Afraid to take the leap

Tjzdazz

We currently live in a small semi and our mortgage is miniscule because we have had the house for a number of years.

We have now saved enough money to either pay that mortgage off or have a decent deposit for a bigger house.

We don't love the layout of the house we are in now - there is no dining room or off street parking and the estate behind us is not ideal. Not to mention; we are currently expecting our first child and the schools are not good.

We have scoured the market for months and have finally found a detached house that we really like in an area not far away with an outstanding school - it has recently been reduced by £10000 and today we put in an offer £20000 less than the reduced asking price. But now I'm nervous.......

The house needs modernisation but is quite liveable. My fear is much more to do with moving from the comfort of such a small mortgage to a much bigger one. Don't get me wrong - we are by no means going to the top of the amount we have been offered in principle - it is just that we are not used to such a big % of our income going to a mortgage and I worry that if anything happened with our jobs, things would get very difficult. I am seriously risk averse but I also know that life is short...

We do not need to sell our current house in a rush because the mortgage is so small and in fact have considered renting it out which obviously scares me even more lol.

I was wondering if anyone has had similar fears and taken the plunge and how it worked out in the end? Any other advice would be welcome too.

Thanks in advance

The_J

Insurance is available to cover you in the event of life changing events.

Becoming a landlord can be a pain but if you get good long term tenants it can work quite well.

Tjzdazz

Thanks the J, had not thought of insurance....

And I will defo give being a landlord some serious consideration

The_J

Sorry I would have gone into more detail but got distracted. The insurances available would be:

Life cover - bigger mortgage, if you die can your partner support it? Level cover pays out a fixed amount, decreasing cover follows a repayment mortgage downwards (roughly) and Family Income Benefit pays out an annual income for X number of years after you die (X being selected by you at outset).

Illness - what do you get through work? How long does it last? You can get accident & sickness cover (part of PPI) that usually pays out for 1 or 2 years the mortgage payment (and potentially a little bit more) for a fixed cost. Critical illness cover pays out a lump sum tax free, Martin Lewis doesn't like it because in the past the providers have been a bit shadey about what it covers, nowadays it's better but it might well be called Cancer, Heart Attack and Stroke cover. Just like life cover it pays out a lump sum tax free but it pays if you meet the definition of the critical illness. Finally Income Protection pays an income (up to 50-60% of your salary) if you cannot work due to illness for a period. Useful if you have 3 months of cover through work because you can set it up to kick in then, the longer you choose it to kick in the cheaper it is.

Unemployment: You can often add unemployment cover to the accident and sickness cover (only applies for compulsory redundancy). It's fairly expensive at the moment given the economic climate.

That's a broad breakdown for you, you know what you're worried about so you can insure yourself against those concerns and ignore the ones you're fine about.

Being a landlord is fine. You're in a pretty low risk situation as you can pull the plug whenever you want.

Tjzdazz

Thanks so much - that is immensely helpful . I'll have a good look at the options but a already feeling less worried that there are alternative ways to think of it.