Should we stretch ourselves now fo long term gain?

capital0ne

Burchell27 wrote: »

My question is, is it more beneficial to stretch ourselves now and hopefully reap the long term rewards, or play it safer by taking a smaller mortgage and look at 3 beds instead?

Stretch yourself while you can, it will pay off in bucket loads - an intermediate move costs a helluva lot of dosh, that could be better invested in a bigger proiperty.

Also your earning power at your ages can only get better - take advantage of that now

Good lucj and Merry Xmas:beer:

AlexMac

Crashy_Time wrote: »

You said - "But long term you will see great gains". How is this knowable from any of your past experience?

Simples - was message in fortune cookie last night in local Chinese Restaurant..

And was mega true in 1975-1987, 1990-2007, 2010 - 2018 (OK, but not in 1987-1990 or 2007-2010...; Flaw in every arrogant sweeping generalisation, for which I apologise. Still means £10k wreck is worth £1mil...)

Davesnave

AlexMac wrote: »

Simples - was message in fortune cookie last night in local Chinese Restaurant..
......Still means £10k wreck is worth £1mil...)

:rotfl:
No one here can see the future. Probably a good thing, given that people are more capricious than property. That, more than interest rates etc, is what I observe really costs some people who made otherwise 'sensible' decisions.

I see my old £9k wreck is only worth £250k, so obviously I got things very wrong. Luckily, I'm not living in it now. It's about as different from where I am as it's possible to be, so it would fit me like Beyonce's knickers.

fred246

We borrowed 6 times my salary (bit of a liar loan to be honest) to buy our dream final home. We had a fixed rate for the first 5 years so we overpayed to bring it down to a reasonable amount. The house was in an area with good schools. Bringing up a family in a detached house is great. Can make loads of noise and watch films on your home cinema. A few extra bedrooms and bathrooms great to have the whole family stay at christmas. We payed it all off in 12 years and then carried on saving for a very early retirement. Stretching ourselves worked out well but we knew we could. If you buy loads of Costa Coffee, ipads, iphones, cars on PCP, designer clothes and want to pay for private education maybe not a good idea.

LandyAndy

Another vote for getting the bigger house. I went straight from a two and half bed semi to a large four bed detached at age 27 and have never owned anything smaller since.

ruperts

The biggest threat to affordability will probably be the two kids, which unless you've got very willing and reliable friends and family, will necessitate either a significant drop in income for one of you to stay at home, or a significant increase in costs for putting them into childcare. That situation could last in some form for well over a decade, until they're both old enough to look after themselves.

airandwater

Craig1981 wrote: »

leaves you with £1900 for other bills and expenses... for two of you that is quite a bit

...............until you need to spend £700-1,400 on nursery fees with for two kids and another £100 a month for soft play, farm visits, snacks and day trips.

Many of my friends who have recently had kids and live in a three bed want to move into a 4 or 5 bed. If you can, get the biggest house you can afford and then you won't have to move again.

However, that's more rooms to heat and furnish - not to mention the increase in stamp duty. Tight finances as a couple isn't fun. Add two kids to the mix and life and romance could be challenged as money will fly out of your account like there's no tomorrow.

If the OP is adamant to stretch themselves then do so for a detached house near a good school.

Burchell27

Thanks for the reply’s and helpful advice.

Interesting to see the majority would go for the larger house in our position. We definitely want the 4 bed. I guess it’s a risk but like many have said, historically house prices have risen long term, and to be in our forever home before 30 would mean we wouldn’t have the cost of moving again.

In terms of kids being a strain on finances, we are expecting our wages to rise in the coming few years, and have already agreed that my wife will carry on working after the first child. Luckily we both have very supportive parents that live locally and I work for a family business meaning my hours are fairly flexible. We would take out a 5 year fixed rate to ensure we don’t get any surprise jump in house costs in the medium term. Plan to overpay where possible.

Plan to have our house on the market by the end of the month.

Thanks for the advice guys

Crashy_Time

AlexMac wrote: »

Simples - was message in fortune cookie last night in local Chinese Restaurant..

And was mega true in 1975-1987, 1990-2007, 2010 - 2018 (OK, but not in 1987-1990 or 2007-2010...; Flaw in every arrogant sweeping generalisation, for which I apologise. Still means £10k wreck is worth £1mil...)

I would say you are a few years out on "1990", no one thought property was a great bet again until at least the late 90`s in my recollection, and the problem arises if you need to sell during crashes, and if you over-borrowed and interest rates spike (happening now) The "house for life at a low fixed rate" is not going to work for everyone.

lisyloo

and the problem arises if you need to sell during crashes

Only if you HAVE to sell and have negative equity i.e. bought recently.

If you are moving house and have sufficient equity to get a mortgage then it won't be a problem as your new house will also be cheap.
This doesn't affect the majority and usually only when accompanied by other circumstances such as divorce, death, forced relocation, redundancy etc.


I am not saying ignore this, but I don't think people should be ruled by extreme worse case scenarios also sensible financial planning is a good idea such as insurance and making sure you keep your skills up to date e.g. qualifications or certifications


My gut feel is that you should go for it as fortune generally favour the brave but put some sensible financial planning in place of which savings should form a part as well as insurance.