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Original poster

Would you buy a 1.1M house with 300k deposit?

168 replies

User112 · 26/12/2021 22:40

We are fortunate to have a 300k deposit. I run a consultancy business in a niche field and make around 100k a year. DH is on a similar salary - he gets around 10% bonus too.
I’m comfortable buying under 900k, but DH saw a property that he really likes. It’s at 1.1M.
We have 3 kids to get through uni. DS in year10 and our twins are in Y1. DH and I are 42.

Banks are willing to lend us the money, but I’m getting worried thinking about having such a big mortgage. I grew up in a working class family and we budgeted for everything. Growing up, I had food to eat, clean clothes (supermarket ones) and some toys (bought only for Xmas and birthdays) but we didn’t have luxuries. I still carry those habits and spend only on what’s needed. I feel like I’m holding back DH, but I’m really not sure! He is a spender and a risk taker.

Would you take such a big mortgage on our incomes? Mortgage will be around 3.5-4x our joint pre-tax income.

OP posts:
Username7521 · 26/12/2021 22:43

Yes.
Similar deposit earning slightly more going up to 1.25.
Oh 3x kids in private school too.
It’s manageable for us but we don’t like expensive things.

Pepperama · 26/12/2021 22:46

Is the finance the only consideration? How much do you love it? What else would you like to do with your money - is it more important to have the asset of a great home or would spending less enable you to do other things that are important, whether that’s travel or philanthropy or retiring early or whatever.

If a fab house is highly desirable and it’s well researched (i.e. likely to keep its value relative to other property) then it may well be an affordable and sensible purchase

Scrooge89 · 26/12/2021 22:48

Similar situation here I’m stopping at 900k and we have 500k deposit but 1 coming to 2 in private school

deeplyambivalent · 26/12/2021 22:52

It's not a bad deposit. I think interest rates are likely to rise though, so 'stress test' your scenarios about what you can afford by asking yourself what would happen if (e.g.) interest rates doubled.

Original poster
User112 · 26/12/2021 22:53

Ours are in state schools. We don’t intend to send them private as we have very good grammars nearby.
Also to add, we don’t have expensive tastes, nothing flashy or designer. DH plays a sport (court hiring types) and I am a part of a local bike riding club. We drive a 2011 Honda CR-V and are quite happy with that.

Mortgage will be our only big spend.

OP posts:
Starseeking · 26/12/2021 22:54

The mortgage would only be 4 times your joint £200k salary, so it's well within reasonable lending limits.

Psychologically it's a huge number to be looking at as a debt, but if you are able to service the repayments comfortably, and still live well, I'd probably go for it, and arrange to overpay a fixed amount monthly, so the overall total outstanding reduces more quickly.

musicalfrog · 26/12/2021 22:55

I don't get why uni is a factor. If my dc go, I hope they'll sort the finances themselves (I never expected my parents to fund my university years).

Original poster
User112 · 26/12/2021 22:55

@Pepperama

Is the finance the only consideration? How much do you love it? What else would you like to do with your money - is it more important to have the asset of a great home or would spending less enable you to do other things that are important, whether that’s travel or philanthropy or retiring early or whatever.

If a fab house is highly desirable and it’s well researched (i.e. likely to keep its value relative to other property) then it may well be an affordable and sensible purchase

Finance is my only issue here as I like to keep things light. Tbh, I have this feeling for anything expensive. I don’t buy a £150 coat because it’s too expensive, even when I like it and I can afford it.
OP posts:
Original poster
User112 · 26/12/2021 22:56

@musicalfrog

I don't get why uni is a factor. If my dc go, I hope they'll sort the finances themselves (I never expected my parents to fund my university years).
We want to pay for the kids uni.
OP posts:
musicalfrog · 26/12/2021 22:59

We want to pay for the kids uni.

Obviously that's your prerogative, but it's also a choice and you need to decide if it matters that buying this house may put that at risk.

Original poster
User112 · 26/12/2021 23:02

@musicalfrog

We want to pay for the kids uni.

Obviously that's your prerogative, but it's also a choice and you need to decide if it matters that buying this house may put that at risk.

We are hoping our incomes will rise to cover DS’ uni fees and we have more time for the twins. It just feels too tightly planned for comfort. (For me). DH thinks I’m being ridiculous!
OP posts:
blueshoes · 26/12/2021 23:04

Do you expect to get an inheritance, pay rises/bonuses?

How secure are your jobs?

