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

I would go for the smaller house. You don’t even have one child yet so it will be many years before you need a big house and even then you won’t need a 6 bed house. You would be paying a much higher mortgage for rooms that will sit empty.

The money you have inherited should be making your lives easier not harder. There is no need as a couple to put yourselves under financial stress. A 4 bed house and enough money left over to enjoy a high standard of living sounds perfect to me. You can always move again in 10 years or whatever if you want more space in the long term, the first house you buy doesn’t have to last you forever.

You need to visit the middle house and get a floor plan. It would be a rare property that had 5 bedrooms and no chance of a second loo.

However I feel the one point that is not being talked about is the difference between a detached house and a terraced house. Unless I've got it wrong the first is detached and the other 2 are terraced. I would go detached every time.

Could you afford £2k a month when you're on £500 a month and then nothing a month on maternity leave?

Could you afford £2k a month while also paying £1k a month per child in nursery?

If the answer to those is no then go for the smaller house.

If you’re both in very secure employment I would personally get the larger property. You could also get a mortgage over 35 years to reduce monthly payments as you’re only young and then reduce the term as time goes on. The thing with mortgages is they’re painful early on then it tends to get easier over time.

@MulledWineBeMine I agree, there’s no way on earth we’d put them in the conservatory. We’d consider a temperature controlled insulated outhouse/shed but obviously that costs a LOT of money.
We definitely do need the floor plan for the middle house and to view it I think. That is listed as 4 double bedrooms and 1 single

Out of interest why would you be going part time if you're the higher earner?

I'd go for the smaller mortgage, to protect yourself if you're looking at reducing your earning capacity otherwise you risk being too financially dependent on a man

This

None of these houses seem suitable, what’s the issue with waiting for something else to come on the market? Why does it have to be one of these?

I’d go for the small house. It doesn’t sound that small - plenty of bedrooms for future children - and having a smaller mortgage means less worry if something unexpected happens and also more money for other things. You are only in your 20s so no need to worry about whether it is a forever home. It can still be a long term home and you may or may not move in the future.

This, 1000 times. DH and I are late 40s/early 50s and we paid off our small mortgage earlier this year. We've dealt with redundancy, sickness, maternity leave, interest rate rises, nursery fees for 2 and other financial pressures, but we've always been able to pay the mortgage. We made a deliberate decision not to overstretch ourselves. Sure, we don't have. Big, flashy house. But we have moderate, warm, dry, nice enough house that is all ours.

Don't overstretch in a falling market. Hold tight if you can and look at the prices again in 6 months time to access the rate of decline. 2024 will be a difficult year for sellers. Interest rates not likley to come down soon.
https://uk.finance.yahoo.com/news/interest-rates-remain-high-warns-bank-of-englands-breeden-161406827.html

I think with the two properties there's almost too much variation between the two and you need to look at a middle ground.

To share my experience, we have a 3.5 bed new build semi (1264 sq ft) and three children under 8, so we could be you in a few years in property 1.

We decided to buy this just to get on the ladder and then we plan to buy a bigger house later so that each child could have their own bedroom. However, as time passes, we no longer want to move unless the perfect house comes.up! We really love the area and are so glad we moved here. We could have moved to a larger house and extended ourselves, but I love having the smaller payments and overpaying every month as opposed to being forced to pay an amount each month. This allows us to have flex in our life and adapt to changes that you can't always foresee. For example, we've had two very close family bereavements and one of our children nearly died and received a very serious diagnosis - all of these resulted in life changes/ reduction of hours at work and it was nice to not have to consider the mortgage above our mental health and the needs of our children.

Psychologically I think it's nice to overpay every month knowing you could get some extra money if needed, I also don't think you need lots of room for young children of primary age and two of them are usually more than happy to share. In an idea world, I know that the rooms in your first house are not massive, but ours are comparable and we get along very comfortably. We have recently done our garage (into an office) and created a lot of extra space which has also added value to the house.

Ultimately, you can't make the wrong choice. As long as you're happy with the area, you'll be fine. You can always move!

Personally I'd pick property one because

1. prefer to overpay the mortgage than over extend myself
2. I would choose the area the house is located over the house itself
3. you don't need as much space as you think with young children, however, the more space you have, the more cleaning there is to do!
4. would want to be prepared for nursery fees
5. Life has a way of blindsiding you with changes you don't expect which could result in job loss, need to reduce hours and unexpected costs. Being able to adapt to these whilst having a young family is a real privilege.

"However I feel the one point that is not being talked about is the difference between a detached house and a terraced house. Unless I've got it wrong the first is detached and the other 2 are terraced. I would go detached every time."

I pointed this out, no way would I want to live in a terraced again. There is to much disruption from neighbours and we had issues with noise when the kids where small it made getting them to sleep difficult.

