Can borrow more than expected... What now?

samantha.b.mcgregor

My OH and I are looking to buy our first home together (he's 37 and has owned property before, I'm 31 and a true first time buyer). We're both on relatively good salaries, our credit scores are good, and we have a healthy deposit thanks to a gift from his parents.

We've already seen a house which we (*I*) have fallen in love with (a 2 bed Victorian terrace with potential to add a third bedroom in the loft space), so yesterday we went to see a mortgage broker to check on what mortgage deals might be available to us for that house and to run through some scenarios to see what our monthly repayments would be if we put in a lower deposit (as there's some work we'd like to do to the house).

The broker was really helpful, but it turns out we're pretty safe bets and so the amount we can borrow is A LOT more than we expected. The original house would be the bottom end of what we could borrow, and would obviously leave us more disposable income (for holidays, wedding, future kids etc.). But my OH is now pressing to look at bigger, more expensive houses. His rationale is very logical: each move costs, so if we can get a house now that might be a 10 or 15 year house rather than a 5 year house we should. But I'm nervous about stretching ourselves, particularly with the market having slowed as much as it has.

Really just looking for advice based on others' experiences... Should we be conservative and go for a smaller, less expensive house? Or should we push ourselves and get something bigger that we'll live in longer? :huh:

TIA (and sorry this post has turned into an essay!)

Richiep22

I have recently been in a very similar position with my OH and are now waiting to exchange on a larger 2 bed, with more land and potential to convert the loft space into a 3rd bedroom. This was a compromise between the 2 beds we were originally looking at and the 3 beds we would be able to get a mortgage on. I think it's important to look at the difference in total monthly cost for "running" the house - ie mortgage repayments, council tax, utility bills...


Also, something we had to work out was whether the mortgage would still be affordable on just the one salary, were we to decide to have children. There's no point having a bigger house, with space for children, if you then can't afford to have them!


Just got to weigh it up and its a judgement call/gamble from there, based on how you think your circumstances and needs will change over the next few years.

Lauralou79

Just because you can afford it doesn't mean you have to go higher. We could of bought for more than our 3 bed semi.
But I want to be able to enjoy life and afford holidays etc. Plus we can afford it on one Salary if needs be. Also work out if rates rise could you as easily afford that higher mortgage.
It's personal preferences and what you both want from life I guess.

samantha.b.mcgregor

Thanks Richiep! My thoughts exactly... My salary is higher than his (at least for now), so in my head it makes more sense to be sensible about what we could afford on only his salary if we needed to.

bm147

I don't think anyone can truly say they can afford to have kids.
However, definitely being comfortable enough and having some expendable income goes a long way. As you said, if one of you decides to stop work can you afford to continue paying the mortgage?
Its the current dilemma my wife and I are having... IMO comfortable with a 5 yr plan sounds good!
Come 5 yrs time, bigger deposit available, hopefully some equity in your home, and the potential for a bigger home and the same sort of monthly mortgage payments because of the bigger deposit and equity...

HGW2012

Maybe look somewhere in the middle as a compromise.

We had exactly the same we were looking at a ball park figure and found out we could have double. So due to repayment affordability we have gone in the middle.

hazyjo

Think about pay rises too. If you're in the public sector and rises are non-existent or low, or scaled, you might want to buy cheaper. If you get more, the mortgage you get now will look very affordable in say 5 years' time.

The kids thing is of course a concern. Part-time, or a year off would be a lovely option to have.

Trick generally is to buy once, twice, or as few a times as possible as it costs thousands to move. (Unlike me who's on move number 8 lol.)

Good luck.

Jx

TBagpuss

It's also worth thinking about whether you expect to be in the same area for the next 10 years. People move about, jobs change.

I think it is sensible to look at the bigger picture.
What would it cost to run a larger house (mortgage, bills, etc). Can you comfortably afford that? Will you still be able to afford it if /when interest rates rise? What is important to you? Spending less on a mortgage means you can afford to spend more on other things, whether that is holidays, pensions and other savings, personal luxuries or a mix of them all.

Do you need a bigger house? If you buy a 2 bed then you're good for 6 or 7 years anyway, even if you have children, as young children can share a bedroom.

Personally, I've always borrowed at a level where I felt comfortable with the repayments and expenses. I've always borrowed less that the maximum a lender would be willing to lend, and I have not regretted it.

samantha.b.mcgregor

I'm so grateful for all your replies and advice so far - it's all really useful! THANK YOU

G_M

I need a new car at the moment. Looking at a modest new 5 door hatchback that I can afford comfortably, and which will meet my needs for local travel/transport.

Turns out I can easily afford a much better car. Salesman has said with my income and savings I could get a brand new Porshe on finance and easily afford the repayments over the next 5 years.

What should I do?

samantha.b.mcgregor

G_M wrote: »

I need a new car at the moment. Looking at a modest new 5 door hatchback that I can afford comfortably, and which will meet my needs for local travel/transport.

Turns out I can easily afford a much better car. Salesman has said with my income and savings I could get a brand new Porshe on finance and easily afford the repayments over the next 5 years.

What should I do?

The sensible car, of course. When you put it like that it seems soooooo obvious :doh: