Should we stretch to a £925k house or stay within budget?

[Stansteding]

We have a house worth £515k with a mortgage (SE England) and I have £282k cash after a flat sale to bring our buying power to £800k. We’ve been looking at houses in this range but the perfect house came up which ticks all boxes (except needing painting and new carpets) for £925k. Right now we have about £1000 a month left over to save, both work full time and two small kids so I am enjoying having the flexibility and safety net of two incomes which can cover the mortgage on their own. But now I’m thinking with the enormous amount of stamp duty we would pay, maybe break the mortgage and borrow the extra £125k needed to get this house. I’ve got the mortgage in principle just now and it would be around £600 extra a month mortgage payments if we extend our mortgage by 10 years so taking us past retirement age instead of mortgage ending a few years before. I am just stuck thinking that all the £800k houses have some sacrifice and maybe we should go for this more expensive house. Another factor is we have a 5 year fixed mortgage as I never thought I’d need to extend our mortgage, but my flat did sell for less than I paid for it. Coupled with that the interest rate we got right now is good at 3.9% and would go up to 5.2% and is 1.5 years into the 5 year fixed. Really wishing I’d gone for a 2 year fixed so we wouldn’t be on the hook for £8k to break it!

I know this is a first world problem but I just don’t want to make a mistake as it’s enormous sums of money and I’ve never had this much in my life and I’m afraid of making an error we can’t recover from. But equally I don’t want to be so risk averse that we don’t have more space for the kids.

What are you like and what are your lifestyles?
DH and I our really home bodies and our home really is our castle, we only go out occasionally. So the stretch was 100% the right thing for us, being in the perfect home gives us so much joy.
But if you are someone for whom holidays and going out give you the joy maybe the stretch is not right. Sit down and discuss what you need to give you joy in your life.

I agree with this.

Personally, I would go with the affordable option, and if location is important to you, then I'd be thinking about what compromises I could make to get the location I want without increasing the price paid.

I think I'm naturally fairly cautious, but that's probably also because I remember interest rates being so much higher than they are now. The "low" first time buyer rate for me in the early 1990s was 11.5%, so I'm very aware of that.

I'll be retiring next year, at 59, and that wouldn't be possible if I had a mortgage.

To be honest, I think you'd be daft to spend that amount of money when you say you like and could be mortgage-free in your current home.

I don’t think you can afford it, OP. And that’s coming from someone with a £630k mortgage on a £900k house that runs until we’re 74 ….

I think you're right to prioritise location.

If you would be happy with a semi detached in the right area then look hard at those. Next time a suitable one comes up, act quickly and decisively to secure it. Things like garden size are less important, in my opinion.

Thank you, you are right and I won’t make the same mistake again of being hesitant. A semi detached would be more in line with our budget and I’m not fussed about having a detached.

Plenty of high earners seem to be losing a job in late 50’s and struggling to find similar roles. I’d rather have a decent house and be a bit safe than presume you can keep earning top whack to 65+

first direct which is linked to hsbc group allowed me to do this

I would go for the dream home to be honest but get a good survey because even though it looks done if it has a leaky roof or damp you’re in for an expensive surprise

Do you both expect to keep earning more?

What is striking about your question is that you don’t say anything about the actual house you’ve got or the house you want, except for the finance. If your house suits you where you are and you like it and there’s enough room then stay where you are.

Financial advice I’ve come across always said that you could make more money by Investing than with property. You could put a portion of that into a stuck and share ISA each year.

What is striking about your question is that you don’t say anything about the actual house you’ve got or the house you want, except for the finance. If your house suits you where you are and you like it and there’s enough room then stay where you are.

Financial advice I’ve come across always said that you could make more money by Investing than with property. You could put a portion of that into a stock and share ISA each year.

the unstable jobs market would put me off the bigger house right now. It’s a big commitment if one of you were to be made redundant. It’s taking many months to find work at the moment.

ironically the big pusher to move is my husband even though he earns less and is older. He doesn’t want to take a mortgage but he’s been so depressed by the houses we’ve seen. I do want to move as we could get more space and an actual garden (I mean it when I say a patio which was poor planning on my part for when kids would come) but after this thread I think wise to stay with the financial cushion and get the bigger house, same location, garden (not a big one). It’s just my husband is now talking about leaving the area entirely because we can’t find the family homes he had growing up, but we don’t live in the north and it’s just not realistic here so close to London. Also I need to be close to work because even with the flexibility, I do all pick ups, drop offs, sick days etc and need to be close by or I’ll lose my mind with the pressure of it all.

