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

I work in property in central London, a lot of our offices have off market vendors who don't want their properties fully advertised (often due to divorce or school gate politics) and do is suggest registering yourself with all the main agents as they'll likely have properties to show that you won't have seen online.

@switcharoo i have a question for you. I don't mean to be insulting but most agents I have dealt with tend to lie all the time, switch story lines and being generally dishonest. I just did the maths on a brochure we were given and they grossly overstate the square footage even! I know they work for the seller and I understand that but we find it so difficult to deal with especially as this is our first purchase and we're nervous. Any advice?

Honestly speaking all agents will push things to get a deal across the line but they won't want to lose a buyers trust so a good agent shouldn't be outright lying to you. Buyers aren't out there in vast numbers so remember your as valuable to the agent as their vendor, the agents main focus is getting a deal agreed because that gets them the money at the end of the day. At your bracket you're likely above the area of the market that desperately need to sell (they're the one/two beds that are expecting a first or second child and so despite brexit need to move). So your probably experiencing vendors who aren't highly motivated to sell unless they get a price they can't refuse. Obvs a generalisation, you might find a probate or divorce and so they really need to shift the property.

Mortgage sounds fine.

I live in a two bed, two bath flat in shoreditch with my son, absolutely love it. There is absolutely noway I would move somewhere else.

@EllaWt what did you do in the end? How do you feel about your decision now, a couple of years on? We’re on the same joint income but super risk averse. Currently living in a 500k modest house in the London suburbs (almost paid off) but thinking of upgrading in the next few years, however we’re still thinking of going quite modest compared to our income - around 800k. We’re finished with the small child stage so all those high costs and unpredictability in terms of going part time etc are out of the way at least! I like the idea of being debt free asap and having a good investment pot which frees us from having to stay in our current jobs and gives us options for the future. However on the other hand we like our jobs so we’re not exactly trying to escape from them. I don’t want to get 5 years in and find I’ve got enough spare cash to upgrade again, I want this to be our last move prior to old age!

Interesting to read other perspectives and how you feel about the decision you took in retrospect.

classic MN thread :-)

so your mortgage is one year's salary?! what's the issue?

people in high-paid jobs unable to make very basic financial decisions... or just a bit of humble-bragging/day-dreaming.

One year's gross salary And there's no issue I just never expected to be in this position so yes I'm caught in indecision but I can make the basic financial ones I promise

I think for a lot of people who were not born into wealth these sorts of decisions are quite hard. I was looking forward to paying off my mortgage and being debt-free so the idea of taking of extending the debt further for something we don't really need is something I am grappling with, so shoot me.

Anyway I really just wanted to know how things had panned out for the OP. Obviously quite a different set of circumstances but I could potentially buy a house of a similar value hence wondering if she felt it was worth it in retrospect.

@SD25
I agree and makes you wonder what kind of job pay you so much but you are unable to make basic financial decisions? And also are able to spend so much time on mumsnet???

I think it's well known that hours worked and salary are not directly correlated, as unfair as that is. I am enjoying a quiet period which is nice but does get boring, fortunately mumsnet is here to fill the gap

Also lots of well paid jobs don't require financial acumen.

If you're thinking of starting a family workout the financial implications of this. Maternity pay and leave, childcare costs, part time salary, schooling costs, child expenses. Everything is rosy when you have double income and are in control or your costs, this significantly chages when little ones arrive on the horizon.