If you don't have private school fees, it should be do-able. It is better if you expect big lump sums in the future to mitigate some of the risk.

DoubleTweenQueen · 26/12/2021 23:05

How do you feel about the 1.1M house? If it's a fantastic house, and you can afford it, why not? Unless you can find another great house around the 950k mark?
I wouldn't stint on a home/lifestyle.

Would the vendors be open to an offer?

If it's a great house in a great location, it's an investment too?

So - depends on the property, whether you should go ahead - sounds as though you can afford it.

Original poster
User112 · 26/12/2021 23:07

@blueshoes

Do you expect to get an inheritance, pay rises/bonuses?

How secure are your jobs?

If you don't have private school fees, it should be do-able. It is better if you expect big lump sums in the future to mitigate some of the risk.

No inheritances. But we are expecting salary rises and bonuses. Reasonably stable careers I’d say.
OP posts:
silentpool · 26/12/2021 23:08

Have you stress tested at higher mortgage rates? That would be a concern.

BasiliskStare · 26/12/2021 23:10

I think if you are happy - do it but if your plans don't work out - i.e. pay rises or bonuses be prepared to sell or do you have left over money each year which could reduce the mortgage year on year. £300k deposit on £1.1m is pretty highly geared.
Also I would check the house doesn't need money putting into it over and above the mortgage ( i.e. renovation etc ) and if it does factor that in

But good luck whatever you decide Flowers

Original poster
User112 · 26/12/2021 23:10

@silentpool

Have you stress tested at higher mortgage rates? That would be a concern.
Yes. To 3%. How much would you stress test for?
OP posts:
Original poster
User112 · 26/12/2021 23:11

@BasiliskStare

I think if you are happy - do it but if your plans don't work out - i.e. pay rises or bonuses be prepared to sell or do you have left over money each year which could reduce the mortgage year on year. £300k deposit on £1.1m is pretty highly geared. Also I would check the house doesn't need money putting into it over and above the mortgage ( i.e. renovation etc ) and if it does factor that in

But good luck whatever you decide Flowers

Highly geared = too tight (too less)?
OP posts:
roseblosssom · 26/12/2021 23:11

We maxed out on our first property as we had to in order to get on the ladder and it was fine but not what I'd choose long term.
We've flipped houses so have a property around 1M but mortgage just over £200k. It's far better in my opinion. No worries about day to day spending and we can treat ourselves.
If you can find a property you love for closer to £900k I'd do that. If it's a case of nothing compares to the 1.1M house then I suppose that forces your hand. I think I'm like you though in that I hoard money vs DH who's always treating himself to a new watch.

jellyxat · 26/12/2021 23:12

It's fine I think. We bought a £1.4m house with a £700k mortgage. It feels like a huge number but we don't have expensive tastes and we'll pay it back eventually! It's about 4x our pay.

Eve · 26/12/2021 23:12

@musicalfrog

I don't get why uni is a factor. If my dc go, I hope they'll sort the finances themselves (I never expected my parents to fund my university years).
Well the Govt expects you as a parent to fund it.

Tutition loan is 9k per annum

On top of this if you are entitled to only the basic living loan of its approx £3.5k

Most Rents average nearly £5k - my DS even with a job needs funding.

deeplyambivalent · 26/12/2021 23:13

3% sounds decent to me. Maybe a smidge more. But that sounds in the ballpark.

CSJobseeker · 26/12/2021 23:14

I'm younger than you and I remember paying a mortgage at interest rates of over 4%.

In the current climate I'd stress test a bit more than you have.

musicalfrog · 26/12/2021 23:17

@Eve if university is unaffordable then I'd advise them against it. It's not a good idea to spend money you don't have in any situation and starting at 18 is a terrible thing to advocate I think.

The loan isn't an expense for parents so I don't understand why you've put that.

Sorry OP slight derail there!

IKissedSantaClaus · 26/12/2021 23:19

I think it's probably ok but I do get why it feels a lot. Psychologically, breaching the £1m mark feels significant to me.

I am sure you will have thought of it all but have you factored in additional stamp duty, fees etc of a higher spend, plus any additional costs of running/maintaining the house if it's larger?

We have a higher joint income (mostly DHs salary as I'm part time) and a similar deposit and I'm hoping we can eventually find something in the £750-1m bracket as I'd feel a lot more comfortable.

We're in Scotland and the political and financial future feels very uncertain to us, prices also feel very high at the moment so maxing out makes me nervous. You might feel more secure in your jobs.