Can borrow more than expected... What now?

Whoknowskt89

Personally, having gone for the easy move in 5 years place, I wish I had of pushed it and got a bigger place.

It all depends on the size of the 2 bed and your way of life. If you're the type to have a lot of clothes or 'stuff' will it fit in the 2 bed comfortably without using the second room? If it does, then you'll probably be fine when the kid(s) come along.
If it's a place where the double bedroom isn't that big and you'll be relying on the second bedroom for storage you'll either have to convert the loft or move when you decide to have kids or get rid of a lot of stuff to live comfortably.

Either way that's just my opinion, good luck with whatever you decide.

getmore4less

even with the new lending criteria they will still lend plenty for most people that have sensible income/outgoings.

do a 10 year plan work out what you can afford long term, not what someone else thinks you can afford today.


moves cost money and HPI means the extra on the next house costs more in the future(but income goes up to compensate).


2 bed terrace is a starter home - where do you park your cars, do you have a office /study or sit at the table, any me space.

skip at least one step up and get some room/space

AndyTails

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?

For a depreciating asset that will need replacing in the same time frame, the decision might be fairly easy. For an asset that may appreciate or may depreciate, and the options have different lifespans, it's not such an easy decision.


The wife and I have bought twice. Both times we borrowed the maximum the bank would lend us. The first time we were both fresh graduates and expecting pay to increase, hence we weren't worried that stretching ourselves in the short term would leave us stretched in the long term. The second time we weren't expecting much pay increase, but I got about a 30% payrise after a year (turns out I was underpaid when we bought!).


We looked at the rising market and judged that buying the biggest we could would a) protect us somewhat from the rising cost of our next house by giving us more money on selling and b) give us cheaper mortgage payments in the long term, due to buying the 10-15 year house while it was cheaper.


For the second purchase we were (still are!) planning on having kids in the house, so we made sure it would be affordable on just one salary. It looked tight, but doable, if we borrowed the maximum so we went for it.


I should also mention that both times we bought, a generous grandparent unexpectedly gave us some money straight afterward to help us do the place up, which alleviated any money worries... so that probably colours my experiences and maybe you shouldn't rely on my opinions!

vacheron

We moved straight into a relatively large house (probably skipped 2 or 3 house moves compared to others I know) I did this for the same reasons when a friend who mentioned that he was in a worse financial position due to slowly "climbing the ladder" than he would have been had he paid the larger mortgage since day 1. He also explained how easily you can fill a place in 5 years that seemed more than large enough at the time.

Some people are also perpetual movers and like change, some people are happy to move once for the long term (us).

Your finances will dictate what you consider comfortable, however the car analogy can be misleading as a car is a liability which will depreciate to zero over the next 20 years whereas a house should at least retain a significant percentage of its current value.

Also when you move, 5 years might seem like a long time but it is no time at all. We have been in our home for almost 8 years now and so would already be 3 years overdue! would you really be happy to move home more often than many people change their cars?

However, even on a larger home look at the possibility to easily extend. We never thought we would be looking to extend 8 years ago, yet we are just about to commit a 6 figure sum to adding another 50m2 to the ground floor to create an open plan kitchen / family room. As luck would have it the layout is ideal for this however this is just good fortune as it wasn't something we were even considering at the time!

trailingspouse

Although you love the 2-bed Victorian terrace, you've already said it doesn't fully meet your needs, as you are talking about putting a 3rd bedroom in the loftspace. This will cost money that you may not recoup (plus hassle).

Another thought, if you're planning on having children - a bedroom on a different floor is of limited use. Do you put one of the children up there? (so they're two floors above you when they're in bed and you're watching the TV downstairs). Do you sleep up there? (so the kid/s have the whole of the main bedroom floor and you have to come downstairs to see to them or to go to the loo yourself). Do you all sleep on the main bedroom floor, sharing rooms, and keep the loft for visitors (that's a lot of money to spend on a room that's only going to be used by visitors).

So my advice would be to buy a 3-bed. You don't have to get the maximum mortgage that your lender would allow - decide how much per month you and your partner would be comfortable with (adding a margin for increases in mortgage interest), and then see what size of mortgage you could get for that monthly outlay.

samantha.b.mcgregor

trailingspouse wrote: »

Although you love the 2-bed Victorian terrace, you've already said it doesn't fully meet your needs, as you are talking about putting a 3rd bedroom in the loftspace. This will cost money that you may not recoup (plus hassle).

Another thought, if you're planning on having children - a bedroom on a different floor is of limited use. Do you put one of the children up there? (so they're two floors above you when they're in bed and you're watching the TV downstairs). Do you sleep up there? (so the kid/s have the whole of the main bedroom floor and you have to come downstairs to see to them or to go to the loo yourself). Do you all sleep on the main bedroom floor, sharing rooms, and keep the loft for visitors (that's a lot of money to spend on a room that's only going to be used by visitors).

So my advice would be to buy a 3-bed. You don't have to get the maximum mortgage that your lender would allow - decide how much per month you and your partner would be comfortable with (adding a margin for increases in mortgage interest), and then see what size of mortgage you could get for that monthly outlay.

This is really considered and helpful advice - thank you

SuboJvR

Obviously 2 bed houses fit the bill for some people but it's something we wanted to skip. I guess as we are a little older (early 30s) than some first time buyers, I didn't want to jump in on the bottom rung and know we would need to upsize. I imagine 2 beds fit 20-somethings a bit better as they have more mortgage time to play with!

As it is we rent a two bed and it's too small for us and all our stuff. I work from home in the living room; I want an office. If we even contemplate a child then that extra bedroom is essential then.

It's all personal. I'm not sure we will have kids but I would hate to be in a position where our house is too small to accommodate even one, as then we would need to move and do so under pressure!

I would have a look at other properties. Like cars it's easy to fall in love with the first thing you see. But there's loads of choice out there and it's not just bottom and top of affordability - I wonder what's in the middle ground :-)