Should you take out the biggest mortgage possible?

[sandcup]

We are first time buyers, late 20s. In London. Due to our jobs we can afford fo borrow up to around £1mil. Obviously you can get a decent two bed flat in an ok area for about £550k.

Older people we speak to suggest taking out the biggest mortgage and not needing to move as it’s so expensive to move. But equally we like the idea of not being tied to our very stressful and long hour jobs.

This. People are going to have very different views. We went for somewhere we could afford and was big enough, but didn't stretch ourselves. Now mortgage free in our early 30s, whilst we bring up our son (and another one hopefully!). We might get another mortgage if we upsize, but for now the freedom is great. You can't beat this, IMO.

I wouldn’t borrow as much as a million but I would stretch further than 550k to get a better flat or small house.

I wouldnt buy an apartment if you want children at all. Can you comfortably afford to buy a decent 3 bed house? Then you have the best of both worlds (hopefully!)

The most important thing to do with any mortgage is protect it. Get your insurances thoroughly explained and make sure you have the right policies, especially important if you are stretching.

We were offered a mortgage far above what we actually spent. However, we had children in school so knew we would be living here for 20 years. We did a reverse Rightmove search whereby you put in your max mortgage offer and all the property requirements, number of bedrooms, search area etc then reverse the results to you get the cheapest houses first. We looked at anything with potential.

Moving costs a lot especially stamp duty so staying put for a while is the best advice. Personally I would go for a house over a flat just because of the monthly fees.

I think it depends on your attitudes to work and play Vs where you live.
If You don't stretch to the max you could both go part time in a few years, first pay down what you can, then go part time eg 3 day weekend, and then have a better life in a worse house.
Or you could max out, have the perfect house etc and if you love to work loads then it's a win win.
There's no "right" answer so if anyone tells you what to do they just mean based on their life.

I agree you should max out but only subject to a few factors -1. Affordability of the monthly payments with a buffer for interest rate rises. 2. What prospects there are for your job if you needed to find a new one 3. What pay rises are likely for you in the next few years. 4. How soon you might be planning a family. 5. Whether you can still afford overpayments.

In my 20s I was very likely to get significant pay rises every year or two as I had a structured training scheme and large corporate employer.

If you can pay down extra capital in the early years it saves you a lot of interest in the long run plus gives you a buffer if you need to remortgage a few years in.

I think the older folks you have been talking to have rose tinted spectacles and are remembering the last 14 years of low mortgage rates

and probably even earlier.

My parents always said this but they bought in the 60s and 70s when my dad’s salary went up a lot, as did the price of property and my mum didn’t need to work. The price of their house compared to my dad’s wage wasn’t ridiculous as well and they always laughed and said you could walk out of one job right into another.

Even 35 years ago things have changed massively.

Do you want to stretch yourself when interest rates could go up? Are your jobs at risk? Do you want a baby? Think your finances through.

A £1m mortgage will be over £5k/month repayment. Do you want/can you commit to paying that back for the next 25/30 years? If so, go for it.

We are also in London and could have borrowed over £1m. I'm very pleased we did not (especially post interest rate rise). It does mean we live in a neighborhood that wouldn't have been my first choice, but having the option to move/quit jobs easily, having more money to spend on holidays etc, and not being so nervous about what the interest rates do is worth it for me