Go for the financially comfortable option or stretch ourselves for the perfect home?

[Boxiboxi21]

Option A: 315k 3-bed semi, nothing wrong with it, just quite small and surrounded by neighbours in a cul de sac with properties at the back too. We could comfortably afford this even if I lose my job. We would have approx 18k left over in savings.

Option B: offers over 375k, 4-bed large semi, better location and facilities nearby, not overlooked at back, has own suite for family members to stay. This would be our forever home!

My partner and I have a baby on the way and my job may not be hugely secure after my maternity leave early next year. We could afford the 375k now but it would wipe out all our savings on stamp duty and the deposit, and mortgage would be £400 higher a month which would be very tight if I lost my job. Which would you say we should go for?

Do people really think rates will go as high at 9% again ?

When I first got a mortgage 27yrs ago in 1999 I was paying just under 7% and then went down over the years to the almost low of .5/1%

In the past mortgage rates have been at 17%.

@KeepPumping But the earnings - cost of housing ratio was much lower. Therefore you were not committing as much of your earnings to a mortgage. We had 3 of DHs salary plus one of mine to get £18,000 to buy out first house - a decent sized 3 bed semi. Identical one is £475,000 now. Probably not going to be 3 times one salary plus 1 of the second salary!

Yes but that was almost 40yrs ago

@Blondeshavemorefun In 1979 I think!

I was thinking mid/late 80’s but prob wrong

We went for option A cheaper house. I'm glad we did as the price of food etc keeps going up and I've been on maternity leave. I would have really stressed out about finances picking the bigger house and probably would have had to go back to work sooner which I didn't want to do. Don't get me wrong, I still think about the bigger house but being comfortable and happy and knowing we'll have money for days out as a family was more important

You are right !

What has changed do you think?

Stretch and buy your perfect home (doesn't sound too much of a stretch anyway).
You don't want to be looking back in just a few years time and kicking yourselves for not doing it.

Thanks everyone. The majority of the deposit foe the 375k house will be coming from a windfall of money in received recently - I've never had so much cash available to me before. It makes me feel a little uncomfortable that the entirety of that will go on a house, even if it's a really nice one, because I grew up in poverty and it was drilled into me to save for a rainy day.

However even if I go for a 315k house and have a decent chunk of savings left over, I can imagine this will soon get eroded on spending i.e. holidays, general bits for the baby, car. We won't be as careful as we would be if we went for a 375k option with higher mortgage.

I have a lot of work to do to get my house ready to sell and even if the current 375k house goes, at least now I feel more certain in going for another house at that price point. Thanks so much all!

It’s just pointless looking at houses if you’re not even on the market, it’ll only make you regret not being able to do anything.

Some vendors don’t want viewings from people who are not on the market. If it’s perfect, it might sell quickly!

I’d say the 3 bed. We’ve raised 2 kids to adulthood in a 3 bed semi. More space is nice but certainly not a luxury worth a chunk more debt for IMO. fast forward and we have also now paid off our mortgage which wouldn’t be the case in a larger more expensive house.

And for a short period of time, when houses were much cheaper as a proportion of income, and people got tax relief on mortgage interest!

If you are 100% sure that you love the area and won't want / need to leave any time soon, I'd definitely stretch and go for the more expensive house. As pp said earlier, needing to move in a few years because you need more space will cost loads in stamp duty, removals costs, not to mention the absolute hassle of moving. I wish we'd held out for a bigger place when we moved here - as the kids have grown, the house has seemed to shrink!

@Blondeshavemorefunaccording to Mumsnet economics, we’re all fucked. Rates will rise to 9% +, no point in buying houses, the economy will
never grow and profitable home ownership is a thing of the past. Sadly with current Labour government I can see why they’re saying that! 😂😂

indeed. 9% is semi high compared to 5/6 but not to the 12/17% decades ago

tho obv people mortgages were much less then

If you prepared for the possibility, and able to deal with a worst case scenario then yes, go for it.

I'd go for the better home. Moving again will be prohibitive and you can actually afford it.

I stretched myself and I have no regrets. If it’s a forever home, it’s worth it.

In 5 years when your fixed term ends and rates go up, you won’t be paying nursery fees anymore as your youngest will be at school already.

Why assume you will lose your job? Even if, you can find another one - it sounds like you would survive on lower income than now.

Moving is expensive. If you can get a mortgage on your dream home right after your starter home, do it. It will save you tens of thousands spent on stamp duty, solicitors and estate agent fees.

House prices keep going up and you might not be able to afford a house like your dream house in a few years time. Despite what people on mumsnet are saying, the trend is going up. Even if the market is slow now, it doesn’t mean that houses will get substantially cheaper. The dream house will cost more in 5 years and the question is will your salaries grow enough to be able to afford it? Absolutely go for it.

Be careful - tomorrow is Saturday and they likely have first viewings scheduled. If the house is great and priced reasonably, they might get their first offers on Monday. Good houses get snatched up quickly, only the average ones linger on the market for months.

This happened with the house I sold and the house I bought last year - one day of viewings, offers first thing on Monday (4 on the house I sold, 2 on the house I bought). Both cases the highest offer was asking or above, so they got accepted on the same day. It does happen

In the 1970s. BoE would never set them so high today. People took mortgages on 3% rates and half of them would be bankrupt if rates were to grow to 17%, nobody sane would allow for this to happen, it would break the housing market. Rates are not going back to 3%, but not 17% either. They will most likely stay in the 5-10% range

BOE doesn"t control mortgage rates, the bond market does. Mortgage rates at 10% also mean a lot of bankrupt people, even 5% is testing people,, that is how big a debt mess so many have got themselves into.

BoE decides what the BoEBR is and mortgage providers set individual mortgage rates (after the fixed period) at BoEBR + eg 4%. BoE has direct impact on how much interest you pay