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

getmore4less

TXC said:

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.)

if we bump the mortgage up to £200k  90% LTV is sitting around 3%-3.5% that fits.

push the full term out will give a bit of head room and there is some room to squeeze the bills

Looks pretty comfortable, with wage growth in the pipeline it will ease up quickly  

Definite

TXC said:

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?

At your age and circumstances, I would definitely do it. What seems a lot now, will not feel like much in 10 years time. My neighbour, who has been in his house for 20 years, bought it for 120k then, which was a huge chunk of money. He paid his max every month, paid it off in 17 years. My house, which is identical (terrace) has just gone on for £600k (we've been renting it and are now moving). Wish I'd bought when he did at my max

TXC

Thanks all, some brilliant advice here! definitely got some thinking to do. Right now I'm leaning more towards taking the plunge. I'm really re-assured by the fact that it is massively re-sellable if the worst comes to the worst and lodgers are quite abundant looking at spare room! I'm also on track to clear off my student loan in around 7 years so that'll be a nice chunk back too when I do.
I mean all of this may be a moot point as I'll proabbly get outbid buy a cash buyer or someone 30k over asking but definitely food for thought!

steampowered

Mortgage lending rules are conservative. Mortgage lenders are not allowed to lend you an unaffordable amount, and stress test affordability against a situation where interest rates rise.

The figures you gave for your finances are absolutely fine. If you want this property you should go for it.

JJR45

Mickey666 said:

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.

Depends on how much you laugh though.
I was certainly happier buying a new build in 2008 for £250K, than the other people who purchased the same houses off plan for £340K a  few months earlier. They have only just got back to the price they paid for them,
So although generally, property appreciates over time. There are winners and losers in every cycle, and people's circumstances can change. So generally maxing yourself out,  carries the most risk.

Angela_D_3

JJR45 said:

Mickey666 said:

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.

Depends on how much you laugh though.
I was certainly happier buying a new build in 2008 for £250K, than the other people who purchased the same houses off plan for £340K a  few months earlier. They have only just got back to the price they paid for them,
So although generally, property appreciates over time. There are winners and losers in every cycle, and people's circumstances can change. So generally maxing yourself out,  carries the most risk.

And the most reward 

JJR45

Angela_D_3 said:

And the most reward 

I would say so in business, but not necessarily in house buying to live in. Simply because other costs tend to go up the more expensive or riskier property you buy.
You could get lucky, but as it is a home as well as an asset, it is best to have a little more caution because if it all goes wrong you lose both.

sammyjammy

If the value of your house had dropped 10% in the first 12 months of living there how would you feel?  That's potentially the only issue I foresee being a possibility, If that wouldn't bother you go for it.

TBagpuss

I agree with the poster who said think about it as a home and how comfortable you will be.
I am a single person (although rather  older than you!) and now have a 3-bed semi - I bought it because while I would have been fine with only 2 bedrooms, I wanted more outside space, decent sized living space etc and that effectively came with a third bedroom. 

I do regret slightly that I wasn't a bit braver when I was buying my previous house - having moved south across the North -South divide I was reeling from the fact that houses cost about 3.5x as much as where I'd been living, so the borrowing for y 2-bed terrace felt massive. In reality I would have been happier and more comfortable if I'd been willing to borrow a bit more and go for somewhere a big larger or in a slightly better area. I ended up being unable to move as soon as I'd hoped, for a variety of reasons, and with hindsight I would have rather had a few years t the start with a bit less money to spare, and had the benefit of living in a nicer house in a better area. 

(Life's ironies being what they are, when I moved most recently I would up getting what I wanted for less than I expected, so ended up borrowing less than I'd planned/expected!)

TXC

sammyjammy said:

If the value of your house had dropped 10% in the first 12 months of living there how would you feel?  That's potentially the only issue I foresee being a possibility, If that wouldn't bother you go for it.

I mean I wouldn't feel great! The flipside to that would be I could wait 12 months for that to happen and prices have increased further its such a minefield! I suppose unless I was selling in 12 months (which unless the sh*t really hit the fan I absolutely wouldn't be) then it would be something I could ride out?