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Property/DIY

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Original poster

Location, location, location or finance, finance, finance? Help me decide.

47 replies

KirstyAndPhil · 15/10/2010 14:03

Our house is under offer and we have viewed two very different houses which we are considering offering on. I am in a real quandry deciding between them so I thought I would see if the wisdom of mumsnet can break my mental deadlock.

The first house is uber expensive but gorgeous. The owner may accept our offer on Monday. It it in one of the nicest streets in our neighbourhood. It is next to our local park and right by DC1's school and all our local friends are within 5 mins walk. It is 3 mins from the Tube which we use to commute each day. It has wow factor but is tired and needs work. To buy it we would need a mortgage that is nearly 5x our combined salaries . We could get that mortgage but the repayments would nearly cripple us. I would work full time, we would not have holidays, we would have to watch every penny. Our lifestyle would really change. But we would be surrounded by friends and the park and transport links and we would have a lovely home.

The second house is in a much less nice neighbourhood about 20 mins walk from here. The house has less of a wow factor and is slightly smaller but it is also lovely. We could move in and do no work at all. We would not even require a mortgage to buy it so it our lifestyle would be unchanged and I could go down to 3 days a week at work. However, it is 20 mins walk from the park, 25 mins walk from most of our friends, 25 mins walk from the school and a bus ride away from the Tube. I love the fact that in our current neighbourhood I pop into friends houses and meet them in the street. Kids call for DC1 on the way to school each day. That would all be lost. The street it is in is quite nice and is full of family homes but the neighbourhood is much less nice.

I am so indecisive at the best of times and this choice is such a hard one. I know I am very fortunate to have such choices so I am not feeling at all sorry for myself, I just want to get this right. What would you do faced with a similar decision?

OP posts:

Fiddledee · 15/10/2010 18:08

Are you sure you can get the mortgage. We have just arranged a mortgage, we have a 75% deposit, so only a 25% in mortgage. We were only offered by the bank that we have banked with for many years at first only 3 times one income (they had cottoned on we were going to pay for private schools), it has been raised to 3.25 one income to the same amount we borrowed to buy our current house. We have worked out we could still pay it if interest rates rise to 5%.

Have you got a mortgage in principal otherwise nobody will accept your offer in this market.

magichomes · 15/10/2010 18:51

This reply has been deleted

Message withdrawn at poster's request.

violethill · 15/10/2010 19:01

Yes, remember when interest rates do go up, they're likely to go up a LOT

Swedes2 · 15/10/2010 19:06

I think neither house is suitable. Wait for something to come to market that's in the right location and a little more affordable.

CristinaTheAstonishing · 15/10/2010 19:17

No. 2. Ther's nothing wrong with the house apart from not having the WOW!! factor. When you live in it day-in-day-out that would be less important than having the money to go and spend lavish holidays in other people's house with the WOW! factor :)

Laquitar · 15/10/2010 19:43

sorry but at 20 min walk from tube and friends!
That's quite short for most of us.

I would go for no2. My motto is 'keep life simple and easy'. With no mortgage you can even use black taxi!

Want2bSupermum · 15/10/2010 19:54

I would put in a lower offer on house no. 1, something that is affordable on one salary. After they reject it leave the offer on the table and walk away. Sell your home and move into rented accomodation (6 month lease) and keep looking for something affordable in your area. House prices are not going up right now. If house no1 hasn't sold within six months I am sure they will call you.

mylovelymonster · 15/10/2010 20:29

Agree completely with Want2bSupermum. Don't buy a house you don't really want! And if the first house doesn't work out, there will be another one along soon.

lalalonglegs · 15/10/2010 20:57

House 1 sounds lovely but, at that price, you would start to resent it. House 2 sounds as if it has too many compromises in terms of location - I'd keep looking or do what supermum suggests.

lalalonglegs · 15/10/2010 21:03

You must be in London as you mention the tube which means that the difference between a house in which you could be mortgage free and one that requires a 5x mortgage is likely to be 100s of 1000s of pounds - surely there must be somewhere in between the two?

sonotboden · 15/10/2010 21:15

if you are used to not having any serious money worries it is really easy to say "it would mean no holidays" but it would be worth it.

it seriously is horrible living like that. sorry but you really really would be mad to take on that size mortgage at the mo if you have the choice of not doing it. The wow factor is not so wow if it needs money spending on it still and you cant afford to do it.

if you really want to move, find something between the 2 and save some money up. would also add that if you can be mortgage free and work in the public sector for gods sake take that- how would you feel with a 5 x mortgage and being under threat of redundancy? no house is worth it if you cant sleep at night and live on value beans

Original poster

KirstyAndPhil · 15/10/2010 22:34

Thanks everyone.

