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Original poster

Would you borrow to your max in current market?

48 replies

pinnerts · 28/06/2023 20:17

We have to move due to schools but unfortunately to get a house we would have to borrow to our max. The alternative is to buy a flat which is much more feasible but is a flat. For the house - we would be borrowing 540k v 400k for a flat.

OP posts:
CuriouslyDifferent · 28/06/2023 20:19

I believe There’s a market crash going to happen, somewhere in the region if 20%, so in answer to your question…

Yes if I was going to be there a decade or more. no if not.

Original poster
pinnerts · 28/06/2023 20:43

We hope to be there for the foreseeable until DCs are grown up. As we are also selling a flat, any drop in prices would also have an impact on us.

OP posts:
KievLoverTwo · 28/06/2023 20:45

Dream home that ticks every box and more and I could put up with crippled finances for - yes.

Anything else - no.

Coffeaddict · 28/06/2023 20:47

We did a year and a half ago. Everyone predicted a crash after the stamp duty holiday ended but here we are sitting on a house that's gone up by 20%

Like pp said if it's a long term plan and you can afford to ride out any drops in prices I would go for it

PurplePear7 · 28/06/2023 20:47

Prices might fall to pre covid levels but I really doubt prices are going to drop 20% - the market won’t allow it because it would be so catastrophic.

I am moving and borrowing pretty much my max just now too op, it’s just me so I don’t have much choice!

Persipan · 28/06/2023 20:52

No, but then I wouldn't (and didn't) borrow to my max even in a much better financial climate than this - I'm fairly cautious as a single parent and like to be sure I have some wiggle room even if my circumstances were to worsen.

KievLoverTwo · 28/06/2023 21:01

PurplePear7 · 28/06/2023 20:47

Prices might fall to pre covid levels but I really doubt prices are going to drop 20% - the market won’t allow it because it would be so catastrophic.

I am moving and borrowing pretty much my max just now too op, it’s just me so I don’t have much choice!

Houses rose 31% in 21 and 22. Far more than 20%.

Original poster
pinnerts · 28/06/2023 21:04

We are looking in London so not sure that prices did go back by 30% with covid but am still concerned that they might fall by quite a bit

OP posts:
electriclight · 28/06/2023 21:24

Are your jobs secure?

How much equity would you have?

If jobs are secure and equity is sufficient to remove the possibility of negative equity, then I'd do it for a great house that ticked pretty much all my boxes and would suit me for a long time.

keel34 · 28/06/2023 21:25

I suppose it depends on the rest of your outgoings and how comfortable you are with the mortgage payments, and if rates went up further, also where you see your income going in a few years?

Original poster
pinnerts · 28/06/2023 21:36

In terms of equity we are putting 40% as our deposit. My job is secure, civil service but also not that great with pay rises. DH's is private sector, more of an unknown but could also get pay rises depending on future jobs.

OP posts:
StarDolphins · 28/06/2023 21:38

I wouldn’t ever borrow the max. Even on my first flat, I went for a much cheaper one. I am quite risk adverse though & close to the bone would give me sleepless nights.

CosyFanTucci · 28/06/2023 21:40

Absolutely no for a flat. Maybe for the right house.

ohsobroody · 28/06/2023 21:43

CuriouslyDifferent · 28/06/2023 20:19

I believe There’s a market crash going to happen, somewhere in the region if 20%, so in answer to your question…

Yes if I was going to be there a decade or more. no if not.

People have been predicting this since 2010 and not seen anything like a crash, mild stagnation? Sure! A proper crash ... nope.

Don't get me wrong we would be happy because we want to upsize but injure can't see it happening! I though the experts were predicting more like a 5-8% drop?

mobear · 28/06/2023 21:44

I would hate to ever be in a position where I was forced to sell my home so I/ we’ve never borrowed the max.

Original poster
pinnerts · 28/06/2023 21:45

We would only be maxing out for a house. If we went for a flat then we'd definitely be comfortably under our budget.

OP posts:
kitsuneghost · 28/06/2023 21:46

I always think could we get by on 1 wage if redundancy or illness strikes.

keel34 · 28/06/2023 21:50

It's tricky OP. We were cautious the first time and outgrew the house very quickly (without building much equity in the 2016-17 post Brexit price stagnation). We pushed ourselves in 2020 for the long term home, obviously a bit nervous at the moment, but our household income has increased quite a bit so we are comfortably within affordability (and can afford the rate rises) no regrets, but do often wonder how stressed we would be had I not have gotten from SEO to G6 over the last few years (civil service also).

CuriouslyDifferent · 28/06/2023 21:50

ohsobroody · 28/06/2023 21:43

People have been predicting this since 2010 and not seen anything like a crash, mild stagnation? Sure! A proper crash ... nope.

Don't get me wrong we would be happy because we want to upsize but injure can't see it happening! I though the experts were predicting more like a 5-8% drop?

Show quote history

That was before the underlying inflationary issues came to light which freaked out the BOE Cmtee. They now need to trigger a job loss recession and rates will rise to 6% most likely.

Im a Tory but I think what they’ve done is very sly. They got the bankers to ensure. One gets kicked out their house by the banks u til after May 2024…. When most likely labour will be in govt. Fab job at kicking the can down the road.

As for what people have been predicting since 2010 - correct, but by artificially keeping interest rates at 1-2% for the past decade or so, they’ve just stored up the pain.

Im not an economist, I just invest and listen to a lot of people who know a lot more than me about economic fiancés. A really good explanation is on PensionExpert on YouTube from about a week ago, where he talks about why the BOE got spooked. You won’t find it on any Msm, but it’s all in the data.

Original poster
pinnerts · 28/06/2023 21:58

I think the alternative is for us to always live in a flat

OP posts:
keel34 · 28/06/2023 22:01

@pinnerts how do the mortgage payments look compared to your income? How old are the kids?

fancreek · 28/06/2023 22:01

If you go all out will you be able to make repayments on 10% interest? 15%? If no then no, I wouldn't

Ambi · 28/06/2023 22:05

We're risk averse so would never borrow to our max. I've just done a quick mortgage in principle and we could borrow upto 3x our current mortgage but we kept ours low when we moved as we've had high interest and redundancy in the past.

rosetintedmemories2023 · 28/06/2023 22:06

pinnerts · 28/06/2023 20:17

We have to move due to schools but unfortunately to get a house we would have to borrow to our max. The alternative is to buy a flat which is much more feasible but is a flat. For the house - we would be borrowing 540k v 400k for a flat.

I own a flat too (also in London). My solution (and it has always been so prior to mortgage crisis as I never want to overstretch) was to buy a 3 bed flat.. sadly the perfect one is quite hard to find... I was even going to give up and try to find a generous 2 bed with a big hallway (to put stuff people usually put in the box room) but Mumsnet has convinced me I should try to get the 3 bed flat..

May I ask where is it that you are looking that you can get a flat for a family for £400k! My 2 bed is worth £400k but it's quite small. You can have a young child in there though...

Original poster
pinnerts · 28/06/2023 22:08

Our current take home pay is 7k per month and repayments would be 2,300 or 2,400 per month. Definitely couldnt pay it back at 15% but then most Londoners wouldnt be able to

OP posts: