Big or small mortgage?

[HomeDilemma23]

I realise this is a hugely privileged position to be in but I find myself very unexpectedly with a large monetary gift. I am in my mids 20s, currently renting but looking to buy. My partner and I both work and earn decent salaries but we’re stuck between two properties.

1. small 4 bedroom house where all bedrooms could just fit a double bed but one would have no space for storage, good parking, garage, decent sized garden. Needs no work but would be keen to potentially extend/convert the garage. £500pcm mortgage (with our large deposit)
2. 6 bedroom house with a large garden would potentially need a bit of work. £2kpcm mortgage using the whole deposit. Our dream home around 5 minutes walk from property 1 so location not very different but this one does have stunning views

We don’t have any children at the moment but hope to have 3. We plan to start trying in the next year if we buy a house. My worry is the 1st house probably couldn’t sustain us forever if we were lucky enough to have the family of our dreams.

We are leaning towards the smaller house and either using the full amount of money or keeping a little aside to alter the house to some extent. For context we’re in a cheap area and both houses are under £450k. I currently work 50 hour weeks in a very difficult job and all I long for is my own home to feel comfortable in. Will we regret not getting our dream home whilst we have the chance?

Again, I am completely aware of how privileged this situation is. I grew up in a household with no money and we all shared rooms and we didn’t even have heating and sometimes went without food. I really welcome any viewpoints

Smaller house with smaller mortgage. Financial security means you can sleep at night. 2k is an insane amount and you don’t know what’s around the corner.

There is s big differrence between 600 and 2000. What are the monthly runnibg costs? How will cover refurbishment?What are your incomes? What maternity pay will you get? How much will childcare cost ?

Small mortgage

The biggest you can afford - if that’s your forever house. Stamp duty and moving is expensive you don’t want to fork that out twice if can be avoided

I would probably hold out for something in the middle... it seems the smaller one is too small and the bigger one is too big. A mortgage of £1k will be manageable if £2k is.

Could you service a £2k pcm mortgage on maternity leave or once you are paying nursery fees which could be £1k per month for one child? Or if one of you chooses to be a SAHP so going down to 1 salary?

Either way, If you decide to use your money for a house deposit with a partner make sure you protect your investment. You are young and I assume not married so you need to make sure you get back what is yours if it doesn’t work out.

Yes I know you’re completely right @cestlavielife. it’s a huge difference. I think the bigger house looks to be overpriced judging by nearby houses but I don’t think I’d have the guts to low ball an offer.
With the smaller house we’d instantly be saving money compared to where we rent at the moment (around £600 a month in savings). Both of us are due a pay rise within the next year and we could afford £2k plus running costs but it would be quite tight if we had any large unexpected bills.
With the small house we could afford for me to go part time and still be very comfortable. I get brilliant maternity pay, 9 months plus a 25% bonus if I decide to return to work.

I agree that look for something in the middel! 6 bedrooms is an awful lot of bedrooms as is £2k mortgage.

I would go for the smaller mortgage, the biggest difference is that you will have wiggle room when it comes to paying childcare. If you go for the larger one now would you have to space your children out more to pay for nursery? (fee are expensive) would you end up having to have less children then you would like?

Not having a big mortgage over your heads if one of you ends up redundant for some reason. This does happen and did to us just a year after buying our first house, if we had bought a bigger house we would have had to sell it.

Been together over half a decade @BasinHaircut and getting married soon. It was gifted to us jointly but otherwise brilliant advice. I am the higher earner but not by a crazy amount.

Also don’t forget the stress of moving again.

What is the square footage of each house, OP?

@MigGirl Yes, good point about nursery fees. Our family is keen to do some of the care but that’s now and things could definitely change so we need to factor it in. We would save £600 a month whilst I was not working as that’s what we spend each month on dog Walker/pet sitters.

". Both of us are due a pay rise within the next year and we could afford £2k plus running costs but it would be quite tight if we had any large unexpected bills."

In which case if you are thinking of starting a family soon then I'd say you can't really aford it. Add another £1k a month for nursery fees then the extra you need for baby cloths food ect (there are cheaper when little). The you'd probably find it difficult with one child let alone wanting 3.

Agree with everyone that you need a middle ground. Our mortgage is bigger than £2k so it can be doable (though not going to lie, it’s painful with 2 sets of nursery fees on top!), but 6 bedrooms is a bit unnecessary.

If there’s a specific area you’re after you could always post leaflets through in early Jan?

i agree with something in the middle. Do you really need 6 bedrooms?

i bought my 3bed house in 2020 and we got a £1.1k mortgage to pay it back quicker. We ended up overpaying too but now putting all the spare cash in the saving accounts with the aim to pay it back by the end of next year, in just under 5 years!

we initially considered getting even a higher mortgage payments but the mortgage advisor told us that we could always overpay a decent amount without any penalties and have that extra flexibility.

I also grew up without much so I’m very frugal but still enjoying life 😊 we did progress in our careers since we bought a house but our lifestyle didn’t change much

@NAndJSaysVoteConservative

1. 1260
2. 2230

Low balling an offer. You could save a life-changing amount of money just from leaning into saying a few uncomfortable words.
You just say (or write)
'we adore the house and would be a completely reliable and motivated buyer, but we can't quite stretch to the full asking price. The most we can stretch to is x. If there is anyway you'd consider a sale at that price we would be delighted to proceed at pace.'

You literally have nothing to lose. Mad not to.

I suppose you’re right @cheeseandbranston. We’re in a village so worried word would get around that we were cheeky fuckers.. the last house of a similar layout on that road sold for 27% under what they’re asking but it was a few years ago. It would make things hugely more affordable if we even met in the middle.

As a first time buyer I'd go for the smaller mortgage to give me greater spending power. I'd also use some of the monthly savings to buy Added Pension every month.

And I'd have no hesitation in doing the cheeky offer on the second house. At least then you'd know that you'd tried.

But for mid 20s couple a 4 bedroom house with garden and garage sounds fantastic.

There is a house in the middle @FluffyKitty007. A 5 bed where the mortgage would be £1000pcm but it only has one toilet vs the 3 that the others have. We’d ideally like 2 toilets so that someone can nip to the loo whilst the other person is in the shower.
It is otherwise great with a huge garden and lovely views but I’m not sure whether the smaller house would still be more sensible to start with.

This house has been on the market for 8 months now so they would maybe take a lower offer but I’m completely clueless as to the best way to find out if a 2nd toilet could be added

6 bedroomed house seems overkill, too large, high bills, costly upkeep, endless cleaning, something you’d likely to downsize from in pensionable years. You’d have little flexibility to go part time with kids.

4 bed could be a good option, affordable while the kids are little, offers enough space, lower bills.

Will you go back to work after having all 3 children? Also have a think about whether you want your children close together as you may need to factor in 2 or maybe even 3 lots of nursery fees!

We went for our dream house (which I don't regret) but it has been a long hard slog having double nursery fees to pay as we had ours close together.

One other thing to consider - I always thought I'd go straight back to work but totally changed my mind after having baby no 2.

If you can afford to survive on 1 salary and cover childcare then I'd go for the expensive house personally!

I'd say 1260 is too small for a 4 bed, don't think it'll be practical when you add DC into the mix.

Agree with those who recommend trying to find a middle option.

Small