House that we can afford but outgrow or stretch ourselves?

[gillyweed]

First time buyers. We have 1 kid, 1 on the way and 1 more in the future hopefully! Both have pretty decent jobs with progression opportunities (that are a little out of reach to me at the mo because of the babies!) but dp is pretty certain of a promotion soon. Bring in just under £50k between us. In the North West.

We are stuck before we even start looking; banks have said they would lend around £160K but when we look at repayments for that we would be really struggling.

Do we buy a terrace for around £100 that we will almost certainly outgrown in 5 yrs, or stretch ourselves and go with a higher mortgage for a bigger house - either way we want somewhere that needs work and we can add value to.

Just after peoples experiences really; did anyone stretch themselves and regret it or pumped for something they could afford a d wished they'd pushed themselves?!

TIA!

Can you buy a semi or end terrace that has the potential to be extended? We bought or house thinking it would do is for a few years but property prices have shot up locally but as it is an end terrace we are able to extend it for a lot less than moving to a bigger house in the same area.

Oooh I don't know but we have a similar dilemma (or at least hopefully will at some point this year) so I will watch with interest.

We're second time buyers now stretching ourselves as our first time buy turned out to be the completely wrong choice.

How much would you be stretching yourselves? Would you be able to afford the mortgage and any repair bills coming in?

Can you/have you done a strict budgeting spreadsheet?

Tbh the only reason we can stretch to our new home is because we go without any luxuries. No holidays, only run one car, cheap mobiles that cost £10 to buy three years ago. No smoking, no drinking, no gym membership etc. We also buy a lot of clothing secondhand/from eBay.

hmmm I've done a budget but only for this year, should I do one that covers a few?!

yep end terrace is a good idea, or at least room to expand!

We don't really have many luxuries and I'm very frugal as it is - I'm worried if we stretch ourselves we'd have no life at all tho. And what if there was an emergency or repair urgently needed, then where do you find the money?!

i wouldn't stretch right now, unless you have a cast-iron plan for increasing earnings in the future - overtime, definite promotion?

interest rates can only go in one direction at the moment...

I should add that we're a family of four in a little 3 bed terrace, and it's fine. stops you accumulating piles of crap that you don't need.

I totally sympathise, being massively risk averse myself... Our mortgage is about 2x our annual household income, and it's very manageable, even though we're tied into a high fixed rate, and we're still dealing with old debts. And to be honest, I think a five-year timescale to upgrade or move on from a first house is fairly normal.

I do think there's a shift of mentality from renting to paying off a mortgage. You find that your mortgage (and council tax) are non-negotiable, so everything else becomes fair game for savings: washing at 40degC becomes a luxury; the second car or gym membership is suddenly completely frivolous! If you're still into upgrading mobile phones, or have sky tv, or even if you shop for food or clothes without sticking rigidly to a list of necessities, then you have room for manouvre.

Have you considered casting your net a little wider than you'd originally planned? We had to move a bit out of town, and away from our old friends, to get the house and the lifestyle we wanted for the money we could afford to pay. Actually, some of our friends saw the benefits and followed after us! We pay a bit more to commute, but it's more than compensated in our reduced mortgage payments.

Hi
I'm totally risk non averse so we bought the right house for us really long term. This is our third house, and we have found that we've spend about £15000 each time we've moved, on stamp duty and all the many many hidden costs. I personally think it works out cheaper to get it right and stay put. My bezzie has done the opposite and moved loads, it is sometimes disheartening being in a house when you know you won't be staying long term, and restricts you putting your own stamp on it.
We achieved the stretch by going for a really long term mortgage, til we're about three hundred years old. We will downside when the kids leave home anyway, so it's all a bit academic!

From experience I'd say don't stretch yourself too much. It's easy to think 'we'll cut back on luxuries' but it's hard to do it.
A property that you could extend in the future is a great idea.

I am really surprised you only going for a 100k property on such income.

*a high

Personally I wouldn't stretch - but I put a high price on not being tied to my job, freedom etc.

Hmmm...have to say I really regret not stretching ourselves when we were FTB.
We would be In a Much much better position now if we had.

We are on house 2 and facing another move. If we had stretched ourselves first time (pre DC) we could've stayed there rather than move when dc1 was born.
We would still have moved eventually but probably missing out this house saving £££ on moving costs, decorating etc. Also would be able to have done it with longer mortgage and lower insurance premiums as we'd have been younger when making the move to the forever house.
Or to cut a lot of waffle short, moving is expensive and stressful. If you can avoid it do so in your situation, assuming confident on work situation I would buy the long term house.