Also I see no reason if you insulated the roof in the conservatory why you wouldn't put pets in there. I suggested it as this is exactly what in-laws have done the conservatory is just like another room in the house now and just as warm in winter and cooler in summer. I'd do it to ours if we had the money so we could the use it all year round.

Go for house 1.

If the bedrooms would just about fit a doube they will be fine with a single bed. You don't need the 6 bedroom dream-home for at least 15 years from now. If you can seriously consider affording a £2000pcm mortgage then overpay your small mortgage and get it paid off as quickly as possible. You can then get yourselves into a much better position to buy the larger home. Aim to move to a larger home when your oldest is in year 5 or 6 (taking into account school catchment areas). It's called the property "ladder" for a reason. Going for your dream forever-home as your first-time purchase overstretches you to pay for things you aren't going to need for years, and leaves you worse off in the long run.

Protect your deposit
Smaller house
Area Always, look up crime reports for the areas online.

I agree @MigGirl pets can be kept in a conservatory if you are careful it doesn’t get too hot or cold in there. Our Guinea pigs lived in ours for years quite happily each winter - in summer they lived in the garden with shelter & a run.

We just kept the heating on low in there for them over the winter months.

Smaller (although that is still insane for a first time buy). Buy somewhere for now; you cannot predict what happens with children. Overpay mortgage and do renovations, so if you do need to move, you’re in a strong position.

As MigGirl says detached every time if the other properties are not detached. Living a comfortable life with children is so much better than a life living where you watch every penny. My D’s partners mother said she would do child care one day a week four years ago and I can probably count on two hands the number of times she’s actually had them. My D bought an ugly house semi with one loo after growing up with three and yes it’s a bit of a pain but now with two children 6 & 4 she still says one loo is the pay off for not watching the pennies. Even with the houses in the same village I still say it’s location location location and where each one is located. Avoid pylons, takeaways and garages.

Have you seen the size of rooms in a 4bedroom new house!!! 1240sq is not a big enough house for a family.

There are a lot of 'what ifs' to consider here. What if you can't have as many children as you'd like? What if you decide 1/2 are enough? What if one is born with special needs/a disability and you couldn't cope with any more? All things to think about.

Personally I'd look for something in the middle and preferably with 4 bedrooms on the same level, much better with young children. Also to me the downstairs space matters far more than bedroom sizes. We have a 4 bed, 1 is a box room and another a small double. Downstairs we have a kitchen diner with a sofa, lounge and an extra reception room. We use this as a playroom currently, but it's about to become a gaming room with toy storage and sofa bed for guests/kids sleepovers.

Our children, 9 and 7, spend very little time upstairs but I get this will change as they get older, in which case the 1 with the small double can have sole use of the playroom if need be. As it is though, we have plenty of space to spread out and do our own thing if we want to.

AT your age, I'd go for the mortgage and the house that you want. Pay the moving etc costs now, in a while the mortgage starts to seem irrelevant. And if it all goes pear shaped you can sell up. But it most likely want.

Thanks everyone! Lots of different viewpoints to consider

I agree with you on house one. It is a very narrow living room and that L shaped bedroom isn't great

I don't think the bigger house is an easy sell. Does it have a drive if it's a terrace? I'm thinking most people who want super size family homes want drives and garages. And most people would sacrifice bedrooms (especially those on a different floor to get this), especially with young children.

Are there any other houses the same as middle option that have sold? Worth searching the Right move sold pages to see if you can find their floorplans. If no one else has put in an additional bathroom there's probably a reason why not. But if they have, it's very likely you could too.

Or just wait and see what comes up in New Year.

Start smaller. A 4 bed is still a great sized house for a family, we lived in a smaller 4 bed detached 80's house with two young primary children and it worked well, I don't understand people on MN needing such huge houses!

You don't know how your lifestyle and priorities might change after children so I would go for the safe 4 bed detached as it sounds ideal for a couple then a young family, you can put the pets in the playroom/study space, then nice open plan family space in the rest of downstairs, no worries about neighbour noise, easy to maintain and clean and budget flex for the parental leave and childcare years.

Give it 5 years to see if your hopes for a large family come true, then you can always move for a bigger property once you are sure you want to stay in that location.

I only know one friend who has stayed in their first time buy property from their 20's and that's because she's remained single and has a low income, the majority have relocated due to all manner of changes in employment, relationships, wanting to be nearer to family, school choices, amenities. Life is hard to plan for and you sound like you have very healthy finances even before the gift, so money isn't likely to be a constraint in future.

I don't think the 6 bed looks an ideal layout for a family to be honest, but that's personal choice!

I'm not a fan of either of the floor plans you have posted, so hopefully the 5 bed is the answer. Overstretching yourself is a bad idea- it will have a big impact on the quality of life you have when the kids are little, and for what? Spare rooms that you don't need?
That said, you need to make sure that the space is where you need it. The 6 bed has the downstairs living space of a 3 bed as it is spread across 3 floors. If you are planning 3 kids + pets then you need to maximise your living space.