Buy the most expensive you can afford? - am I being silly?

TXC

Hi all
Question to ponder - as per my last thread I'm continuing the apparently ever lasting house search and my max budget has increased by an extra 10k weekly as I'm in lpool where prices are rising seemingly in real time!. A house has come up that ticks all the boxes and I could see myself staying there forever (or at least 7-10 years) - I ran an AIP for the price and whilst I know its not concrete it did get approved - I'm just balking at the price because it's so far removed from  what I had in my mind as max a year ago. one of my parents told me that it would be wise to buy bigger now if possible and I love the house as it's a good investment - what are your thoughts on this school of thought?
also would appreciate a fresh pair of eyes and opinions on this scenario: I'm in my late 20s, single and my take home pay is 2.5k per month - fortunate enough that this is quite a lot above average for my age and location. my job has a lot of scope for promotion and generally I receive c.4% rise per year for inflation. kids are not and will not be on my agenda. this house (3 bed semi in my ideal location) would be a mortgage of c.858£ per month, adding all my Bills on that I'd  be left with around 670£ to do with as I pleased and at least a further 280£ I could put straight into savings. I keep talking myself into thinking I'm being absolutely ridiculous buying a house like this as a single person and leapfrogging the starter home as I'm naturally a very cautious person.  I got myself into a right muddle in my early 20s financially and I live in constant fear itll happen again (even though experience and age is on my side) - 
does this scenario ring alarm bells for anyone?

AnnexeRegular

Have you thought about what would happen if interest rates rose and wiped out the £650 you have spare a month?

TXC

AnnexeRegular said:

Have you thought about what would happen if interest rates rose and wiped out the £650 you have spare a month?

really good point - I have looked at that, my plan was always to get a 5yr fixed with a view that I would either (hopefully) have been promoted by that point with a good increase - or even with yearly inflation rises my monthly salary would be a good +£400 or so to where it is now

MaryNB

You could always take in lodgers (some lenders have a max, my limit is 2) to help with repayments. Probably won't count towards affordability but an option for your own piece of mind.

If you're worried about it being too pricey, are there any suitable 2 bed houses in the area? If kids aren't on the agenda that should suit you long term. No point in buying bigger than you need just for the sake of it. 

comeandgo

I have previously gone larger than needed and am still in such a house and I love having the extra space and it’s all paid for now.  My fall back plan if things got tight was lodgers but also made sure I was insured for job loss and my employer had a very generous sick pay policy.  

Thrugelmir

Buy a property as a home not an investment. You'll always need somewhere to live. Three bed semi doesn't sound excessively large. 

NameUnavailable

It's not just the initial outlay and mortage payments, think also about the upkeep, bills, council tax etc., which are all going to be more on a larger home. Also do you want to be able to go out at weekends and have holidays? Worth thinking about.

Yes, you can take in a lodger if you get a bit short of funds or ultimately you can sell and downsize, so the risks aren't too great if you do go for it.

r3mski

Hello,
I am exactly in your shoes - stable job, buying by myself and was seriously torn between maxing out my budget to get a bigger house that ticked "all" my boxes or a slightly smaller one that ticked most of my boxes. I'm sure there is solid logic for both schools of thought (the current neighbour of our family home who is an EA was definitely in the go big school) - spoiler alert; I am currently waiting on an exchange date (fingers crossed!) to my future slightly smaller house and my logic was;
* I love eating out, travelling and I'm a sucker for a fancy gym class so it's important to me that I can still do that at least some of the time. What is your lifestyle like? How much of it are you prepared to give up? Do you have expensive hobbies? I think COVID has helped a lot of us forget our life outside of the house, but when we're allowed out and about again, would you still want to do those hobbies? 
* I'm not relying on a partner in this purchase and I didn't want the added pressure of thinking I MUST have £XXX paying job because I'm making huge payments on this house. How much do you love your job? Is relatively safe field with progression? Are you OK with the thought of 858 + bills every month? 
* My perfect house doesn't exist. Or it does, but it's actually 995k according to RightMove. So really, paying 10 to 25k extra wasn't going to get me my dream house, it was just going to get me an extra bedroom and a driveway. Both of which I am prepared to live without for now. It helps to remember that it really is a property ladder, and you don't have to climb all the rungs at once.
* For me, it really helped to make a list of whats really important. When I first started looking I was perfectly content with a 2 bedroom, semi or end of terrace with a green garden in X area. My budget only grew because I saw saw extra bedrooms, driveways, garages, kitchen diners, fancy french windows etc. and my vision sort of skewed! It might be worthwhile to reconsider what is a must and what is a nice to have! If what you must have really is an extra 10k then so be it, but if you realise that you're not really gonna need that extra bedroom then maybe you'll get to save that 10k for something else!
There's no correct answer to the questions above obviously, but that's the logic I followed to offer on my house and I don't regret it (yet) so I hope it helps! 

steve866

I personally decided to max out budget on my recent purchase. The reasons I did so was because;

-interest rates historically low
-was able to get a 35 year mortgage to keep fixed monthly payments low but with option to overpay 
-moving house is expensive, the alternative would have been to move again in a few years 
-moving house is stressful, it took me over a year to get a complete chain and make the move
-I will eventually be left with an asset worth a decent chunk 

The downside is that I earn a high salary and I no longer have the option to change careers for a lower paid job (not that I want to). 

Mickey666

Whatever the OP decides they'll be laughing at the price they paid in 5 or 10 years time, their career will likely have progressed and their salary will likely have risen way faster than their mortgage repayments so they'll have surplus cash each month to spend, perhaps on paying down the mortgage early.

This is the thing that many people don't think about or allow for.  If you think you'll be doing he same job in 10 years time with the same salary then stretching yourself to buy a home today will likely remain a stretch in 10 years time.  But if you anticipate some form of 'career progression' leading to a higher income then a stretch today will seem easy-peasy in 10 years time.  This is how many people end up paying off their mortgage early.  The mortgage payments remain (broadly) the same, but your salary increases with your career progression.

Mickey666

NameUnavailable said:

It's not just the initial outlay and mortage payments, think also about the upkeep, bills, council tax etc., which are all going to be more on a larger home. Also do you want to be able to go out at weekends and have holidays? Worth thinking about.

Yes, worth thinking about, but so it the promise of living mortgage free in a spacious house, perhaps detached with no near neighbours, maybe a bit of land, etc.   Life is short so aim high with no compromises.  Even if you crash and burn then you'll likely be no worse off than having never aimed high in the first place.  Don't settle for what you can afford today, plan ahead for what you want tomorrow.