Housing ladder and first time buyers: are we doing the right thing?

[DYIDIY]

Sorry for the long post, will try to summarise our situation as much as possible.

We are FTBs late to the game (for several reasons) so we are about to purchase our first property aged 39 and 42. We have 1 DS who is 3.5 and not planning another one for now but we are also potentially open to the idea in the future (obv I realise we need to make up our minds soon as I am not very young).
We live in a very expensive area just outside of London, we have friends and family here and a life we love so we decided to settle for a smaller property and compromise (still costing us 525K!), it's a lovely but small 2 bed garden flat.

We wanted to ideally get a bigger home and future proof ourselves in case we need more space with a potential DC2 or DC1 simply growing older but we decided to a) prioritise area over size and b) buy now instead of waiting more years for a bigger deposit and lower childcare fees in case prices kept increasing and also to make the most of the current stamp duty advantages for FTBs.

A housing chain seems like an impossible goal for us, we are realistically not going to be able to move from the new place for at least 5 years after which we'd be mid 40s. Our earning potential isn't going to increase massively and mortgage payments are quite £££ so whilst we will continue to save, we won't come out of the 5 years deal with 6 figures in our bank to allow us a lovely upgrade.

I feel happy that we have finally managed to put together a deposit whilst renting and paying for nursery, it's been very hard and took us a decade to get to this point but I cannot fully enjoy the moment as I am already focusing on the next steps and whether that is ever going to be achievable.

Are we doing it all wrong?

Sounds like you're doing it right to me, being thoughtful and sensible and not over stretching yourself for a dream that mightn't be so in reality.

There doesn't have to be a "ladder" if your property works for you, there can be a paid off mortgage on a property in a lovely area and time to enjoy having more disposable income after- what's not to like?

The advantage of buying now mean it will be easier to get a longer term mortgage if you need, and associated protection policies will only increase in cost as you get older too.

Fair play to you and congratulations on being able to buy at all I say!

The 'ladder' isn't a thing. It became popular idea off the back of the council house sell off where people could by their council house cheap, many realized they could then flip these houses for more money than they paid and buy a different house.

That then became a popular idea for tv shows about flipping houses and buy to letting (to fill the housing gap) and they all started banging on about 'climbing a ladder'.

In reality people buy homes to live in and you should only buy somewhere you could plan to live forever because nothing in the future is guaranteed and houses don't exist to make money so you can climb imaginary ladders.

In the old days people tended to stay in one owned house their whole life, even if people did it was usually laterally due to needing to move not moving upwards every few years. The money lost in moves and stamp duty alone in that silly game is insane and it just drives market prices up.

Consider it as 5 years investing rent money instead of handing it to your landlord, on top of whatever you can save, plus any equity you might build up.

Well put.

Of course you aren't doing anything wrong.
Sounds like you are doing very well.
That is a colossal amount for a flat, but you have to work with the situation around you.

thank you for this message!

This, honestly if you don't see your wage increasing massively the bigger dream home might increase beyond what you can save. At least if you buy a house you have some equity and you are paying off your own mortgage instead of a landlord's and then if larger properties increase in value then at least the one you have invested in will increase also and take some of the sting out. Xx

Also is it comparable to the property you're currently renting? Size and mortgage repayment vs rent? The only way I might hang on would be if rent for something better was substantially less than the mortgage payments especially the interest element of the mortgage. X

Good luck OP. :)

This. With spades on.

In the old days people tended to stay in one owned house their whole life, even if people did it was usually laterally due to needing to move not moving upwards every few years

How long ago are we talking? People certainly do less moves now because of high entry costs/ stamp duty/older age etc.

Do you want a flat or a house @DYIDIY? If you eventually want a house as would consider looking in a different location a bit further away? It’s easier to make connections with small dc. Flats in my part of London really haven’t increased in price for a few years so I know a few people stuck in them.

Sounds like you have worked really hard to get to where you are now, to be in a position to buy - and you haven't left it too late at all, I have first time buyer clients who are much older than you (i am a mortgage adviser).
I totally get where you are coming from, wanting to future proof yourself, and there are pros and cons to each situation. Have you spoken to a mortgage broker who can see if perhaps with stretching your mortgage term you might be able to get in to a 3 bed property? Its great to be thinking of the FTB advantages, but if in a few years time you want to move to a 3 bed, then you are no longer first time buyers and it might end up costing you a lot in selling fees, stamp duty etc.
Lots of people are also quite divided on whether to stay renting or to buy, and I am absolutely on the side of buying, for the stability and also to be growing some equity of your own instead of paying off someone elses mortgage or growing their equity in the property you are renting.
I don't think you are doing it wrong at all, you are clearly not rushing into anything, as long as you know all your options.

The good thing about doing it sooner rather than later, is that you can stretch your mortgage term in order to keep repayments as low as possible, and also, as another person said, the mortgage protection goes up the older you get :)

Thanks all. We are already in the process of getting the garden flat so we have made our decision really.
Moving even more further out is not an option, we debated a lot on this and it isn’t right for us at this stage of our life.

I would buy a house in a cheaper area, doesn't seem sustainable to buy a two bed flat for a family of three.

Congratulations!

The idea of moving up the property ladder didn't impact my decision making process on my first and favourite house. It was a small 2 bedroom terrace and I was incredibly proud of it.

You're buying a beautiful home and I'm proud of you!

@Papricat how so? It’s one bed each. How is that different from a 3 bed for a family of 4?

@user1471538283 thank you!!

It may not be a thing for you but it certainly is for us and people around us. Houses are expensive in the south east, we couldn’t afford to buy our forever home to start with. We first bought a 2 bed and are now in a 4 bed and will be looking to move up in the next few years as we approach 40. Same as everyone we know really.

@DYIDIY yes you are definitely doing the right thing. Far better to win a house then pay rent and the fact the property suits you and your family now is great.

We first bought a 2 bed and are now in a 4 bed and will be looking to move up in the next few years as we approach 40. Same as everyone we know really.

Except the OP is a similar age but a FTB…

Moving even more further out is not an option, we debated a lot on this and it isn’t right for us at this stage of our life.

Normally it’s a harder move once you are in the dc settled in school stage & be mindful that houses a little bit further from you may be out of reach in 5 yrs time. Having said that I also know plenty of families happy in flats.