The offer we have put in on house 1 is already 12% below asking price. The only reason she is considering us is because our buyer is chain free and she wants to move quickly. She refused the offer a couple of weeks back but said if she didn't get something better in three weeks she would reconsider. So there is no way we could get more off the price. Things are not hanging around on our local market.

DH laughed when I read him this thread and pointed out I had got my sums wrong. The mortgage would be just over 4 times are combined salaries. Not just under 5. It sounds like most of you would still think that is too much.It has been approved though, a five year fixed rate at 3.99%.

Our jobs are as really pretty safe. It is highly unlikely we would lose them. But I accept there are other risks I can't minimise; such as illness or death in the family. Ultimately I don't think DH's parents would ever see us out on the streets but we can't make a choice based on the assumption that they would bail us out.

OP posts:

cat64 · 15/10/2010 23:49

This reply has been deleted

Message withdrawn

Quattrocento · 15/10/2010 23:56

Think you are a bit nuts tbh

Your DH is in his late thirties? You have safe public sector jobs? So you're never going to make a significant jump in salary. And you are entering into a multiple of 4x JOINT earnings on how long a term of mortgage? Are we talking 25 uears? Because that's a whole lot of years when you are in your late thirties.

Original poster

KirstyAndPhil · 16/10/2010 08:22

I haven't already decided Cat. Hence the indecision and doubt in each of my posts. I am sorely tempted by house 1 because I love it and because I think you climb the ladder fastest by stretching yourselves. But I am far from decided.

Quat, we can expect our salaries to rise quite considerably on promotion. We are both recently-ish promoted so the next chance is probably about 5-8 years away but we are both likely to continue up the ladder. Also DH's parents won't live forever and we are likely to inherit from them. So its not 25 years of debt at this multiple of our income.

But you are all probably right nonetheless. What multiple of joint salary do you think is acceptable risk? For most people is it 3x combined salary irrespective of projected future earnings?

OP posts:

Mooos · 16/10/2010 15:40

There is no (longer) a ladder.

Mooos · 16/10/2010 15:41

Thank goodness.

Doozie · 25/10/2010 16:55

No way to option 1 - wake up, you're living way beyond your means. Admitting to basing your financial planning on your IL deaths sounds a bit vulture-esque too.

Option 2 - is promising, 25 mins walk is not that debilitating and you'll all be fit. Also what's stopping you from making local friends so you'll have the same close friend set up as now?

Option 3 - keep looking - you never know what potential is around the corner.

Good luck.

TheRealChopin · 25/10/2010 17:54

Don't count on an inheritance. A friend of mine did that and it ended up that her mother had to sell her house and use the proceeds for her to live in a care home. My friend got an inheritance but it was a fraction of what she had thought.

Appletrees · 25/10/2010 17:57

Depending on your age, number one. I think every mortgage should be a stretch for the first two years. If you can see clear after that two years, then go for number one.

specialmagiclady · 25/10/2010 19:30

I say that you need to find something in between. Could you "downgrade" to a 3 bedroom house in area 1? How many are in your family? Could you survive without a full time spare room? Or do a garage/loft conversion in the longterm

We live in an area that sounds like your area 1 and I would find it a real wrench to leave and would really advise against it!

I would say better to compromise on house size/beauty than area. After all, a big house is a money pit, maintenance-wise. If you're in the right place for schools, social and commuting, your quality of life will be compromised by moving out of that area.

If there are, say, modern houses on old bombsites or 3 bed houses that haven't been loft-converted in the area you want to be in? Could you wait for them?

On the subject of "oh we could afford to go private in house 2" the same things apply - redundancy, illness of dp, dcs, or protracted illness and non-death of the crumblies. At least if you're in the right location from the get-go you don't have to suddenly move when the kids are 9 to get into the academy down the road from your old house.

I wouldn't go for the hideous mortgage unless you really know - and let's face it nobody does - you will be able to pay off a chunk in a couple of years' time.

notsomumsie · 28/10/2010 17:26

5 x salary is just too much.

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