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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:
gettingto · 27/12/2021 00:43

It's affordable so I don't see why not, it's 800k so 4 times your salary. What are the repayments? 2.5k? out of 11k plus take home minimum? Leaves plenty left over

Fiddlersgreen · 27/12/2021 00:43

@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).
As they have a high household income, their DC won’t be entitled to the full student loan and parents are expected to contribute to make up the short fall.
Flowers500 · 27/12/2021 00:50

[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]
And it’s this kind of attitude to education that keeps cycles of poverty and poor prospects going. Can’t believe that some people don’t want the best for their kids or want them to have actual decent careers. Anyone who doesn’t place their child’s education as a priority is pulling them down.

Anyone who’s buying a 1 million pounds plus house should be aiming for a lot more than just minimum wage, unskilled jobs for their kids. They bloody well should be expected to either do uni or a strong other path if it’s more suitable for their specific skills.

Gives me the utter rage that some people ruin the life chances of children before they even have an opportunity. This “don’t get any ideas above your station” notion of it being bad to borrow money (ie literally INVEST in your future so you earn more) when you can work for minimum wage now and be stuck there for life is so backwards and harmful and ignorant.

roseblosssom · 27/12/2021 00:55

Agree with @Flowers500 re uni loans. I took out the max loans that I could and my parents covered my accommodation. DH took out no loans - all his birthday money, CB money etc was saved by his parents to cover uni. He really wishes the money was saved for a house deposit instead.
If all goes well our DC will have plenty for a deposit and uni fees but depending on their proposed career choices we may still advise a loan and top up accommodation.

expat101 · 27/12/2021 00:55

I’m o/s and our rates have gone up to just under 3% (I understand each country is different) and my family in Switzerland says there is a major correction coming in economies esp. for countries who “printed” extra money to get through lockdowns.

So for me, my stress test would be 5% and I would still consider that at the long term cheaper end.

Another thing to consider is the likelihood of wanting to redecorate or buy more furniture to fit in the new home. Is this a consideration?

Would you consider downsizing when the children have grown?

Finally, are you happy with it?

BasiliskStare · 27/12/2021 00:56

@User112 - My only very personal point is I would absolutely be going to see the house first. My DH is great - but I am going to be living there so I want to go and have a good look round ( buying from abroad etc different problem) But I would be taking on a sizeable mortgage before I had decided myself whether the house was worth it. ( Maybe your DH is great at houses - mine just wants a nice kitchen & a big sofa and TV and a study) So no way would DH choose our house alone Grin

BasiliskStare · 27/12/2021 00:57

"wouldn't" not would - sorry too quick typing

gettingto · 27/12/2021 00:58

You could fix for 10 years though but I wouldn't expect to make lots of profit as I think the economy is shifting.

Flowers500 · 27/12/2021 01:00

@roseblosssom

Agree with *@Flowers500* re uni loans. I took out the max loans that I could and my parents covered my accommodation. DH took out no loans - all his birthday money, CB money etc was saved by his parents to cover uni. He really wishes the money was saved for a house deposit instead. If all goes well our DC will have plenty for a deposit and uni fees but depending on their proposed career choices we may still advise a loan and top up accommodation.
Exactly—uni loan repayments make virtually zero difference on what a bank will loan for a mortgage. So a student loan to repay BUT a a house deposit when they graduate is 100x better than no lona repayments. If they do well on income after graduating then they’ll have their foot on the property ladder early and be able to upscale. If they do badly financially they won’t pay the loan off anyway. So it’s literally win-win!
gettingto · 27/12/2021 01:10

Yes to the deposit, one of my "richest" friends was someone from school who left education after A-levels. Got a bog standard normal job & with help from parents from living at home & some money bought a flat in the early 00s in Hackney whilst I went off to uni. She got one of those low deposit interest only mortgages which I think now only exist to high earners. She moved up the ladder over the years so how has a huge house that cost £££££ but a tiny mortgage.

gettingto · 27/12/2021 01:13

I'm pretty sure if I had worked f/t in my retail saturday job & bought at 17 (do you have to be 18) I would have more wealth then I did by going to uni & getting a "professional job".

Changechangychange · 27/12/2021 01:18

@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).
Depending on where they go and what they study, that’s not really realistic.

English at Leeds, yep there is plenty of flexibility for a part time job and living costs are low. Nursing or medicine in London, there’s no chance of holding down a job due to placements, and living costs are sky high.

The expectation these days is that parents fund living expenses. That’s why poorer kids tend to stay at home and go to their local uni (which may or may not be any good).

