Getting cold feet

BohemianRhapsody

Hello.

We are in the process of selling and buying in London. The main push factor is secondary schools but also our current is small house and we don't like the area anymore. The new area ticks most of the boxes.

We would be taking on a large mortgage of £415,000, 5 year fixed with a low rate, with LTV 50% and 25 year term. Mortgage payments will be ca 27% of take home. It's a long term 10+ years house. We are early & mid 40s. Career wise, fairly secure jobs and expecting slight salary increases in the coming years but highly pressurised roles and you never know what might happen with regards to Brexit. Savings/emergency pot of £60k but we might have to use some of it for urgent repairs in the new house (new boiler, re-wiring). Our 12 year old car is also in need of replacement soon and we will try to get a second hand car.

My main worry is that we are over stretching and the fear of a no deal Brexit and its impact on house prices and jobs. I am risk averse so getting cold feet but at the same time realise that living in the right house and location would make a massive difference to our wellbeing. That said, I don't want to have sleepless nights over money worries and want us to enjoy life. Childcare costs should decrease in 5 years time as the kids get older. But we wouldn't manage the mortgage payments on one income. If we rented, we would have paid similar or even higher monthly rent.

We could of course try to find a cheaper house in the new area but it feels that for what you get, it wouldn't be worth all the extra costs and hassle of moving and too much of a compromise.

Any views?

TIA

letitbe90

Go for it, I wouldn’t worry about Brexit. Not enough appetite for a no deal Brexit, not even Boris could make that happen (government would be brought down and article 50 revoked before no deal occurs).

pattypan4

Brexit to one side. Your inner mind is telling you something, that you have no leeway for an unepected situation and it could happen, `fairly secure jobs`. We overstretched ourselves once in the 70s, we sold and downsized from a nice detached to a semi and were able to breathe and save for a later move up the ladder, much more comfortable and better sleep because of the worry disappearing. It was hard to bite the bullet but was worth it

davidmcn

Whatever Brexit turns out to be (if anything) will be played out over years to come rather than being a sudden event, and in any event there's always the risk of something adverse happening to the economy, so you could be delaying for ever if that were your main concern. So I would put that to one side and focus on the other criteria.

AdrianC

The one thing you don't mention is probably the most important - how far "up the ladder" you're moving...

What's your current mortgage debt and payments? You've got a lot of equity in there - 50% LtV with a £415k mortgage says £830k purchase. Negative equity is simply not going to happen.

BTW, I don't have kids, but are older kids really cheaper than young ones...? Sure, you don't have childcare, but you do have all the fashions and gadgets and school trips and university...

AnnFinancialQs

Have you thought about an offset mortgage? You seem similar to me in being relatively risk averse. An offset mortgage would mean you could put a lower deposit down, and then put the rest of your savings into the offset account. There's loads of info online that will explain it better than me.

I like it because it gives me the flexibility of keeping more cash that's still accessible should the worst happen, while paying less interest on the mortgage. It also gives the option to add more £££ to the offset account until you're fully offset and can either clear the mortgage or just not be paying interest on it.

bouicca21

I went through a similar dilemma some 25 years ago. I went for it. The mortgage became more and more manageable. The house was spacious and in a much better area. Never regretted it.

olgadapolga

Going through a similar feelings at the moment with our house purchase.

We sold years ago and ended up in rented, initially for a year due to work but ended up being nearly eight years. Have been searching for a home for a few years, made offers, offers declined, offers accepted, sales have fallen through, it's been a nightmare.

Finally found the house we have just exchanged on, we are completing next week and I am, quite frankly, terrified. All of the money from our house sale is going on it, plus the majority of our savings.

Husband is self employed, I am SAHM, money will be tight and I liked having the house money/savings there as a security net.

But what I didn't have was the security of our own home as we've rented since selling. I am sure that everything will be fine, the house will be ours as there is no mortgage involved, it's just a case of adjusting our lifestyles to match what we will have available.

But I'm still terrified.

BohemianRhapsody

Thank you all for your input.

AdrianC - this should be our long term house - from here the next step would be downsizing in 10-15 years time. At the moment we are mortgage free. Hence why difficulty to mentally adjust to £415k mortgage. As for kids and costs, please don't crush my dreams I guess you are right, teenagers are not cheap but at least the childcare costs will be lower/gone.

Anne I will look into offset mortgage.

OldMusicGuy

We went through similar 20 years ago. I was all for buying a cheaper house on the development we were considering so we didn't "stretch ourselves". My wife persuaded me to go for the biggest house we could just about afford and it was a great decision. We stayed here for 20 years, it was a great family house and of course we have more equity than if we had bought a smaller, more affordable house. We are downsizing now and I'm really glad we bought the more expensive house.

Brexit is an irrelevance, don't obsess over that. If you are staying in this place long term, whatever happens will work itself through in 5 to 10 years. If you aren't moving for 10 to 15 years, ignore Brexit unless it directly impacts your employment security.

1010

So strange reading this as we just going through the same dilemma with similar numbers. Buying a house with approx 50% LTV and increasing mortgage to 380k.

Our focus for the past 3-4 years has to be mortgage free so it’s a serious mindset change but it is a forever home. We are expecting so our family is growing and whilst we could cope where we are it would be tight.

Sharing as I understand you dilemma as I’m having sleepless nights regarding the worry. One thing I’m looking at with my FA is to stretch the term but over a set amount each month to keep the term short. This way I’m controlling finances in case on month things are tight (the house needs a lot of work).