Buy Cheap & Move Soon, or Pay More & Stay Longer

[RatLady]

DH and I are looking to buy our first home (both of us are first time buyers). We have a large deposit (£100k) and are planning to pay £1000pm mortgage. We were wondering which of the following options is better:

1. buying a home that costs less than £160k in order to pay off mortgage in 5 years, and then eventually relocate to a nicer home and location once we can afford to buy in cash or
2. buying a home that we would prefer to live in longtime/for life that would cost more (the homes we like cost around £240k+). But that would mean we would be chained to a mortgage for longer and also end up paying more because of accrued interest.

As first time buyers it seems that we're saved from stamp duty on our first home. Also, buying once (or at least longterm) means that we don't have to spend so much on solicitor's fees, moving costs etc. So these are arguments I can see for the latter.

Any advice? What would you do/what did you do?

Buying a house is a stressful old business - I think it's supposed to be having children, getting married and moving home as the top 3 stresses in everyone's life - so why do it more than once?

As you have rightly pointed out, no stamp duty and only one set of legal fees.

If you sell, you also have to pay estate agents fees.

Then there is the moving day - a massive pain, as well as everything that comes after a moves - redecorating, new furniture etc.

Our moving costs came to about £10,000 inc. stamp duty.

Do yourself a favour and buy somewhere better

The stress-factor is definitely worth a consideration - chains, surveying and gazundering etc is stressful to even start thinking about let alone do twice!

DH is more tempted to go with option 1 as costs are at the forefront of his considerations, but I'm more with option 2 as I'd like to really settle into the home and make it ours rather than know that it's temporary and we'd be leaving in a few years (therefore would be less likely to renovate/decorate as desired).

I would say option 2

Selling is so annoying and expensive

Put me off for life and I'm moving to house #2. Being a FTB was so much easier I'm comparison....never again

The first time you buy it's not punishingly expensive, especially as there's no stamp duty. Moving again is much more expensive. Plus there's a certain amount of potential extra expense every time you move - you might need to redecorate, replace a kitchen, change the boiler or central heating. I'd go for option 2 as long as you're not stretching yourselves too thin.

Although you may save interest on option 1 as others have pointed out you then need to factor in moving fees and stress. Plus not knowing what the housing market does over the next few years you have no idea how easy it will be to buy and sell.
I would personally buy a house you can stay in for the long term and over pay the mortgage when you can.

This may sound a bit like "how long is a piece of string" but how much can you overpay on your mortgage before you get penalised, and what are the charges for doing so? Is there a % cap on the overpayments or does it tend to be a lump sum?

My mortgage allows 10% of the balance to be overpaid annually. Once my kids leave home I plan to remortgage and drastically reduce the mortgage term to pay it off quicker.

If you can go to the top of your budget, with wiggle room, I would! This assumes you find the house if your dreams

Moving house is costly and expensive and REALLY stressful.

Good luck 💐