Flowers500 · 27/12/2021 01:21

@gettingto

I'm pretty sure if I had worked f/t in my retail saturday job & bought at 17 (do you have to be 18) I would have more wealth then I did by going to uni & getting a "professional job".
Maybe the thought of that makes you happy, but I can’t say it would for me. Any maybe true if you’re in a low paying job, but certainly not if you’re a doctor/Corprate lawyer/in finance and in a position to buy in mid-late 20s.

Buying young AND professional job is the dream

newmummycwharf1 · 27/12/2021 01:29

My parents paid for my uni and also contributed to my first house deposit at 25. It does not have to be either or if you are a high earner and I have always been grateful not to have deductions- however small - from my pay. Ultimately as parents, the idea is to make progress easier for the next generation where it is within your power, so I applaud your goal to pay uni costs for your kids. It is definetely important to stress test and ideally fix for at least 5 years. Sounds like you are both young enough and aspirational enough to out earn what seems large right now with good winds. I am sure you do this but investing your disposable after mortgage payments and other expenses may also help with uni costs and early life set-up for your kids

roseblosssom · 27/12/2021 01:29

@Flowers500 I'm one who'll never pay my loan off because I don't work. Flipping houses (thankfully got on the ladder at 23) and DH having a good job mean I get to be a SAHM. My parents paying tuition fees would of been a massive waste of money. Annoys me when I see it on here as something to aim for. I went to private school and knew no one who didn't have a loan despite their parents obviously having the means. DH went to state school and wasn't well off growing up, his parents thought it was a massive achievement paying his fees, kind of sad really.

gettingto · 27/12/2021 01:31

I bought about 10 years ago in my late 20s. If I could have bought in the 90s or early 00s I am pretty sure I would have a lot more housing equity.

Flowers500 · 27/12/2021 01:36

[quote roseblosssom]@Flowers500 I'm one who'll never pay my loan off because I don't work. Flipping houses (thankfully got on the ladder at 23) and DH having a good job mean I get to be a SAHM. My parents paying tuition fees would of been a massive waste of money. Annoys me when I see it on here as something to aim for. I went to private school and knew no one who didn't have a loan despite their parents obviously having the means. DH went to state school and wasn't well off growing up, his parents thought it was a massive achievement paying his fees, kind of sad really. [/quote]
That’s so sad that his parents thought that, they just have been really disappointed that it didn’t have the impact they wanted

BasiliskStare · 27/12/2021 01:45

@roseblossom well you are obviously up on the game.

Back to the point I think I would take into account if you have a big mortgage - interest rates / future pay rises bonuses - are they reliable / and personally I would factor in a bit of wiggle room for "unforeseen circumstances " and who knows what that might be.

TheNoonBell · 27/12/2021 01:46

Normally I would not take that level of risk, however, we now live in a time of high inflation so assets are a good bet.

I would get a long fixed rate mortgage as interest rates are certainly only going to go up.

musicalfrog · 27/12/2021 07:20

Newsflash @Flowers500 not having a degree does not equal minimum wage job for life. I mean really! Hope that's not what you're teaching your kids as that's a lot of pressure. Hmm

BTW the sliding scale is a great idea for expenses. It means those of us without the ability to afford a 1m+ house won't need to stump up too much, and those who have decisions like the OP to make will be able to afford it easily if they make prudent decisions elsewhere.

Roselilly36 · 27/12/2021 07:32

Buying at a possible peak of the market, interest rate rises predicted, I wouldn’t do it.

I can remember the mortgage rate being 12% plus, and the crash in early 1990’s.

Hopefully there will be more of a gradual levelling to the market, but it’s anyone’s guess what 2022 will bring.

I noticed a lot of blogs on property predictions for 2022 have been updated & re-written recently, with a much more conservative approach to possible rises in market prices.

Good luck with whatever you decide OP, I am probably more risk adverse based on previous experience.

Bluntness100 · 27/12/2021 07:33

How old are you both op?

Indoctro · 27/12/2021 07:33

If you can easily afford the mortgage on one salary then I guess it's ok.

Personally I'd rather spend a fraction of that and be mortgage free rather quickly

We did this and paid mortgage off in 6 years and it's a great feeling to not to burdened with debt.

Indoctro · 27/12/2021 07:34

Should of said we could of bought a £800k house but we bought £340 and now live stress free as owe nothing to the bank

It's a nice feeling. We are 42 and 44.

RedHot22 · 27/12/2021 07:36

It’s absolutely not important to go to Uni but lovely that the OP is making that opportunity available to her DC and prepared to help.

Obviously the year 10 isn’t far off but there’s time to save for the DTs. It’s just having 2 there that makes it more ££££ at once.

4 of mine went to Uni.
It cost us 15-20k per child.