Taking on a 1 million pound mortgage - crazy?

[Pogpog21]

Has anyone got or recently taken on a mortgage 5 times relative to their gross pay? For context we are early 30s, have 520 equity in our house which is 810k in value. We have savings to go toward stamp duty and excess needed for a 1.8m house (but will be left with about 50k at the end of it and a huge mortgage). We have been looking for a house for a year - a “forever home” and prices and demand have led us to conclude we should go all out and just move now and stay there until we downsize/ retire. The house offers everything we could ever want - it is huge. We earn 200k base between us + variable bonuses (~usually around 30k combined).

However are we mad to do this right now?

We’ve got a mortgage offer locked in for 5 years at 2%.

On one hand, I’m worried about rising rates in the future and we’d be comfortable and safe financially in our current home.

However on the other hand if we continue to earn as we do I think it makes financial sense to put money into something rather than building savings that are being eaten up by inflation and we are huge home people - we have a dog and a little one and spend most of our time working (me working at home a lot now) or chilling at home/ hosting at home. Our current home is lovely but could do with a few more rooms and a bigger garden.

any insights / thoughts / similar experiences?

Spot the error here!

LOL! that's why i don't earn £100k a year

My SIL worked in the city mega money it really was another world. She threw it all over to go into the church. She wanted to be happy. We all follow different paths

We've moved up the house chain. But did put money in pensions, other bricks and mortar investment a mixture of commercial and domestic. Also sailing yachts, we were never without a boat. Spread the risk as Warren Buffet said is wise

Your maths will work - if you look on it with hindsight, with everything that you think should or ought to happen, having happened.

Life doesn’t always go that way.

A bigger and more expensive house will be a millstone around your neck if something goes wrong. You’re three people and a dog. Just because you can, doesn’t mean you should. Don’t let yourself get carried away, you may pay a heavy price for it (and not just monetarily).

The problem with life insurance through work is that if your job or employer goes under you may lose the insurance as well.

I agree with the first paragraph in this post, but would reframe the last one into something like

"If your PIL are subsidising your future plans you are in a vulnerable position."

Ours actually comes with a clause in it to say that you need your own life insurance because that is precisely what happens, I presume people have it for a few years, get old and then can’t afford to buy it for themselves

Thanks everyone, we are going to go ahead but will ensure our insurance is good and once we’ve overpaid the first 5 years and got the debt down as much as we can will focus on other investments and pensions more.

i feel a bit scared - but one only lives once.

@Pogpog21 Well done! We are mid 40s and 50. Older than you but in similar position in that we have 1.5 equity and are looking at the next step up, which is actually going to cost 2.5 at least! We wish we had traded up while younger, although we like our house and love our street. We have messed around for a year and interest rates are now closer to three per cent so it has put us off! May I ask which bank you are doing this through and which area you’re buying in? If one of us had a 3m inheritance coming it would have been a no brainer so it’s the right call for you IMO.

What a useful (and fresh) thread, very interesting read and great contributions from everyone!!
We are in a similar predicament re wanting to upsize to a property 2x value. But without the inheritance expectations or huge equity. But in London prices are over £1m pretty much everywhere (in decent areas with good schools anyway), so not an option to get a cheaper house.
Will be saving and waiting out the market for 12-18m!
We are on £280k combined basic + bonuses, both work full time. 2nd child due very soon, so we won't be saving for some of the parental leave. Aiming at £1.3-£1.4m house max ie a 4 bed terrace without the pool or huge garden :)
our mortgage will probably be c£1m which is a scary thought, indeed, but we should be able to just about cover with 1 income (and very frugal lifestyle to boot in that case!)