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

We’d ideally like a 5 bed @Wotchaz as we would like to host family members that have moved away without having to turf kids out of their rooms. We also have a fair few pets and my partner has the option to work from home which would save us £115 in parking per month, and £250 in petrol (plus what we spend on pet care) so an office space would be ideal.

We currently rent a very small 3 bed and rent a storage unit as we can’t fit all of our furniture in so would like to avoid that cost ongoing if possible

@Rachaelrachael I think we’d like them close together if possible. I would like to cut down my hours significantly but it wouldn’t always mean a pay cut. If I did emergency or night shifts I could even end up with a pay increase on less hours.

If my partner worked from home we would save a lot of money. He goes to the office as his boss said you’re more likely to get promoted if you’re physically there. It’s difficult as we spend so much on parking, petrol and care for the pets we’d likely be better off with him at home as we could even potentially sell one car

Small mortgage, move in ten or fifteen years.

Interest rates could easily go through the roof in the next decade. What if your £2k a month mortgage turned to 4k a month when your five year fix ran out?

Yes it feels like a 3.5 bed in reality @NAndJSaysVoteConservative but the garden is reasonable so there would likely be scope for an extension.

Oh gosh, go for the middle house and install a second loo under the stairs or wherever you can put it! A huge saving over the £2k place and will last you much longer than the small house. And a big garden means space to extend in the future if you want to.

2230 for 6 beds can’t be right? Unless I am misreading something

Are they modern houses? I would prefer a 4 bed with generous rooms than the pokey rooms and many bathrooms new builds have.
I think you haven’t found the ideal house yet.

In reality @NeonSoda I COULD change roles and do overtime and cover the extra £2k but it would be awful for my mental health. I can easily pick up a last minute shift here and there and get £400-1.5k depending on length and location but I don’t want to put myself in a position where I NEED to do that every month.

And how will you pay that doubled mortgage when you are on maternity/parental leave three times and only one of you is working?

Middle house add loo.
Sensible offer, they’ll probably bite your arm off.
OR
Wait until new year for more choice. Not many people want to sell houses over Christmas.

Stick up the floor plan for the middle option. A second bathroom is easily achievable in many properties and you could pay for it with a few months saved rent.

If you are limited in housing stock in a village then location in terms of garden, views etc is the bit you can never change.

You don't have kids yet and don't need all the rooms, plus you have cash so you are in the best position you'll ever be in to do a bit of work. All houses need this eventually so better to future proof for 10 years now.

I’d definitely recommend a second bathroom but this could be added in pretty much any house?

5 bed sounds like a good compromise. I agree with the point made above that your payments might go through the roof! We were lucky to get a 5 year deal when interest rates were very low and we expect to pay back the house by the time the deal runs out, but interest rates have been so unpredictable, you should factor that in.

Depending on the size of the gift amount, there could be a third option of buying somewhere outright, a smaller property maybe in a cheaper area. You never know what life could throw at you, and if you can possibly give yourself as much wiggle room and security as possible then that's the most prudent option in my view. But I'm very cautious. Option 1 of smaller mortgage though is definitely the sensible choice.

How affordable would the bigger mortgage on just one salary? Have you costed childcare?
We have a very low attitude to risk so would always try to choose the "safer" option. This has worked out for to be able to adapt to life's changes like me going PT/ DHs redundancy and lowering his income / childcare costs and still manage financially. It's certainly something to consider and be prepared for.

@Chewbecca Property 1 is a 15 year old detached

middle option and property two are stone built period terraces

I wouldn’t go back to my day job and then would do locum shifts @NeonSoda. The fact is I WOULD have to work if it doubled to £4K but nights pay better so I likely could do it without paying the full amount in childcare/any if my family had the kids in the morning after a shift.

An EPC should give an indication of energy bills. Factor those in, along with council tax difference and water costs.

@Calmdown14 we haven’t viewed the middle option yet as and there’s no floor plan in the listing but I can see if the estate agent has one

If a £450k house costs £2k/month in mortgage, then a £500/month house (with the same deposit) would cost just ~£150k. Surely there has to be a middle ground, rather than just these two unsuitable houses?

Why not wait for a larger 4-5 bed 2 bath? Expand your search area a little?

But what about for the almost three years you’d be on maternity leave? Possibly just statutory minimum pay? Could your partner cover the increased mortgage on their own without you working?

What is your contingency plan if one of you falls long-term sick or can no longer work in the jobs you currently do?

We definitely can wait @PercyPigsInBlankets we’re just conscious of what we’re spending on rent and wouldn’t want to start a family without buying first.

@mumda Small property is a C, larger property a D

@HomeDilemma23 energy bills might be the breaker though

OP can I ask what your job is / what sector? I'm looking to get into something with good maternity packages, yours sounds amazing!

I echo the 'middle house' thoughts - surely best of both worlds where you've got some extra financial freedom / free from money stress, and a plenty big enough house for the next few years. You're still young you might enjoy moving in a few years for a new dream house project :)

(edited for typo)

I get very good maternity @NeonSoda but yes we would likely be fully screwed if one of us ended up on sick pay. I have insurance for my hands and eyes (recommended in my field of work) but if anything else happened I’d be up the creek as I have the most scope to make money quickly

I sent you a PM @DawnThoughts. Hope that’s okay! Worried it would be too outing otherwise