Would you borrow to your max in current market?

[pinnerts]

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.

Very few few crashes in the past 40 years. Some with stagnation, is mid 90s but the housing shortage is far more chronic now. The realist is immigration levels are multiples of the accomodation we build every year. Work out supply and demand and you know prices won't be dropping too far for too long

If you do go for it, fix for a while. Yes you may pay more but better for peace of mind. If you fix for 10 years (which 99% of people wouldn't at this stage), then I doubt you would worry about 15% interest as your mortgage balance would be much lower then..however if interest rates do fall, it would be very frustrating for you..

Most immigrants are on student /work visas and statistically are from countries like India and Nigeria due to commonwealth links. They mostly rent..yes some might buy eventually but that would take several years..Hongkongers would be able to buy fairly easily(due to large deposits) but I think whoever has wanted to move here has already made the move.

I was buying with my British DH on a visa and they mostly took his income into consideration. My income was weighted far less. I don't doubt rentals would become scarce and more expensive but that may just mean we have families sharing rooms. For expats it may mean that companies have to arrange long term rentals for their employees. But on the sale side of things, that doesn't mean there wouldn't be a crash..

I’m aware im speculating, in recent weeks I’ve yanked most of my investments into the lowest risk categories, as I truly believe the underlying economic indicators are torrid, and we now need a recession where a huge numbers lose their jobs…. Most likely going to be at 6% base rate later this year.

It’s going to get horrible for some people. :(

i don’t care myself, I don’t use property in my investments, am totally insulated from Uk inflation, most of my money is in other currencies now.

I hope I’m wrong.

If you are trading up from a flat to a house - the alternative you don't mention is to simply wait to see how much prices drop isn't it ?
If your flat looses 25% and the more expensive house also looses 25% you save considerable amounts and may not need to max out.

For simplistic example :

Current flat value £200k (less 25% = £150k)

Current house value £400k (less 25% = £300k)

Total saving - 50k less than maxed out

I'm cautious anyway (and have probably ended up in a smaller house than I could have as a result) but I'd stick to a flat personally. Partly because in London a flat might actually end up with a lot more actual space than the tiny house that I presume is the alternative.

I wouldn’t personally. Why the move for the school and if it’s to get in a catchment for a very popular school it’s not always a done deal.
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If it’s an actual long term home I’d be less focussed on what might happen to house prices and more on what might happen to my salary and job over the next 3/5/10 years. If I had good job security and likelihood of increasing salary I’d be more confident in maxing borrowing than if I didn’t see any career progression or job security.

Personally no I wouldn’t borrow to the max at this moment.

I would never borrow to the max . Always been in a position where we could cope on one salary for a while if we had to and had spare money to have holidays, days out, activities for DC etc.
But I live somewhere where it's possible to buy inexpensive houses, and I can understand you wanting a house. What are the advantages to you of a house apart from a garden? Is a flat close to a park/other green area a possibility?

On paper (or the Zoopla tracker!) it has perhaps gone up by 20% but if you actually put it on the market I doubt it would sell for that.

If I can help it I would never borrow to my max. Whatever you 'predict' there is absolutely no way you can tell what is going to happen in the future. The only way to protect yourself is to mortgage to the lowest level you possibly can.

Our fixed term comes to an end in December. Although we will find it very difficult, because we kept our mortgage low we shouldn't lose our house trying to pay the ridiculous interest rates.

there are many flats in london which have private gardens, mainly period conversions. If OP is ok with period conversions which not everyone is, DH is flat against them. But if you really want a garden and lower mortgage, a period ground floor flat with private garden and share of freehold gives you the best of both worlds. I guess house means no one on top of you but in London, the Victorian terraced houses have paper thin walls; i had far more neighbour noise in my MIL's victorian terrace than in my top floor 1930s flat.

And there are lots of them in London in good areas, though it would probably be £450k rather than £400k. Still far less than the house though.

Depends. If I had lots of equity very secure jobs eg surgeon yes.

If I had high LTV no

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

Could you move a bit further out as 40% plus 540k is a healthy budget

How can repayments on 540k be £2400 though?

Unfortunately we cant move further out as need to be in London for jobs and elderly parents who rely on us. Our current plan is to port our mortgage that is on a lower rate plus borrow more - hence repayments as 2400 per month. But it's really really tempting to just go for a flat and have a lot more slack in our finances

I would. Simply as I spent 16 years in a flat with zero outside space and could never go back. I'd just fix for as long as I could.

@pinnerts but when does the cheap mortgage run out?

Our existing mortgage is fixed for another five years but thats only part of what we would be borrowing for a house. For a flat we could just stick to what we have and obviously pay off a lot more of it in the meantime

Our mortgage is about 50% what we could realistically borrow and and times that feels tight.

If the flat has grounds / near a decent park and provides plenty of room and individual spaces for everyone then I'd go with that.

You’re unlikely to fall into negative equity with a 40% deposit, so the question becomes how resilient your financial situation is to servicing the debt. For example, you say part of the debt is currently on a low rate for 5 years? If, in 5 years, the best rate you can get is 6% for the whole debt, could you still manage? 7%? 8%?

Things that were once unimaginable are now distinct possibilities, so should evaluate how much risk you are comfortable with.