in a 3 bedroom house and have no.3 on the way. Although we can manage where we are its not ideal.

So weve been looking for a while but because when we finally move it will be pretty much long term, as we know we will have children at home for at least 18 years, so the next house will be our final move before retirement, so weve been pretty fussy, we know what we like, what we want and where we want/need it.
However all the houses we see have some little niggle, apart from the ones out of our 'price range' (we had said no more than 250k.
The ones we really like are 320k, which would mean our monthly mortgage payment would double and we would have to increase our current years left (16) to 22 years, although we would still only be 56 and 58 by the time it was cleared.

Would you do it? Or is it too much and too risky? It would stretch us but not so we were living on the breadline (i think)

. . . and as for 'certainties' of pay rises, inheritance, reduced outgoings - there are no certainties in life (apart from that saying about death and taxes)! God forbid, obviously, but health can fail, accidents can happen and not just to wage earners but to dependents who then need to be cared for. You need as big a margin as possible.

I think the thing about buying the most expensive house that you can is good advice if you have safe jobs, with reliable wage increases, and with rising property prices. but at the moment most people dont have those 3 things.

Im fairly comfortable with doing potentially risky things with money, but I wouldnt go for an interest only mortgage.

Have you looked at a current account mortgage? Depending on the amopunt of money you have moving through your account they can work out cheaper than standard mortages, so you could find yourself paying off more capital than you could on a standard mortgage.

I should add that we have only ever had a repayment mortgage that was a maximum of 3x salary.

It is a tracker mortgage so although we have extra atm I am saving it for a time when the interest rates go up.

It is only dangerous advice if you don't factor in being able to afford an interest rate hike.

Also, the cost of moving must be factored in.

There are tracker mortgages available atm for 4% above the base rate thus 4.5% which is about average over th last 10 yrs or so (although avrage 20 yr rate ar about 8).This is ok but even an increaase in the base rate from 0.5 to 2.5 puts pyments up by 44%.Now is not the time to be extending debt

at the risk of sounding like kirsty alsop i'd buy something cheaper but with 'potential'

you can't extend your current place but you could find a new property with the option of a loft conversion or extension or putting in a scond bathroom.

that way the improvements are made gradually overtime when you can afford them and are put on hold anytime money is tighter.

but that's me.. i like having as small a mortgage as possible because then i don't have to have nightmares about DP losing his job or me getting pregnant at the wrong time in my contrat and only getting SMP and no job to go back to.

Would any mortgage company even let you what with mortgages being so hard to get at the moment?!!

I think you shouldn't personally. Unless your jobs are very secure public-sector type roles where redundancy rarely happens. Or unless you really enjoy counting the pennies (I don't, I hate it). Your dc's are young and they get quite expensive later.

i absolutely wouldn't but then a "dream" house is nowhere near as important to me as the flexibility you have when you only actually need a single income to cover essential outgoings inc. mortgage.

12% interest rate is not extraorindary - as others have said, there are trackers currently at 4% above base: the base would only need to be 8% for interest to be 12%

If you can't afford 12%, you can't really afford this mortgage. Don't be lulled into a false sense of security with the market as it is. In 2 years your taxes will be higher and there will be no child benefit - interest rates will be higher and house prices will fall. I'd put money on it.

5 people sharing one toilet is not really a 'nightmare'. When I were young, people with a toilet INSIDE were posh.

Agree with MP

If you have number 3 on the way, you have several years of childcare costs on the way (I seem to recall you are a nurse, not a sahm?), so this is not a moment i would take on a big expensive mortgae.

Can you keep looking? Can you find something within your price range (and below the crucial stamp duty threshold) that would be suitable for loft conversion / extension once you have more disposable? Because then as well as not paying stamp duty on the extra investment you make yourself, your council tax band will not rise to take account of the new space! Council Tax band remains the same, despite your own improvements - and only rises when you sell to the next owner.

My DH has a relatively good salary for where we live. Not rich but comfortable.

We have bought a house with a mortgage at 3.5 times his salary even though we are old. We did this just before the crash when 3.5x was a "sensible" multiple. It's a good house in a lovely area. We worked out all the costs carefully and bought what we could afford. We knew things would be tough to start with but I thought I would start some part time work very soon. Our DS2 was nearly 18months at the time.

Unfortunately just as we did all this I was diagnosed with a very serious illness which has not only put paid to any chance of work for the past two years and the next one at least. It's been very expensive indeed. Childcare costs have been hideous. There are many other extra costs to being ill.