I see I’ve been looking at this “dream” house mainly
to try to appease him which I shouldn’t do as we can get a perfectly adequate house at £800k that gives us so
much more financial freedom. And this house has plenty of problems for the money which we couldn’t afford.

thanks everyone on this thread for making me see sense and to have a serious chat with husband.

How old are your children?

One of my siblings has overstretched to get a big house. His current account is overdrawn. I live in a cookie cutter and have more money than him. His house is worth twice mine. I am a bit tight for space so I need to be careful re how much stuff I have and how carefully I store it. He can store anything he likes. He has loads of space for anything he wants. He could stick in a grand piano without blinking (though the catch is he can’t afford any kind of piano). I suppose it’s whatever you want and are comfortable with. Btw painting a large house properly is a shit load of expensive work if it’s done properly.

We bought a house explicitly because of the big garden and my bastard kids never go in it! "Too many insects" apparently 😂

You haven't said how old your children are, OP, but I do think you might be overvaluing the worth of a garden in your mind.

I do think it's more of a fantasy than reality for a lot of people that you'll open up big back doors and the kids will amuse themselves endlessly out back. But in reality, unless you have loads of room for paddling pools and trampolines and swings and treehouse and soccer goals, not to mention neighbours who won't complain, they often don't provide what you're looking for.

For what it's worth, lots of us raise children in London (in very expensive houses) with not much outside space. Yes, when they're really little it's nice to have the option for messy projects and mud tables and water play, but with a little more effort you can find ways to provide those things with a patio or courtyard and some nearby parks and those years go faster than you think. If yours are little, it won't be long before they want to be cycling and roller blading and wanting more space than a garden for outside activities anyway.

I wouldn't put yourself in a precarious position for that, but save the money for the clubs and activities and enrichment it could provide.

6 and 3 so one in school and one in nursery. I really don’t want to move their school either.

It’s that happy medium that I’m aiming for. I can afford a bit more space without sacrificing financial freedom so I’m seeing that stretching will be too much for me. The house hunting is very hard which I see has made me panic a bit and try to tick all the boxes except the important one of if I can afford it!

This made me laugh! If that happened I think my hair would fall out from stress and regret 🤣

Ah. Well a decent run of garden themed time but really not as long as you think. I wouldn’t stretch in your situation, seems obvious you need to prioritise location re schools and logistics. Anything else should be where you compromise. Honestly not sure I’d move at all in your situation. We only moved as our children were sharing a room and that got less and less ideal as they got older.

Ha ha, same here. I was thinking this only a few days ago. Bought a house with a massive garden when Dd was 2yo and she barely ever spent any time in It. To be honest I don’t like just sitting outside. Too many insects and too much sun but I assumed she’d play out there independently as she got older. She never did, was a real geek and was inside playing Minecraft and building servers.

Shes now grown and left home and we’re left with a massive garden which we don’t spend time in either. Just a pain with so much grass to mow. The dogs like pottering around in it I guess.

I would wait a bit longer. I think these price falls are going to continue.

https://news.sky.com/liveblog-webview/money-live-consumer-personal-finance-tips-sky-news-latest-13040934

Could happen again, latest talk is of China demand pushing up oil prices and inflation, and it won"t take much to kick off the Iran situation at any random time either.

What happens if the house turns out not to be worth 515k, or it sells for less than you paid like the flat? There is also a strong chance that the house you want is overpriced, could you make a low offer or do they have lots of interest?

I wouldn’t. A mortgage that carries you into retirement? No way.

You also always need to think about what happens if one of you loses a job, gets sick, or can’t work. You need to make decisions so you could still support the mortgage and family on one income, or from savings if something happens.

It’s better to look at cheaper areas, or buy a house that needs work and renovate it slowly using savings over time or what you can afford month by month.