Intermediate or forever home next?

[squirrelclub]

We are planning to buy a new build house and have a few options but I am not sure by how much to stretch ourselves and whether to buy an intermediate or forever home. Please help!

The mortgage advisors we have spoken to seem confident all are doable but I feel really worried about taking on a lot more mortgage debt with Brexit, etc.

The main options range between £355k and £415k. All are 4 bed detached with a garage, en suite, and downstairs WC. The lowest priced one doesn't have a utility but the others do.

There's also another house at £330k and approx 1005 sq ft - it's a 3 bed with a garage, utility, WC and en suite.

For background - we are both 30, have one child and would like one more in the future, work in professional jobs (so earning potential should increase in theory) and have approx. £80k-£90k equity in our home. Therefore, all of the above require a massive mortgage but can vary the term so the monthly repayments are about the same and manageable.

Based on the above, which would you go for assuming all are affordable?

I feel like we should go for £330k house but it's probably smaller than our current house so it seems a bit silly but it does offer us a lot of things ours doesn't (no or low maintenance, better outdoor space and detached being big priorities for us) but DH is more inclined to stretch to one of the more expensive ones so we don't have to move again in 5 to 10 years.

We're just going around in circles so would be grateful for some external input.

We bought every house we had with the idea that if anything happened we could live there forever. First house 2 bed, one child arrived, sold and bought a three bed. Two more kids came, and stayed there until the oldest two left home, we'd planned that one as a retirement home. But moved back to UK so have another 3 bed. Living here we want to downsize in a few years so we still aren't done.
Look at which will last you the longest. Should you be there forever.

I would say go for the four beds, if your worried about the cost then go for the small four bed. The mortgage payments won’t be vastly different at 20k more but your overall plot will be better and you’ll have more internal space albeit no utility. But long term you would be better to go for the biggest most long term you can afford. If prices drop after will be better off in a long term house rather than trying to sell a house that’s a few years old.

We live in a new build 3 bed of a similar size with utility, but with 2 kids it’s manageable but not ideal we are currently extending to get more space as in an area where nothing is selling.

Go for the four bed, think of the thousands it will cost you in stamp duty to move in 5 years.

Pick one of the ones with a bigger plot and think about extensions and garage conversions you might be able to do if needed.
As pp said, look for something that will see you through, either as it is or one that has the potential to offer you all the space you might want.
For example if the plots on the smaller 4 beds are better I’d probably go for that and convert part of the garage in a few years etc.

If it’s a new build think about parking too, get a plot which has good space for off road parking if possible.

The cost of stamp duty and moving costs are very high so if you can stretch so you don’t have to move again .

Eg on £400k home stamp duty is £10k plus £5k moving costs legal fees, removal and mortgage fees.

So therefore if you think you need to move in five years will have to find at least £15knplus extra cost of the house

I'm also with you husband, moving is hugely expensive, I'd go for the bigger house now and start paying it off.

We went for the bigger house - new build townhouse with 2 double bedrooms on the top floor, master and study on middle floor rather than whole-floor master/en suite on the top and study/double on the middle. Now we're having a baby it means we've still got a spare bedroom to use for guests or more likely as a playroom with sofa bed.

I’d go for the best house you can afford now and crack on with getting the mortgage paid down.

It’s silly expensive and stressful moving house.

Don't forget to factor in school catchments! (That'd be the deal breaker for me).

Do you have a safety net in the form of family to help out financially should the unexpected happen, such as twins, redundancy, health problems, divorce? Do you both work full time and is that your intention for the future? And are you sure a new build is your best bet in the current climate? They often depreciate or not increase in value as much as other homes and once the attraction of the white goods and glossy finish has worn off, you can be left with small rooms on an estate where nothing happens and you are reliant on a car for everything.

Are you generally risk averse with money OP? How about your husband?
In your situation I would draw up a budget for different scenarios - eg. small mortgage now, need to move in a few years, and big mortgage now, stay forever.
I did this and it helps to see that the costs of moving can far outweigh the short term benefits of a cheaper mortgage for a few years.
However both options you describe seem a similar size - 4 bed, so unless you need to take out the bigger mortgage for size / location why would you?

I would future proof as i think interest rate rises are likely and potentially increases in income tax. We wanted to move this year but as it was an intermediate move we decided to stay put. Also depending upon the area, once you take into account stamp duty etc I think it will be harder to make money on a sale.

Given that you are talking about (relatively) small differences in price I would go for the best you can afford with the idea that you don’t have to move again. There are no guarantees with markets that you CAN sell if you want to and moving costs are high as pp have said.

I do think it would be daft to spends thousands on costs to move to a smaller house than you have currently!

Thank you for the comments - they are really helpful.

The houses are in our village where we have lived for five years so absolutely no issues about the location. I do think they are the best option as the only ones that come up which would consider are priced at £320,000+ and need a lot of work (although perfectly habitable - so new kitchen, bathroom, carpets, plastering over Artex etc). I think the premium for a new build isn't too great and we're so busy with work and family life that we just haven't got the time or inclination to renovate.

Yes, I'm very cautious with money - so is my husband and he's satisfied that spending less than 25% of our post-tax income on a mortgage is fine. We can afford mortgage plus bills (ex. childcare) on my salary, which is the lowest. I work 0.9 FTE at the moment. We would be fixing for 5 years and taking out a long term (30 years) but overpaying as much as possible per month with the aim of repaying the mortgage in about 15-20 years. Accident/sickness insurance seems to be £14 pcm to cover the mortgage so that possibility could be covered.

We were spending about £100 less than this recently on our mortgage plus a car loan but we own the car now.

The only thing that has really worried me is the twins comment... 😂😂 But we're not planning on another until our toddler is 4 or 5 so not an immediate concern.