To buy or not to buy our first home! London to a village....

[Blueotterwhale]

My husband and I live in London with our toddler son. We have been been paying relatively low rent for a beautiful 3 bedroom flat which we love for the last 9 years and are now in the fortunate enough position to buy our very first house after lots of saving.

My husband is self employed and older so our mortgage term is shorter and our mortgage payments are higher. I work 3 days a week due to the ridiculous childcare costs and no help to take care of our son in a job that is okay paid.

We have recently been approved for a mortgage in principle but today have been told that interest rates have risen and our payments are now £128 more a month making our mortgage to £2250 a month which is £750 more than our rent. We are going from paying £7.70 a day for travelling to work to £51.60 a day to travelling into work and our childcare costs are going to be around £300 a higher a month so £900 vs £600. (Crazy when you think you should be paying over the odds in London). After all our expenses and childcare costs, insurances, additional car etc we will have around £1900 a month left over for spending and saving.

We are also buying a new build house and they have agreed to pay for our stamp duty and after moving costs, solicitors fee ect we will walk into the house with a very comfortable £20k in savings. But my husband job could go at any time so that's 3 months of expenses to cover us should the unfortunate happen and money to buy a second car as we will need to drive to the station. We are also going to take our mortgage insurance.

We love the house, everything about it but it's not our first choice for location. But in reality we can't afford to be in the area we want with a 4 bed house so have chosen house over location.

I know lots of people will be rolling eyes as it seems like loads of savings/spare money etc but right now we have around £3,200 a month disposable income so its a huge decrease going to £1900.

We love our life in London but want our son to have a garden etc and will be moving into a village which feels like such a huge step. My son will be going from a childminder to a nursery which he will adapt to I know but it feels like all the changes are huge and a little overwhelming. We have considered waiting another year as we don't have to move right now but they are about to begin scaffolding works outside our flat for over a year and also we are worried that if we don't take the leap now we might not be able to afford a mortgage if they require a bigger deposit as we just won't be able to reach the 25% deposit mark for a long long time and the idea of renting for foreseeable future just doesn't seem like a sensible solution.

But maybe we should wait a year and see. Would you go for the house or ride it out and see?!

Thanks so much if you got this far down!

If you are talking about truly disposable income then you will be fine.

It does sound stressful OP! I can see why you are worried - I read your post as saying £1900 for all expenses PLUS savings, is that right? So realistically you won’t be adding a lot to your savings in the short term, if the £1900 has to cover food, bills, all living costs. I would be worried about not being able to save in the longer term. Does the £1900 have to cover your husband’s pension, if he’s self-employed?

I would therefore be thinking about whether that financial hit is temporary or permanent. Eg when your son starts school will childcare costs go down? Are either of your salaries likely to increase? If you think you’ll have a bit more left over/will be earning more after a couple of years, I’d go for it. But I’d also bear in mind that interest rates may not be much lower in a years time - they might be higher. So waiting a year won’t necessarily get you a cheaper mortgage.

sorry not to be more helpful! But I think only you can assess whether you can ‘afford’ the drop in monthly income

I’d be less worried about the finances side of things (sounds doable) and more worried about living in a village after being happy in central London. Are you and DH convinced it is what you want?

Have you done the obvious thing and checked out school catchments (primary and secondary)? In areas with a lot of new build houses, catchments can change quite often so be really careful.

@RoaryLion1 thank you for your comment! The £1900 would be for savings and everyday living like takeaways, days out, clothes, holidays etc. All bills including food and commuting costs have been taken into account in our monthly expenses. We won't be able to save as much no and I'm not sure if my husband will earn more because he earns a very good salary now. We have no pension for my husband so again see the house as an investment for the future.

Why hasn't your husband got a pension?! When you say older, how old is he? do you have decent life insurance for the mortgage if anything happened to him or he can no longer work?

Could you cover the mortgage on your salary?

My first thought would be do you need a 4 bed house? Can you go for something smaller and stay in London?

I'll say go for it. Houses will not get cheaper for certain; yes your DH might loose his job but he might not.
You're building security for your family by buying a house and having £2000 disposable income. For the first year use as little of it as you can to save upore emergency funds.

@WhatsInAMolatovMocktail thanks for your message.

We currently live in East London so the schools where we are moving to vs. here there is no comparison really. We have the village school a 3 minute walk which he would go to and around 3 or 4 high schools in the local area. But the worst school in that area when I was growing up is now the best school in the area so we have a long way off to go before we decide where he goes for high school and so much can change between then and now.

Yes the convincing on if its defo what we want is the difficult part. It's very much between what is the adult, responsible thing to do for our family and also the fun carefree thing to do. But we don't want to rent forever and feel like this chance won't come knocking too often with the fact my husband is older, self employed etc etc. We equally don't want our son to go to school near where we live so renting somewhere else in London to near a better school will definitely be the same if not more than our mortgage and throwing away more than £2250 on someone else's house doesn't seem sensible either so I think I know we have to stretch ourselves, it just feels scary!

