London Mortgage - are we crazy?

[EllaWt]

Hello,
I realise this will seem outrageous to some of you but I could really need your wise advice.

DH and I are about to buy our first flat. We live in London and despite Brexit and all , it's still really expensive.

We both have good jobs and a joint income just short of £300k/year . We also both have good earning potential in our jobs. We're young-ish too being both 32. No kids but hopefully soon.

We're about to buy a flat for £1.2m with 15% deposit and have secured a good rate.

Part of me is excited but part of me think we're mad to take on an approx £1m mortgage. The flat itself is in a very special and desirable location and can be turned into a gem with a little TLC

Doing all the maths, it's do-able on a monthly expenses basis and we're pretty much wiping out our savings.

If all goes well, we should definitely be more comfortable in a year or two once we'd had bonuses etc... but it's still so much money and risk to take on

I really don't know if we're doing the right thing or just being overly optimistic, silly and overstretching ourselves.

Our parents are not in the UK and we have no one to give us advice really. Has anyone here done something similar ? Does this all sound crazy to you ? or do you think it's fine?

Thank you SO much

To borrow that much I am sure you would need to put more money down.

I deal in property and I would have thought it isn't just about how much you earn but about how much you put down especially on a large amount.

I would think a bank would need 30-40% deposit not 16% when borrowing that amount because if you defaulted the bank could easily have to reduce it 20% just to get rid of the place and they have their fees to cover as well

The bigger they are the harder They fall

@Oliversmumsarmy i was surprised too but honestly with 15% this is pretty much as good as it gets for rates for us. We could put more down like 20-22 but rates dont change so our money is better off elsewhere (we work in finance , DH did all the maths so we're pretty comfortable with that

@Oliversmumsarmy
We’re just borrowing over 1M on a second home and only putting 20% down. Getting a mortgage wasn’t a problem. Maybe depends on the part of the coutry?

I am in London.

Hm... strange

I know some couples who like the op didn't put down more as the rates didn't change & put the 5% or so difference into investments. Maybe it depends on earnings or job titles? I know someone who got a buy to let mortgage with a very small deposit due to their job & likely increase in earnings where others I know have needed 25%.

I think what threw me was you saying it was a prime area.

For me prime areas are Chelsea, Knightsbridge type places.

I used to live near Highbury when it was all flats and bed sits.

Visited a house there about 5 years ago and it has definitely changed.

Sorry it didn't work out OP. thought you got some really good advice on the thread. Good luck with your search.

Oliversmumsarmy, we borrowed over £1m and the bank asked we put down a 20% deposit. We weren't asked for 30-40%.

@Blingysolightly i did yes! I'm new to mumsnet and you guys are absolutely brilliant. Thank you thank you thank you

I also imagined Chelsea, South Ken etc. I don’t know Highbury but I’ve never heard it have a reputation for being prime. If the properties have generally been subdivided in flats or bedsits, I’d have a snoop around to see if there’s much of a community or just transient renters.

I imagine it’s near Hampstead Heath which is of course naice and pricey (but yes not prime London in the traditional sense of the word which is more Mayfair/Kensington and would be impossible to get even a one bed for that price).

Sorry to hear that happened OP - hope you find something else soon.

I know I’m awful, but I just don’t want to live outside zone 3.

And that’s why I have a flat. And I don’t want to clean a house.

Hopefully, people with 7-digit budgets can afford a cleaner

But anyway, zone 1 is a different vibe from down 3 and a different vibe from zone 5. So whatever suits.

Highbury is near Islington not Hampstead

I wouldn’t buy a house/flat/maisonette in central London due to the pollution especially with potential children on the way. Easy to put out of your mind but it’s there. You can afford to live somewhere less polluted.

Oh sorry I thought OP was referring to highgate! Yep agreed on Highbury

Go for it!

I lived near Highbury and it's lovely there, great community feel and great for families. Ultimately we moved away as there weren't many good schools, not even private ones. You have to do the school run to Hampstead or the city, which didn't appeal. If you are thinking of children, definitely reconsider.

Anyway, there are definitely some houses available for £1.2m around the Highbury area.

Ok this is more expensive but maybe you can negotiate them down
Elwood Street, Highbury, London, N5
www.rightmove.co.uk/property-for-sale/property-63848715.html

@happychange we saw this one but you wouldn't believe how inflexible all the sellers we've seen are! It's like come on it's a risk for any buyers to buy now...
Can't you compensate them a bit for that?!?

You make a really good point re Highbury and schools. Bring childless for now , I (naively perhaps) think that by the time I do school runs I will be able to afford someone to do it for me or a car service of sorts

Even if you have a nanny dropping children off, you might not like them to spend loads of time commuting. Children need time to relax, play, run around outside every day, time for play dates, hobbies, homework etc.

There is a bus journey to Hampstead for the private schools but with traffic etc will take 30-45 minutes, so wasn't ideal I felt. But a lot of people do it

Gosh, tell me about inflexible vendors! Some people are on drugs definitely!

FWIW, we had ds1 in Highbury, and it was lovely. Lots of great activities for little ones and very friendly mums too. Lots of support for breastfeeding, etc so felt very supported.

Maybe buy for now and move later when you need for schools?

We've moved down to Clapham, good state schools are still like hens teeth but at least a lot of private options

@EllaWt the stamp duty on a £1.2m home will be £64k and if you factor in surveyors and legal costs then you're over £70k on costs, so you have to think about at what point again that you would be prepared to spend that kind of money again especially if the housing market stagnates. If it's a 5 or 10 year period then you have to think about how your life will change over that time period and get really practical. Nannies aren't cheap, have you factored that in to the affordability of the mortgage? What is the realistic salary and bonus forecast over the 5 years? How will your daily lives work with nanny etc. If you haven't thought this through then this property could be an expensive and miserable mistake. Basically if kids are on the horizon any time of the next 5/7 years then you need to go into this property purchase as if they are already here and make your decisions accordingly. This is what helped us when we were at the same stage, hope it helps you too!

I actually think you have had a lucky escape.

If you were thinking of children then a flat on the 1st,2nd and 3rd floors is am awful long way from any garden.

I would look at houses or ground floor flats that have a garden that you can walk straight into.

Our house when we moved in had a couple of steps down to the alley way at the side of the house and a walk of only a few metres to get to the patio and it was a bind taking all the stuff out for DD if I wanted to sit in the garden.
I can't imagine adding in a flight of stairs.