a new 300k mortgage at 40 is it too much

[moomin18]

DH and I have been meaning to move for a little while and have finally got ourselves together. Found a nice place and got a mortgage in principle for 300k. All great so far but now am all panicky. We are both 40 with 2DC 1 and 3. We need a bigger house and house prices in London are high, but it's a lot of cash to take on at our age. Anyone got any advice or happy stories of it all being ok?

I'd be more worried about how much leeway you have in your finances. Can you afford to still pay it if one of you loses your job and is out of work for a few months? Are you able to overpay it so you can reduce the amount of interest paid and give yourself the chance to scale back working as you get near retirement age? Can you afford a 5 or 10% interest rate hike (not likely, but possible if inflation gets out of hand after Brexit)?

It doesn't sound like an outlandish amount, but given the state of the economy I'd be wary of stretching your finances to the absolute limit.

You can pay the mortgage now which is the important thing along with whether you can manage it if interest levels rise. When the kids have left home you can downsize again, which may even leave you mortgage free.

Even in worst case scenarios you'd need to pay rent so I don't think it's a bad idea.

I didn't get my own house til I was 44. I feel more secure in my own house. 50 now. Have a secure job.

We'll all be working till we drop dead most likely so there's plenty of time to pay it off.

Interest rates are extremely low atm so that’s a bonus- personally, I’d definitely go for a fixed rate mortgage right now to lock it in.

As PP’s have said, the main question is whether you have leeway if your financial situation changes. As long as you’re not stretched to the limit, you’ll be fine.

DH and I (mid/late 40’s) recently refinanced in our and actually stretched out the mortgage term a bit. Best interest rate we’ve ever had (fixed, of course)😉

I wouldn’t hesitate. Firstly London property will go up long term, secondly you’ve got plenty of equity so could downsize if you don’t clear it / can’t afford it and thirdly, what’s the repayment? £1300 a month? You couldn’t even rent a decent 2 bed flat in most parts of London for that. I’d look at a long term fix though

We took on a 400k mortgage in our mid 40's and, if I am brutally honest, it did become a bit of a burden. I found, for myself at least, that my motivations around work changed substantially, as I moved into my 50s. I wanted to drop down in hours /go freelance etc, but a lot of options were closed to me, as I needed to maintain a certain level of income to service the mortgage. Plus, although it was lovely having a bigger house, the responsibility of maintaining a larger property became a pain as well. And expensive houses are easy to buy but can be very hard to sell in the wise words of Posh Spice!

what would overstretched mean? The bank is happy to lend us even more but that just seems like madness and we did have about that when we bought our first place but that was a while back, before kids and I felt a lot braver then.

But I like the point about working forever that's definitely true

@Puppylucky it’s a £300k mortgage on a London house. I imagine it will be neither huge or difficult to sell. I can’t see from what the OP is saying that it’s likely to be a mansion, more likely a house people will be falling over to buy

No it's only three times your salary and they'll easily give 5 if you're in a good secure job with decent equity.

It's hard for internet strangers to decide on your finances. We don't know your financial situation or how it may change. If you go on the banks websites then you can put in how much you want and they'll give you a rough breakdown of cost. consider whether you can pay that a month amongst your other expenses.

Most of my friends seem to be buying bigger houses with much bigger mortgages in their forties. first time they can afford it now kids are in school etc. You get a 23 year mortgage and your either sell it in 25 years or pay it off. 20 years is a long time to be in a house you're uncomfy in

Oh, it definitely won't be a mansion, just a bog-standard three-bed house. We could stay in our two-bed place but would have to move eventually. But we could potentially move further out and buy something for the same amount as our two-bed house and stay with our current mortgage which is fairly low.

Sorry other way round. get a 25 year mortgage and sell in 23 years

We’re 40 and have just signed the paperwork and been approved for a £430k mortgage 😱 25 year term, joint earning was £104k when we got approved, and I’ve just got a promotion which will bring our joint income up to about £116k. Have fixed mortgage term for five years initially and plan to overpay monthly once we’re in and settled and then reduce the term after 5 years. I’ve got friends at all stages with their finances tbh, we live in south east (not London but not far) and pretty much all my local friends are mortgaged up to the eyeballs 🤷‍♀️ But my friends who live up north bought bigger houses as their first house that were a third of the price of our current house and will probably stay in those ones forever as they’ve not outgrown them and will be mortgage free within the next 5-10 years. BUT we both have public sector jobs, excellent pension/sickness benefits/death in service provision, so hopefully all will be fine. We chose to live in an expensive place and I love it here, and need to be here for DH’s very specific and niche job, so no regrets!

It sounds like a desirable property, easy to sell if necessary, mortgage 3x your income, low interest rates..I’d go for it.

We took on a big mortgage at 40, and at 64 and 63 paid off the last remnants. I don't think most people have much option now if they want a god sized house. I had my children quite ate too so they were still at university as I hit 60. I'd much have preferred to have the house paid off and the children independent at an earlier age, I got a bit depressed about having big financial commitments when our friends did not. We paid off the last bit of the mortgage out of DH's retirement lump sum and feel so much better now. Do spare athought for how you might feel at 60+ if you do this.

Depends on your income, outgoings and equity, and the stability of that situation - this is not an answer anyone else can give you
We have a similar sized mortgage outside of london and we are in our 40s however it's more than manageable for our very stable income, outgoings and equates to a relatively low compared to the equity on our home.

We're in our 40s and have a 750K mortgage. Was a bit scary at first, but now it's just the way it is. We both have well paid jobs and the bank was happy to lend it, so I just have to have faith in the system, I guess. Hopefully this thread gives you the confidence to enjoy your new home - you're certainly nit alone when it comes to mortgage debt in your 40s/50s. I think this will be the new norm within a generation, so you're just ahead of the curve

I would want it on a 20 year term no more. Are you also ok with potential increases in interest rates. If you’ve done all the sums and it’s on repayment then ok.

Yes I get that, but houses are still often harder to sell than you may think. It's a mistake to go into a house purchase with a big mortgage, thinking that you can sell quickly if you need to, as that may not always be the case. Our London house wasn't hugely expensive by London standards, but it still represented a substantial purchase that not everyone could afford, meaning our buyer market was reduced significantly and it took a while to sell. If we had been relying on a quick sale, to get us out of a financial hole, we would have been in real trouble.

You're 40, not 100 £300k in London is nothing. Especially with a household income of £100k which could also potentially go up. You'll be fine OP!

I think 40 is still young enough as realistically you're going to be working anyway for at least the next 25 years. As long as you can still afford to be putting into a pension alongside the mortgage I don't see a problem with it. If you were 50 I would say it's too much x

thank you, everyone. I think WFH while looking after kids has made me feel about 100 ;-) and has definitely made me feel old and tired which is probably colouring my judgement

300k in London is a small house at best, it's not like they're buying a mansion. This is the reality of living in the South.

We bought an almost 300k house at 35, with 10% deposit. We'd been renting for 10 years but never managed to save enough, as life kept getting in the way. Most people I know started with about the same amount of mortgage - that's just how much a small family house costs here.

It’s fine

Firstly, your home should be your greatest investment. Buy smartly as an investment so you not only get the benefit of living where you do but you eventually sell at a profit.

At your age, you also have effectively 25 years to pay it off. Have you thought of it that way?

You may not stay there that long snd sell up, pocket some cash and buy smaller place in 15 years.

Lots of options

So no problem with that scenario

All well and good so long as both of your health stays good and you are able to work full time and earn well until your planned retirement.
I wouldn't want to commit to that sum at 40 but I'm risk averse and a low earner.