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

okigen

Some factors to consider:
- What will you do if you lose your income? Big mortgage means big financial commitment every month. Is the house at a good location in case you need to attract a lodger? Or can you downsize quickly? 
- You think this is a good investment, but have you considered the alternatives? Having to pay off a big debt will mean you have less money for other investments. Take pension for example, you will save at least 20% of tax right off the bat, which will then be compounded by the gain from your pension fund, even if the gain just equals inflation rate it can still add up pretty fast. Can your house match that gain in value in the future? (Note: I'm aware there are some tax implications on both options, but too long to discuss here).
- Interest will rise in the future. That said, your 4% annual rise seems pretty good to match that up. 

There is no wrong or right answer! The important thing is just to be aware the risks (which you are already doing!) and consider whether they are worth taking. Good luck

elsien

I’m a single person in a 3 bedroom house as the first property I bought and I’ve never found it bigger than I need. I fill the space perfectly adequately with a spare room for guests and a home office. Couldn’t be doing with tiny starter homes. 

As well as the finances, think not just about investments but how you will actually use the space (or lack of it.) 

StandingInTheSun

There is no right or wrong answer. I know someone on a £1k a month mortgage with two kids. Their wage will not get any higher (apart from minor inflationary changes) and they have very little in the way of savings or leisure money.

Yet they're incredibly happy because they got their dream home in their dream location.

For me, personally, I would always prefer a little bit of a head room from my max budget. 

Only you can answer that question for yourself.

getmore4less

The biggest benefit of going bigger is you skip a move and the costs of that.
As said the option for lodgers can reduce the financial risks.

You are at an age where lifestyle changes tend to start happening, more settled and better in a property you like and can grow into than one you don't and cramped 

If widening the budget gets more options then definitely a good idea to look at what's there with more money

if you can see income growth then what may be a bit more than what you kind of wanted that soon get eroded with the pay rises.
The improvements in LTV may be a bit slower but if you can hit one in 2 years that is a consideration over going long.

take home pay is 2.5k per month
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 

That makes the bills ~£700pm what are you including in that?
£2.5k net is ~£40k  at 4.5x that's ~£180 mortgage
What LTV are you looking at even at 95% that would be ~4% rate and ~£860 over 30years
Could go to 35(~£800)  or even 40( ~£750)at <30yo  to give some wiggle room.

on those numbers if you have a bit more deposit could stretch a bit further that £180k borrowings.
getting to 90% LTV saves a lot of money in those first 5 years 

lookstraightahead

I think it all depends on your lifestyle, and where home ownership fits - and how much emphasis you place on it.
To some, having a property is their 'hobby' , or security or community sense of belonging. To others having the flexibility to 'roam' and feel less tied down is their thing, placing their security on other things.
it's entirely personal. The only thing I would say is be sensible and save for a rainy day.

TXC

getmore4less said:

The biggest benefit of going bigger is you skip a move and the costs of that.
As said the option for lodgers can reduce the financial risks.

You are at an age where lifestyle changes tend to start happening, more settled and better in a property you like and can grow into than one you don't and cramped 

If widening the budget gets more options then definitely a good idea to look at what's there with more money

if you can see income growth then what may be a bit more than what you kind of wanted that soon get eroded with the pay rises.
The improvements in LTV may be a bit slower but if you can hit one in 2 years that is a consideration over going long.

take home pay is 2.5k per month
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 

That makes the bills ~£700pm what are you including in that?
£2.5k net is ~£40k  at 4.5x that's ~£180 mortgage
What LTV are you looking at even at 95% that would be ~4% rate and ~£860 over 30years
Could go to 35(~£800)  or even 40( ~£750)at <30yo  to give some wiggle room.

on those numbers if you have a bit more deposit could stretch a bit further that £180k borrowings.
getting to 90% LTV saves a lot of money in those first 5 years 

Hi this based on 10% LTV / 30yr - house asking is over 200k. my Bill's include: council tax (lonely person discount) , utilities, food, petrol, streaming, gym, phone and an amortization of my yearly expenditures (car insurance, home insurance, tv licence etc.)

RAS

Holidays? Clothes?, Emergency fund? Furniture and white goods? House maintenance?

See what you can find second hand re large ticket items, and once you've got to a decent standard, rent out a room, carefully. Make sure you make some profit to plough into your emergency fund and towards overpaying the mortgage. Sooner you can pay that down the better.

Angela_D_3

We were iffered £450 mortgage and nearly bought a £650,000 house in 2004.  Its now worth £2.5,million.  Kinda kick myself about that 

verytired11

I think a lot depends on the house.  Is it in a desirable area (or up and coming area, or bordering a desirable area), is it a desirable property?  In other words, will you be able to sell it for a profit in a few years time?  If so, go for it.  If the worst happens you can sell up and move somewhere smaller. 

MovingForwards

Pick the right property for your wants and needs now and how you expect them to be in the future.

Play with some mortgage calculators and alter the interest upwards, double and triple it, see if that monthly payment sits comfortably with how you expect your income to be with each mortgage fix. Work out what you would give up / reduce spending on if things got tight. Would your area be one lodgers would want to live; look on the likes of spare room and gumtree to see what's available and how much they're advertised for.

Some people are happy / comfortable taking the biggest mortgage and letting it run to full term. Some take it but make overpayments. Some borrow less and either let it run to term or overpay. There's no one way of doing things as we're all different.