which way to play the game?

webinteractions

Hi, I am hoping to a be a First Time Buyer 95% mortgage with my partner very soon but i am stuck in two minds as to which tactics to employ when playing the housing game.

1) Buy a cheaper 2 bed house for around £140,000. It will be on the small side and as my partner and i are planning on having children. 2 kids tops, the kids would have to share the room until the eldest is around 11 where we would move to a bigger house. As the mortgage would be cheaper i would plan on overpaying and building as much capital as possible.

OR

2) Buy a 3 bed house that would last for the term of the mortgage 25 years. Say 180,000 would last us for the 25 year mortgage terms. House would suit our needs and will not move again. Mortgage payments would be a stretch if rates went up by 3%. We would still be able to keep up payments on mortgage but lifestyle might have to change or my partner go out to work sooner etc. I keep hearing about moving costs, so at least we would save on these?!

Some background info on us, I am currently on 32,500 in a secure job and my partner is on around 21,500. I pay 220 a month a loan for next 3 years. No other debts. We are both in secure jobs.

I would be really interested in hearing your thoughts, especially if you have been through this predicament before.

Thanks

MrChandlerBing

Assuming house prices follow historic trends and do continue to rise, would it not make more sense to buy the cheaper house now and then upgrade in the future as and when you need to?

gazfocus

MrChandlerBing wrote: »

Assuming house prices follow historic trends and do continue to rise, would it not make more sense to buy the cheaper house now and then upgrade in the future as and when you need to?

By the same logic though, it is also possible that in future the price difference between a 2 bed and 3 bed could increase, making it more difficult to 'upgrade'.

I can't really advise what's best for you guys but if you do go down the route of the smaller house with the view of upgrading later on, it's even more important to buy is a more 'sell-able' area because the last thing you'll want when you've outgrown a house is to be stuck there because you can't sell.

I actually did something similar to what you're thinking...I bought a 3 bed semi (part of my job is working from home so needed the 'work' space) but the house has quickly become too small so we are in the process of now buying a 4 bed detached, however, because we can't sell our current house, we're left having to rent out our existing one.

ksty

We were in a similar position to yourselves and we went with the 2 bed. Our children are now 18 months (girl) and 2.5 years (boy) and although we have quite a lot of living space our house is cluttered with the 4 of us living here. Also as we have a boy and a girl they will require their own rooms soon, legally around 7 or 8 I've been informed but I'm not sure on that. I chose not to go back to work as they are so close in age and the cost of childcare, which is something that I would never have thought I'd want to do. We are now in the position of struggling to get a mortgage for the amount that it costs to buy a 3 bedroom place.
I would go for the bigger place now providing that when/if you decide to have children (who are a lot more expensive than you plan for) you can still afford the payments.

dimbo61

This also depends on the deposit !
15% deposit would be a good start
Think long term as you will get a good mortgage now that both of you are working. Consider a long term fix 5 years or longer if you go for the bigger property ! and even offset.
Overpay, build savings or put money into the offset.
Plan on starting a family so you have a long term fix while they are young and wife off work .

Thrugelmir

Go for the cheaper place. Overpay like mad and build your equity.

With a 2 bed house you can manage with 1 child. A baby requires very little space.

Make a plan. Budget properly. Then the dream will come to fruition.

Gambling is fraught with risk down to the uncertainies of life.

webinteractions

I'd like to thank you for all your responses, they have been most helpful.

There a couple of things i hadn't considered from a couple of your replies. 1) Not being able to sell the house when wanting to, which makes picking a more desirable area a priority if going for 2 bed especially. 2) Mixed gender children had to be separated at an earlier age than i had originally thought.

We have a lot of thinking to do and i can't help but feel it's a gamble either way! I guess by buying a two bed house would be reducing risk as much as possible but thinking about house buying again in 7/8 years time feels me with dread! Thanks again!

I'm still eager to hear from other people who have had to make the same decision.

Typhoon2000

If you can afford the bigger place and think you will be there for the long term, this is what I would do. No one knows what the market will do in the future. If rises fast you many not be able to make the jump from a 2 to 3 bed. If it falls you might be in negative equity and be unable to move or not meet the qualification requirement for any future mortgage application.
Go with a long term fix for stability, and over pay to keep your options open in the future.

speedy3

i'm not an expert by any means but couldn't you buy a smaller place with potential to extend and have the best of both worlds? thats what we did. its a bit of hassle during the building works but very much worth it.

Bluemeanie_2

ksty wrote: »

We were in a similar position to yourselves and we went with the 2 bed. Our children are now 18 months (girl) and 2.5 years (boy) and although we have quite a lot of living space our house is cluttered with the 4 of us living here. Also as we have a boy and a girl they will require their own rooms soon, legally around 7 or 8 I've been informed but I'm not sure on that. I chose not to go back to work as they are so close in age and the cost of childcare, which is something that I would never have thought I'd want to do. We are now in the position of struggling to get a mortgage for the amount that it costs to buy a 3 bedroom place.
I would go for the bigger place now providing that when/if you decide to have children (who are a lot more expensive than you plan for) you can still afford the payments.

There is no legal requirement for siblings of the opposite sex to not share a room. It's an urban myth. I believe it has come about due to local authorities housing policies that give you more points etc for more bedrooms if your kids are opposite sexes.

Bluemeanie_2

webinteractions wrote: »

I'd like to thank you for all your responses, they have been most helpful.

There a couple of things i hadn't considered from a couple of your replies. 1) Not being able to sell the house when wanting to, which makes picking a more desirable area a priority if going for 2 bed especially. 2) Mixed gender children had to be separated at an earlier age than i had originally thought.

We have a lot of thinking to do and i can't help but feel it's a gamble either way! I guess by buying a two bed house would be reducing risk as much as possible but thinking about house buying again in 7/8 years time feels me with dread! Thanks again!

I'm still eager to hear from other people who have had to make the same decision.

Again, mixed gender children do not NEED to be separated. Though it isn't ideal I suppose for them to share.