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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:
Olliesocks · 26/12/2021 23:24

For those amounts I’d be speaking to a financial advisor.

TheCatShatInTheHat · 26/12/2021 23:26

I'd buy two. Peasant.

NoSquirrels · 26/12/2021 23:31

I’m comfortable buying under 900k, but DH saw a property that he really likes. It’s at 1.1M.

What do you think about that property? Regardless of money?

Tbh, if I felt comfortable at £900K I can’t imagine feeling uncomfortable at £1.1m. That sounds cavalier, but I think if you feel you can afford a £700,000 mortgage you can probably afford a £900,000 mortgage.

At £900K you’ve got a LTV of 67%
At £1.1M you’ve got a LTV of 73%

Equivalently, for my family that would be £175K instead of £150K and I’d totally do it for a house I lived with a teenager and 2x primary age kids, I reckon.

mocktail · 26/12/2021 23:36

@musicalfrog In England at least, student loans are means tested, based on parents' income, with the assumption being that parents will make up the shortfall. So it's not realistic to suggest higher earning parents shouldn't help out.

Would you buy a 1.1M house with 300k deposit?
sheroku · 26/12/2021 23:40

I wouldn't but then again I'm a worrier. We had over £300k deposit, bought for £750k and fixed the interest rate for as long as we could. Given what's happening with inflation I'm really worried interest rates will go up and we don't want to be saddled with huge mortgage repayments. I'd stress test to higher than 3% if I were you.

JW13 · 26/12/2021 23:45

I would be completely fine with that, but when I buy a house I don't expect to live there for the entire 20-25 year mortgage term as we like to renovate and I've always got one eye open for another project. If you think it's your 'forever' home then that's a different story but your youngest DC are still young - is it possible you might move to a cheaper area/downsize when the DC go to Uni? If so, the financial commitment might not seem quite so scary.

I also look at the maximum the bank would lend based on current salaries etc. our current mortgage is approx £800k but when we looked the other day (we viewed another project house) the calculators said we'd get over £1.4m which seems nuts, but gives you an insight into the banks view on what you can afford (even if you don't want that much).

Ultimately as PPs have said I think it depends how much you like the house. If you can afford it then it's more about you being willing to incur the expenditure at a higher level than you'd like.

converseandjeans · 26/12/2021 23:47

Surely on those salaries you can live off one and use the other to pay off mortgage - say you pay off £75,000 a year it would only take you 11 or 12 years.

WonderfulYou · 26/12/2021 23:51

I am no where near your position but if you both make 100k surely you could easily save 100k a year for a couple more years and then have a larger deposit so your mortgage will be less.

I would look for homes for less than what you’ve seen and then save more and then move again in a few more years.

musicalfrog · 26/12/2021 23:52

[quote mocktail]@musicalfrog In England at least, student loans are means tested, based on parents' income, with the assumption being that parents will make up the shortfall. So it's not realistic to suggest higher earning parents shouldn't help out.[/quote]
Absolutely. A university education is a privilege, as not everyone can afford to help their dc out.

Starseeking · 26/12/2021 23:56

My bank stress tested at 6% when considering whether to offer me the mortgage a few months ago.

I thought this was mad, however another poster on here explained that banks consider their projection of interest rates over the fixed period years, then add a couple of per cent to reach the stress test percentage.

It may help you to do similar, to determine whether this house is truly affordable for you.

DietrichandDiMaggio · 26/12/2021 23:59

[quote musicalfrog]@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![/quote]
The full tuition fees loan is available to everyone, and there is no point parents paying it, as most people never end up having to pay it all off.

The maintenance loan is worked out on a sliding scale according to parental income, so those whose parents are on a low income get the full amount and those with high earners for parents get the minimum; parents are expected to make up the difference. Any parent who is unwilling to do so is being mean and a bit shit, because it's not their child's fault they can't get the maximum loan.

Dontlookdownmuch · 27/12/2021 00:10

I’d do it - we had a half a tonne mortgage a while back it felt heavy but time improves the situation - house is now worth £1.25mill and mortgage is around £300k - initially we considered a bail out solution, we wanted to ensure our kids were schooled locally - that was really important to us - so if our hard times had fallen - we had an affordable back up plan (early on - we’d downsize, later on we’d rent and then move when they went to Uni - we felt comfortable with our plan b.

deeplyambivalent · 27/12/2021 00:15

Two other possible things to take into consideration: on the downside, we're unlikely to see the kind of capital appreciation we saw over the past 10-20 years. On the upside, inflation is likely to be higher, which would erode the value of the debt over time.

TorringtonDean · 27/12/2021 00:19

@musicalfrog you ARE joking, surely. Two parents making £200k between then can and should make up the £6k difference between uni maintenance loan and living costs. I’d say it’s more important than a fancy house. I am one parent on £70k and I pay all my DC’s living costs to save them a lifetime of debt. My ex H pays nothing because he is mean and selfish.

Janedoe82 · 27/12/2021 00:27

That’s a big mortgage- I am not much younger than you and with a 200k mortgage- joint income 150k. I hate having as much as 200k as feel it ties me down to having to work longer than I would like to.

NOTANUM · 27/12/2021 00:29

Am I right in saying that you haven’t actual seen the house yet? You say your DH has seen it and haven’t answered questions about whether you love it or not.
First things first, go to see it if you haven’t already and then decide if it’s worth it.

LittleBearPad · 27/12/2021 00:35

The mortgage is affordable. The most important thing is what you think of the house - then you know if the extra borrowing is worth it

gettingto · 27/12/2021 00:38

I am not much younger than you and with a 200k mortgage- joint income 150k. I hate having as much as 200k as feel it ties me down to having to work longer than I would like to

That's really not representative of normality though.

Flowers500 · 27/12/2021 00:38

If you pay their uni fees then you’re an idiot—don’t!!! They will get a loan for that and it is ZERO advantage to not have it. If you have the 30k for each of them then give them a house deposit.

Do the maths: it makes WAY more sense to be a home owner at 25 with a student loan to pay, then no student loan and no chance of buying.

Flowers500 · 27/12/2021 00:39

@Flowers500

If you pay their uni fees then you’re an idiot—don’t!!! They will get a loan for that and it is ZERO advantage to not have it. If you have the 30k for each of them then give them a house deposit.

Do the maths: it makes WAY more sense to be a home owner at 25 with a student loan to pay, then no student loan and no chance of buying.

Seriously, I know people whose parents did this for them and who are really upset thinking about what could have been with decent financial planning. Their parents feel shit that the money was wasted and their children no better off.
Flowers500 · 27/12/2021 00:39

Ans the mortgage is affordable

stayathomer · 27/12/2021 00:40

If that 300k could make you close to mortgage free somewhere else I'd say do that instead and then it will be plain sailing helping your children through college!!

Original poster
User112 · 27/12/2021 00:40

I didn’t see the house but DH saw it as I was working that day.

I love the house 🤦‍♀️

OP posts:
Original poster
User112 · 27/12/2021 00:41

I mean, I saw the pics and kind of in sync with DH about the kind of houses we both like.

OP posts:
DoubleTweenQueen · 27/12/2021 00:42

You should see and judge the house and surroundings as soon as you can then.