I would buy a 2 bed semi that has room at the side to extend to build a third bedroom at a later date. That way you get your 3 bed but don't waste money on removals, estate agents fees, stamp duty, new mortgage arrangement fee etc.....
All your money goes into increasing the value of your asset by xtending.

Buy a terrace with future potential for a loft conversion / extension
Advantages:
Lower capital outlay means you are not paying the Stamp Duty you might if you bought a house that was already as big
If you extend or improve a property yourself the Council tax band doesn't increase until you sell to new owners - so you may save in council tax if the extra space would take you into a higher band.
You can spend the money on an extension or loft conversion when you can afford it, and increase the size of your home without the enormous costs of buying, selling and moving!

As a FTB 5 years ago I stretched and bought 2 bed house rather than a flat/maisonette. No regrets here. As house prices are rising (London), the gap between smaller and larger properties is becoming just larger. And moving is very expensive and disruptive.

I would look at smaller houses with potential to extend to the loft or side.

Wow thank you for all the responses! A real mixed bag!

Does 100k not seem like much considering our income?!

The difference from 100k to 150k would be 3-bed terraced to a 3-bed semi, probably in a bit more of a nicer area too, so we probably would stay a bit more than 5 yrs.

However we only just have a 10% deposit so on a 150k house we're easily talking 800 a month repayments. Would we have no life to speak of if we sent for it?!

I can't comment on your particular finances or your spending or whatever (and you don't mention whether you have debts), but, in principle I would say to strecth if you feel able to.

The costs of moving are enormous, as I'm sure you will start to appreciate! The non negotiables like estate agents fees (when you sell), stamp duty (when you bhuy), solicitors fees and disbursements(when you buy and sell); and then the necessities like needing new curtains and blinds because yours don't fit, and all that kind of stuff.

I remember moving from our flat to our first house and not realising that the vendor was taking her washing line with her, all of her curtain poles and tracks, and having left my lovely integrated kitchen, I then had to buy dishasher, washing machine etc for the new house.

I am definitely not moving house again. When we bought the one we currently live in, which was nearly four years ago, we stretched ourselves enormously. We also fixed our mortgage, so that we knew what our outgoings would be, and did sensible things like not touch a proportion of our savings as that was earmarked for "if the boiler breaks down" etc.

Also, when you are in your "I'm never moving again house", you know that everything you buy for it will be for your benefiit and not for anyone else's.

In your position, I wouldn't stretch to buy property unless you'd be willing not to have that third child if you couldn't afford to.

Depending on your DCs age gap, you might find you are off the career ladder for a while and might even want to reassess your family priorities with three young children. A bit of leeway with the mortgage will allow either of you space to consider dropping your hours etc.

IMO far better to have the number of children you wanted in a house you can comfortably afford (even if it is a bit cosy, shared rooms etc) than to have a 'better' house that you work all hours for and which compromises the family life you wanted.

If you are in it for the long game, you need to take schools into consideration - if that can be tricky in your area.

If you are good do-er-uppers and DIY-ers you could buy something, add loads of value and then move to your semi before you have to apply for a school for your eldest?

I am quite risk averse so take this with a grain of salt. I would find a house that you can afford and that can be extended in future (side or rear extension or loft extension)even mid terraced houses can be extended in these ways. Depending on where you are, you can add up to two bedrooms in a loft conversion even in a modest terraced house if it is a standard Victorian L-shape. Also, ask yourself what would give you more pleasure in lifebeing hand to mouth with no holidays or luxuries in a large house or being able to go out with your children to activities and take holidays while living in a more modest house. I think people need a lot less space than they think they doas long as you can figure out storage you might be surprised with how little space you can live in comfortably.

I would stretch to buy.

We moved from London to a cheaper property in Kent and we really do not like the town. It is now difficult for us to move as we have very little equity and no savings. The house is worth exactly what we paid for it

We could have stretched ourselves and stayed in London/outskirts of London. We are probably paying the difference in travel fares/petrol anyway .

I have not admitted this to anyone in rl. I feel embarrassed that I am so unhappy here. We are not part of the community as all our links are in London. It does not help that dh and I commute and travel to London at weekends.

Nobody visits and most of my friends comment that we live too far. Meet ups always take place in London so I do a lot of driving. Feel very cut off at times.

For me it would depend on how secure employment was and how likely the future promotions were.

Have you factored in child care for three kids if you're planning on three?

Part of me thinks stretch as the financial implications of moving in a few years shouldn't be underestimated, estate agent fees, legal feels, stamp duty. But as others have said interest rates will go up next year if not this year.

What would you do if the car needs £500 of work to keep it on the road? If you needed a new boiler?

I would stretch. £800 seems like a very low mortgage anyway. That's less than £10k a year. Which leaves £40k just on bills, food and fun