Should your always stretch to buy a house?

[Rivergreen]

Name changed as I appreciate this is going to come across as complaining my diamond slippers are too tight, but here goes... (I realise I am in a very fortunate position!)

My DP and I are ftbs, currently looking to buy. We've spent our twenties and early thirties moving frequently for work, and have never been able to settle anywhere until now. So we have been able to save a healthy deposit.

Where we are currently looking, there is a shortage of four bed houses, so there is a large gap in price (typically 50-75k). We can afford to buy at the lower end of the four bed house range, but you're obviously getting something that needs some work. Alternatively, we can buy a three bed of "better quality" and save a lot of money. We do not currently need four bedrooms (no kids yet, and no short term plans for them), but we have been drawn to four beds because they tend to have larger rooms downstairs. Our current rental feels a bit pokey, so space has become a bit of a thing.

When I say "afford" I am talking about mortgage payments being the same as our current rent. A three bed is tempting as we do not need a huge house and paying less each month would obviously be lovely (although not particularly necessary).

However, I have always been told you should stretch yourself for your first house to put yourself in the best position for the future, but is that really true? Would you buy a house bigger than you need because you can?

Regardless of the house we go for, it is unlikely to be a forever house.

as its not a forever house you are looking for and you have no children i would go for a three bedroom put some money into increasing its value and then when the market is better and there are better four bedroom houses available as you will be paying out less each month and can put away more savings you will have a better choice of properties in the long run, short term compromise for long term gain

Buy what you like and don't commit either way? Our first mortgage we were able to overpay so we did and knocked 5 years off the term of our mortgage. It also meant that when we took out a bigger mortgage on the next place we used to paying the higher amount.

Depends on how much time you want to be in the rooms whether their size matters. If you go out lots or if you want to host friends.
I’d personally go for a three bed that needs a kitchen and bathroom or something that will add value. Then when you are ready you could extend or go into the loft space and make a master suite and study up there. Or start putting away the extra you’d need to put into the four bed mortgage and see how you get on. If it constrains you too much at least you know you can’t afford a four bed! Good luck with your first home

I was going to post 'yes, stretch yourself' because property is usually a safe bet and you want to climb the ladder to your forever home in as few a number of rungs as possible. Makes sense, moving incl stamp duty is expensive.

But now I'm not so sure. Right now I'd wait to see what happens post 31 October.

I think it would depend what work needs doing on the four beds and how long you'd be happy living in the area before moving on. If it's just cosmetic work and you're handy with a paintbrush and willing to get stuck in you can do most of it yourself and save a lot of money.

Bear in mind they'll be an upper limit to what a house will be worth in any given area even if you make improvements. If you're looking to make some profit in order to buy your forever home, research sold house prices and historic listings for nearby houses. There's no sense buying a house at the upper end of the scale for the area then putting in a high end kitchen if you want to sell in a couple of years and expect to recoup your money.

I would arrange viewings for both 3 and 4 bed houses and keep an open mind and see if any stand out to you. We ended up going bigger than what we needed when we bought 5 years ago, knowing it was a bit of a do-er up-er and don't regret it. It's not our forever house, but it's in a good location and feels like a decent first house.

I think the stretching comment is really weird.

That aside, are all the 3-beds quite identikit and none available with better proportioned rooms? If so, then I'd probably get a 4 bed. A little project can be a good thing: you can do the place to your liking and add value. It'll also last you longer.

If the mortgage payments are the same as rent then it isn't really a stretch given you've saved up the deposit.

If you've been used to paying that amount in rent, and still live as comfortably as you'd like to, then I'd go for the bigger house myself.
Means you'd be less likely to 'need' to move (though you may choose to). Buying and selling at the same time is incredibly stressful, not to say costly, so if you can 'miss out' a step on the housing ladder, it makes sense so to do.

Sorry, I mean saved up the deposit while paying rent. That means you will have money leftover to save/spend on the refurb.

If you'd be happy in both houses then that is all that matters .

We could afford a much bigger house now after years of being skint but we are staying here because it's home and tbh we like having more disposable income and unexpected bills etc aren't a disaster anymore.

Depends on the future though

If you want children then you’ll need income for childcare and maternity leave or even being a stay at home parent

If you don’t plan children then a 4 bed may be too big for you and increase in bills healing etc

Long term, houses are usually an excellent investment, though I doubt we’ll ever see the astronomical profits that we did in the 1970s & 80s again.

However, bubbles and crashes do occur.

There was a major crash at the end of the 80s, early 90s, and it was very very bad news for those who had over-stretched.

Even the experts aren’t sure what direction things are going to go in after Brexit. I wouldn’t risk much of a stretch right now.

Don't buy a 4 bed house when you don't even have plans for kids. A bigger mortgage means more interest to service it, so you're paying rent on those empty rooms.

The bigger the house the higher the running costs too, council tax, heating bill etc.

I didn't want to live in a "guilded cage" where I had no money for nice things. In retrospect we should have stretched ourselves a lot more however that was years ago. We would have benefited even more from the ridiculous house price increases. Nowadays it's too uncertain.

I'd probably do as a pp said. Choose somewhere that you can extend and improve. Then you have the choice to stay or move depending on the economy or your circumstances.

Thanks all. Lots of points to think about, some which hadn't occurred to me.

To clarify, we can afford either type of house. We do plan on kids in the future, but not anytime soon. And we can afford the equivalent of our rent on one salary, albeit buy cutting back on nonessentials.

The third option would be to buy a three bed in one of the more desirable parts of town, but the location actually isn't great for either of our commutes so we scrapped that idea. You're only paying for old and pretty there anyway. We're happy doing cosmetic work ourselves, don't fancy buying to do something up from scratch though. Our work lives are too busy with frequent travel to do that atm, so we need to be able to live in it comfortably whilst doing the work.

A house has come on the market though that is a detached three bed with a part integral garage (upstairs comes over the first quarter of the garage). Perhaps something like that would be ideal as it looks like it needs some cosmetic upgrading (new bathroom and ridding of old person decor) but there's potentially space to extend over the garage in future if we wanted to make into a four bed / increase value for the future... Lots to consider!