Help - should we buy?

Emma18

We currently live in a very nice 4 bedroom semi-detached house, most desired road in our village (quote from estate agent) but have seen a detached house in nearby area which is equally desirable, however does not give us our ideal 5th bedroom or large living space downstairs. There is potential to extend though, which means we would have our house to stay in for next 20/30 years until the children leave home. We would be unlikely to be able to afford to extend it straight away if we have to pay the asking price. The house also needs totally updating decor wise, whereas ours has been completely redone over the last 8 years. (so this also makes it a hard decision to leave our lovely home!)

I know it's possibly only a question we can answer - but how far should we stretch ourselves financially in order to gain a house that, at the moment, only has the potential to be exactly what we want - right area, right location, but will need lots of money spent to make it the right house....?

At the moment, our mortgage costs us one quarter of our take home income. The new mortgage would take us to just over half. Is this a usual percentage for someone to be paying? Have we just been spoilt in recent years...?

We have looked at all the figures and we think we can afford it - but will no longer have the luxury of not having to worry about money - we would have to become serious moneysavers(!) and start watching carefully what we spend. We don't however have an extravagant lifestyle, so this could be OK for us.

We have put in a low offer which has been rejected (we expected it to be) but just can't make our minds up and it's doing our heads in! If we didn't have to extend the house we probably wouldn't hesitate....it's just that future money commitment!

Any help or advice would be greatly appreciated!

Tiddlywinks

Do you really NEED to move? Costs of living are rising and wages are not really keeping pace - how much of a cushion will you have to absorb any future rises? You seem to be saying that you will be pushing yourself near the limit.

If you stretch yourself too far then you may find yourself in the unfortunate position of not being able to afford to stay in your new home.

k3lvc

Taking on a commitment of a mortgage at over 50% of income when interest rates are low is, IMHO, sheer stupidity unless you've a clear indication of a guaranteed & significant increase in income over the coming months/years.

Have you an agreement for a mortgage to that level yet ?

Catblue

Emma18 wrote: »

At the moment, our mortgage costs us one quarter of our take home income. The new mortgage would take us to just over half. Is this a usual percentage for someone to be paying? Have we just been spoilt in recent years...?

This would put me firmly in the No camp. That is a huge jump to have to find every month. Are you sure you could even get a mortgage for that amount?

Do people really spend over half their household income on a mortgage? :eek:

Emma18

Thanks for your replies. In answer to your questions,

No, we don't NEED to move - it's just that we have very 'picky' and strict criteria because we live in such a nice location now (road-wise) We just saw this house, and it's a rare find.

We don't want to move out the area because of disruption to children (this house means they can stay in current schools)

There are other VERY nice roads in the area, but we would NEVER be able to afford those (you are talking £900k plus!) so this house is probably one of VERY few that we could afford which gives us our ideal of detached house and potential to have the 5th bedroom. (We could extend our current home further to get 5th bedroom in loft, but we would then overprice our house and never be able to get that money back when we sell it)

Our current lender has agreed in principle to lend us the money. My husband is in the fortunate position to work for a large company that (as much as one can in these times) should ensure a secure position for him for years to come. We also benefit from a good annual bonus which we feel we could use to complete alterations to the house as and when we can.

Another 'backup' plan should we have to is that I could return to work to bring in extra income (but we would be reliant on my husbands salary for the main outgoings).

I think we know the most sensible thing to do is to stay where we are and not push ourselves - however, given our picky criteria, we know that the opportunity to buy such a property is not going to come up very often (possibly not at all again while the children are young enough to warrant it) and so something is keeping us hanging on and not wanting to say 'No' just yet....

Emmzi

do you want a home, or a cash cow? If it's a home, build in the attic now. Save for university fees, the kids will appreciate it more!

Emma18

Thanks Emmzi. I guess we see it as both really - we can really see ourselves there, building our family home until the children leave - in a lovely location, fantastic outdoor space that would be hopefully make wonderful childhood memories for them etc etc. We would yearn for nothing else property wise! It would also (hopefully) be a good investment for the future and then when we do come to downsize and buy the bungalow by the sea(!) we should make a good profit!

We would, of course, make other provisions for the uni fees should that happen....

We also know that a cash inheritance will come at some point in the future to the approximate value of one third of our mortgage which we could immediately pay straight off. (I know this sounds callous - but the person involved is very open about it and is much loved!!)

Emmzi

9k per year per kid for uni fees now, may be more when they get there - no way would I be oaying half my wages on mortgage for a bit of a dream that may be awful when you get into it! You appear to be making an emotional decision. You need to decide if that is more important than logic to you (obv not to me but that doesn't make either of us "right")

iheartbristol

We're going to be paying a fifth and don't want to go any higher. We plan to stay in this place (if all goes through) for at least 5 years so if rates go up we don't want too much of a shock

neverdespairgirl

Over half of household income - and a non-working parent, and children too? It would scare me.

Emma18

Thank you all for replies - they make a lot of sense, I can't deny. You mimic what we are thinking ourselves......it just really is probably a once in a lifetime opportunity....!

Further calculations today reveal that with all expenditure taken into consideration - mortgage, utilities, car, food, petrol expenses, we would have approx £500 per month 'spare'. This is based on 3.8% APR fixed-rate mortgage, so we know for 3 years, mortgage wouldn't change at least.

We reckon we could still save up to £200 per month for 'emergencies'/holiday fund/Christmas etc....

Are we being at all realistic.....? Is £500 spare cash per month good....?