We have made it through OK but only just. We've had a lot of financial help from parents, which is very odd in your forties. We could easily have borrowed more when we bought. Fortunately we had considered the costs at 12% before going ahead. Had we not done that we would have been completely stuffed.

This could happen to you. Work out how you would deal with it before going ahead.

Get a porto loo

thanks all, and I know many of you making very sensible suggestions.
We have been out for a drive, past said property

blu like I said in earlier post, chilcare costs are actually becoming less for us now, due to changing hours when I go back, with similar pay but less time out in the week. DD is virtually self sufficient at 13 and ds now in full time school, so chilcare wise we are better off than we've been for the last 4 years IYSWIM

the house we like is empty, and need some work (inside, nothing major) which may enahnce our bargaining when dealing with the agent. Its been extended already and is the kind of thing we could improve over the years and would make a womderful family home, we could stay there til we're 80

however we are mindful about the pittfalls, if dh lost his job, would he get another? The difference at 12% is double again so would be 2k pcm .

Moving to a cheaper area from where we are now is a step backwards
moving somewhere to extend, in where we want to live, also not really viable as most of them are on new housing estates (apart from this one) so minimal space in either direction
Council Tax would maybe be one band different, but we are already 3 bed detached in good area, next to area we would like to move to.
I see what you mean about the stamp duty, but unless we bought another house virtually the same as ours, we're gonna have to go up to the 3% bracket

dh is going to speak with his father this week to see what he thinks, he's very good with looking at the worst case scenario and is happy to say just what he thinks, and dh trusts him and the decisions he's made so guess will wait and see.

What would you do if interest rates stayed above 10% for several years running?

sell up and rent I guess. The house we're looking at isnt overpriced by any means, house prices round here have dropped consdierably over the last year or so.
We have £120k equity to put in, we'd either come out with that and have to rent, or lose it if sales plummeted to stupid £££

If your dh did lose his job - you could rent a room and have a modest income of 4k per year (tax free) from that - although it would mean one more adult in the house at least you could have a back up plan. If thats suitable.

Could you get a flexable mortgage and pay extra to start - just incase?

ivy would you have a random adult living in your house with your 3 kids? Maybe Im paranoid, but I wouldnt. Also wouldnt have the space, unless dd had moved out or the younger two shared.

Id rather stay where I am than that option.

Yes - and I have done to keep the roof over my head. I would rather that than be on the streets which was my choice.

I was careful as I have two girls.

I have since had several students living in the house for short periods and have had another lodger for two months. The last having had a full crb check.

Only you know if you can afford to live on whatever's left over at the end of the month (even taking into account an interest rate hike).

On paper, the thought of doubling your mortgage sounds scary, but if your mortgage is only 50K, say, it isn't that big a mortgage to double! (Dh and I increased our mortgage by ten times four years ago - it went from 15K to 150K!)

It doesn't sound to me as if your current mortgage is that huge and you are a relatively young family still. I would make hay while the sun shines - while you and your dh are still young and future prospects appear ever more provident.

Personally I believe in stretching to your most sensible limit... you have to live in this house for many years to come and as a growing family you will need ever more space.

If the mortgage will be paid long before retirement then I can't see what the problem is. I don;t know about the nature of your dh's work but nursing is a fairly stable profession employment-wise.

Let's face it, we all take a risk when it comes to borrowing money, but if your risk is calculated and takes the worst case scenario into account then the greater risk should ultimately lead to the greater gain, not to mention your quality of life.

What mortgage would you get? Why don't you believe that mortgage rates could be 12%?!!

mp I don't understand this either.there has been another lull in the downward spiral of property but really the crash hasn't even started and is only being temporarily halted by labour yet again keeping it artificially inflated at any cost to keep voters

I agree with you noddy

But when you've been around for one property crash you kind of realise it's inevitability

And when people say "Oh I could sell" well, you know, if your house is worth 60% of what you paid, it isn't realistic

It's so easy for it all to get to tipping point

In ye olde days, there was no option to pay 'interest only' and I doubt it will last as a viable option

the only point of it I could ever see was if you planned to renovate and sell v quickly.It is like renting from the bank and paying all the maintenance and you are relying on a rising market to pay it back.I really think prices witll fall sharply in about 18 months and then rise v slowly after that so IO could leave you really in trouble.