@Delectable thank you. Very helpful advice for sure. Owning a house I think your always having to stretch yourselves unless your lucky enough to have lots of help! But I do think we need to go for the push

@Yodaisawally he is 45. He doesn't have a pension because life! As wiyh everything you can't afford to do it all. We have been saving for a mortgage to get on the property ladder.

I have a pension which my company pays very well into..no the mortgage would not be covered by my salary, I only work 3 days a week. If someone can cover their mortgage on 3 days a week salary then I commend them!!

We will have mortgage insurance for sure. Built into our expenses already and we would also put 3 months expenses straight into savings for just in case!

I wish, a 3 bed house is London in a decent London is around £850,000. We csnt even afford a 2 bedroom flat in London as they are around £500,000 - £600,000 in a decent area!

Do you really need a 4bed though? Are there no 3 beds...
I would be concerned about depending on dh income..
My dh broke his elbow so got sacked from his consulting job as he couldn't type and ended up months with no income completely out of the blue..
Luckily my income just covers essentials but our savings took a hit..will you be increasing your income once dc at school as tgat may help...
Also pension contributions are tax efficient so he should be maximising those things has he got an accountant?

You absolutely can afford a three bed flat in London in a decent area, just not where you ideally want to be. Have you looked in the south east? South or West Norwood, Crystal Palace, penge, streatham? I’d be very surprised if you couldn’t find somewhere with outside space to fit your needs within your budget. They’re all pretty family-friendly areas too.

It doesn’t sound like the increase in commuting costs and childcare make the move out of London financially viable. Also, raising children in London isn’t frivolous and carefree, plenty of people do it! It’s not a prerequisite to move to a village to be a proper grown up. The lifestyle will be a lot different and not necessarily for the best (saying this as someone who grew up in a very small town and now lives in London).

£1900 a month disposable income is fuck loads though. If I were you I’d be putting £450 into a private pension for husband, saving £450 and using the £1k for everything else (so £250 a week for treats, takeaways, socialising etc), it might be an adjustment from your current disposable income but you’re hardly going to struggle.

Sounds like you want to live beyond your means. You don’t need a 4 bed house with one child but you do need pension.

Buying a house is always a good investment. I know thre may be a dip or correction but if your in it for the long term then in 20 years when the house is paid off you will be sitting pretty.

Could you look to change jobs to something more local to reduce childcare and commuting costs? Rather than buy another car could you get a scooter or bike to get to the station?

Are you planning another child? When does your child start school? Paying expensive childcare is not forever.

Did you make this decision carefully after lots of thought or was it on a whim when you saw the house for sale?

Are you planning a second child? If not I’d ditch the 4 bed house it’s bonkers

Village living may be idyllic for small kids, but once they get to their teens you'll end up being the taxi.

My OH grew up in a village and hated it. Nothing to do and had to rely on his dad's good will to drive him miles to and from tge nearest largest town to do anything social.

OP does not wish to address the four bedroom issue…

Can you not find a house in a location with lower commuting costs if you are concerned? We bought a large 3 bed house still on a tube line for slightly under your budget. It’s Zone 7 but door to do commute to central London is about an hour and costs £10 (£12 in peak time).

If you could make it work with just one car that would really help your finances.

Absolutely this ^

a Pension pot of half a million would probably only give you an income of 20k a year from 60 to 85.

no pension at 45 and buying your first house means you’re way behind. Every 1000 that goes into a pension pot is topped up to 1250. It’s throwing free money away not being in one.

The four bed house doesn’t seem the most sensible move.

A 3 bedroom house in a similar area is around £25,000 £35,0000 cheaper and yes we would like a 2nd baby. And both my husband and I work from home so we need space to actually work especially when we are both there together. It's difficult to contend with buying an older house when we will be stretching ourselves and won't have a huge pit of money to put into the house if things go wrong I.e a new heating system or a leak. All these things we have taken into consideration.

Our parents are from Essex and so are a lot of our friends so would like to be closer so them considering we see them all the time and spend 2/4 weekends a month in Essex so moving to another area isn't really viable unless we want to be completely on our own.

We might be on the back foot for a pension but we don't have and never have had hand outs from parents of ££££'s to help with life.

Thanks everyone for your input, good to hear what everyone has to say, we have a few more days to think about things and make our decision.

*Work from home as in he works from home 2/3 days a week and me 1 day a week - the new 'normal' for the world!

@TheFlis12345 where abouts do you live? And how long ago did you buy your house?

@starpatch yes I think we will have to trial without an additional car. Unfortunately cycling is out of the question as its on a main road but I think we will trial putting baby in the car and take hubby to the station and pick him up everyday. It would be 6am starts and collecting him at 7.30/8pm but defo could be worth it for not having to buy another car.

I won’t name the exact place but we’re in the Home Counties near the end of the Met Line. We bought a year ago but you can still get a 3 bed around here for that price, it might just need a little work.

Oh and I just noticed you want to be close to Essex. We have friends in Brentwood and it’s a 45 min drive.