Buying house and retirement planing

abdus

Hello Everyone,

I am new here and looking for some advice,

Situation is that I have family which consists of 5 members. Three kids under 10 years old plus me and wife.

At the moment we are looking to buy house of minimum configuration required for our family size.

To make this happen, I need to go for maximum mortgage value on the basis of my earnings and it will give me maximum 3-bedroom property.

After some calculations, I found out that If I go for the house we need, I can't save for the retiremen.

What should I do,

Should go for small property 2 bed room house and carry on saving for retirement?

or

Should go for the max. value which I can get from Lender and don’t save for retirement?

or

Should select a property which have basic 2 bedroom and bathroom upstairs and later on convert it to bedroom and move bathroom downstairs?

Many thanks in advance

MovingForwards

Wages go up (in theory).
Money paid towards mortgage gets lower due to value of money changing (inflation).
Kids leave home (in theory).

While saving for retirement right now is a bit harder with a mortgage, overtime it becomes easier.

gwynlas

This raises a number of questions
Age and sex of children?.
Catchment area of good schools?
You and your partners ages?
Are either of you already enrolled in a pension scheme?.
I would think that you need a three bed house with at least two reception eooms plus kitchen.
Whilst saving for a pension is a very good notion your current family needs have to be your priority.

abdus

gwynlas said:

This raises a number of questions
Age and sex of children?.
Catchment area of good schools?
You and your partners ages?
Are either of you already enrolled in a pension scheme?.
I would think that you need a three bed house with at least two reception eooms plus kitchen.
Whilst saving for a pension is a very good notion your current family needs have to be your priority.

Cheers gwynlas.

Me 40 yrs and partner is 34 yr. I have 2 daughters and one son.

My wife not working as she is looking after kids at the moment.

I am enrolled in pension scheme from work but its not very good tbh and thats is the reason i am looking to save some for retirement separately.

abdus

MovingForwards said:

Wages go up (in theory).
Money paid towards mortgage gets lower due to value of money changing (inflation).
Kids leave home (in theory).

While saving for retirement right now is a bit harder with a mortgage, overtime it becomes easier.

Cheers MovingForwards.

Thats is very true.

thegreenone

Children have this weird ability to grow, especially sons, so you will need the space now.   After the age of 11, girls and boys really shouldn't be sharing, whether it's legal or not, they will need their privacy when they get older.  (I did note the changing the bathroom).

If you go for the bigger house, which I sincerely hope you do, you WILL be saving for your retirement. At the current rate you will retire at 68 so you have 25 years to pay off a new mortgage and three years hard saving afterwards.  Once the children have left home you can always downsize to a smaller house to help provide for your retirement.  

abdus

thegreenone said:

Children have this weird ability to grow, especially sons, so you will need the space now.   After the age of 11, girls and boys really shouldn't be sharing, whether it's legal or not, they will need their privacy when they get older.  (I did note the changing the bathroom).

If you go for the bigger house, which I sincerely hope you do, you WILL be saving for your retirement. At the current rate you will retire at 68 so you have 25 years to pay off a new mortgage and three years hard saving afterwards.  Once the children have left home you can always downsize to a smaller house to help provide for your retirement.  

thanks thegreenone,

You made a very good point about down sizing property later on.

All the replies showing I should go for the max which lenders allow me

[Deleted User]

Tricky situation. When you kids grow up they won't be able to afford a house unless they are extremely lucky, so will be looking to you for support (either by not moving out or with help to put down a deposit).

Generally speaking buying a property will always work out well financially, unless you lose it by not being able to afford the mortgage payments. On the other hand playing that game only helps deprive your children of the opportunity to buy.

It's an impossible situation.

rexmedorum

I wouldn't opt-out of any workplace pension if I could help it at all but beyond that you can certainly look at the house as a way of "saving" for retirement too:

- You'll need less money in retirement once it's paid off
- You'll be able to seriously save if there's any time between paying it off and retiring
- Usually you'll end up paying less per month than if you rent, as long as you can fund a deposit.

Also not unimportant: Owning your own home gives your family a bit more security. As long as you can pay the mortgage you can stay, wheras renting you'll never know how long you'll be able to stay.

nicknameless

I think you may be asking on the wrong board here.  Try pensions and annuities.  Views on this board are in my experience skewed towards property being an investment and / or retirement vehicle.  Many (sensibly) would not see it as such, although it could form part of such planning e.g. if downsizing.  You need an income in retirement.  At 40 with a poor work pension you are already behind the curve in terms of retirement planning in all likelihood.  I appreciate not everyone can afford to do everything though.  Depending on your salary and disposable income there are some simple no brainers in terms of pension savings and tax benefits if you can afford it.

nicknameless

[Deleted User] said:

Generally speaking buying a property will always work out well financially, unless you lose it by not being able to afford the mortgage payments. 

You keep saying this in different threads and it is simply just not justified.  Can you for example guarantee in excess of 40% tax relief for higher rate earners from using that incremental earning to pay a higher mortgage, rather than save in a pension?  Simple answer NO.