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!

No one needs hand outs from parents to pay in to a pension... your current disposable income is £3200, you can pay into a pension and quite frankly being very naive not doing so.

If you are struggling with the adjustment from £3200 to £1900 disposable income, you will certainly find out what struggle is when he drops to a state pension upon retirement for all outgoings.

@Mustbemagic

Its not naive its about prioritising. How can we prioritse saving for the long way off future when we need to think about the next 10 years which we have been focusing on for the last 7 years and are actually in a better position then we thought we would be to be able to buy sooner than anticipated? I pay into a pension and have a good pot.

Did u have to put down a £50,000 deposit when you moved into your house with no help from parents or equity from a previous property? We have been saving since we moved into London whilst paying to live, paying to rent, having a baby and general life. So there isn't an unlimited pot to cover everything! If you can do it all then I applaud you but we are doing the best we can.

Well done for saving. But my advice would be to certainly cut down on "take aways / holidays etc" to ensure your husband is putting something aside for retirement (even a small percentage is a start), unless your salary, and then pension, will comfortably cover all outgoings when he retires?
Would also begin to think about scenarios such as how would you manage if, for example, your husband is ready to retire at 65 when your second child (if do you have one) is in university and need some support financially, in addition to your household bills and current lifestyle.

Would recommend you read up on the tax benefits, as well as the reasons to start investing in a pension sooner rather than later - google: compound interest.

To answer your question: No, we had no help from family and my deposit was over three times more. But this thread isn't about me.

£1900 for spends after all bills?? That is way more than a lot of people even bring home and have to cover bills,
Rent etc. you'll be fine

£1900 is still a huge amount of money and when interest rate lowers, your mortgage payments will go down.

I live in a 3 bed with two children, I would love a four bed! I also WFH, but the location is great here and a 4 bed mean moving to a less desirable area. If I was you, i go for it.

If you had £3200 disposable income and still didn’t put anything away for your husband’s pension, you’re not “prioritising the now”, you’re just being foolish. That’s a huge amount of money - you could easily have put £1k a month into his pension and had over 2k left to spend as you please (or saved 500 and put 500 into a pension). You have far too much money to reasonably say you couldn’t prioritise putting anything away from the future. And yes, when I bought my first flat alone as a single person I had zero help from family, saved 20k deposit myself and still managed to pay into a pension. It’s about living within your means.

@TedMullins of the disposable income we have now, we save £2,000 of it to allow us to save for a mortgage. So yes the priority has been the mortgage and getting on the property ladder, not saving for a pension. Once on the property ladder, we can then prioritise saving for the future! We don't just piss £3,200 up the wall every month but thanks for your input.

This doesn't add up - saving £2000 a month would give you £50k in just over 2 years. You mentioned you have been saving for 7? Assume your earnings changed at some point.

Anyway, once you buy the house, you will no longer need to save £2000 a month towards a deposit. So in response to your OP the drop from 3200 to 1900 will not actually be so significant?

3200-2000 = £1200 current disposable after savings
new disposable = £1900 - so you have an additional £700 a month
Please use the £700 difference to build a pension pot and replenish savings!

@Mustbemagic my original post was never to ask for pension or savings advice and if u were earning the same as you were 7 years ago then maybe get a better paid job, also you have no additional context into our life or the things that have happened so maybe take a step back. My OP was about whether to take a leap onto a mortgage and to buy a house.

Well done for being able to afford everything in life at once. I wish you the best of luck with everything!

I think you’ll be ok but I would prioritise pensions once you’re settled on your new home.

Why so snippy op? You’re getting some very good advice here

@MustBeMagic great advice.

Wow OP, your loaded and also very rude with it. Nice

Why would you buy a new build? They are always a poor investment relatively - same as buying a new car - they depreciate the second you roll it off the forecourt / put a key in the door.

They are not bomb proof either and immune from leaks and repairs. Have a read of some of the “snagging” listed out on SM by customers of certain developers. Some are poorly constructed compared with solid 1930s houses.

It sounds like you have reservations about the lifestyle and are moving for education. You could privately educate your DC and stay local in London and save a bomb and maybe buy a weekend holiday home if you want to be on the property ladder and have outside space. I doubt property prices will rocket any time soon with the dire economic forecast. I would sit tight.

Why would you buy a new build? They are always a poor investment relatively - same as buying a new car - they depreciate the second you roll it off the forecourt / put a key in the door
I have not found this with the three new builds I’ve owned.

Do you mean you don't have enough deposit to buy a flat in London because you definitely earn enough to pay a mortgage - you earn enough to buy a house if you are prepared to go into places like Leyton / Leytonstone or South East where £850k would buy you a decent victorian terrace (not 4 beds though).

Thanks OP. If you didn't want advice then don't go into detail about financials and ask MN, perhaps just carry on and buy the house?

You say "if u were earning the same as you were 7 years ago then maybe get a better paid job" - I feel I have to respond as I actually do earn the same salary as 7 years ago. I now work 2 days per week for that salary (vs 5 days). I would be better paid if I worked more, but for many reasons I don't.