Mortgage affordability and starting a family

greengirl89

Hi all, 

We are looking to upsize to a house and obviously this will require taking out a significantly larger mortgage. We know what our max borrowing limit is (and can comfortably afford the type of house we want). However, we don't currently have children and plan to start a family in the next 1-2 years. My husband and I both have very good maternity/SPL policies but the bigger issue is the cost of childcare (and the other costs of having a child / children).

I believe nurseries in my area are £1,600-1,800 a month, but I've no idea what a child costs above and beyond that (food, clothes etc!). 

Between us we do pay a fair bit into pensions so that's a good buffer - obviously important to keep paying into the pension if possible but if we were really struggling we could reduce that temporarily. We are also thinking of taking out a longer term mortgage to keep the contractual payment low and reduce the term again later. I am envisioning that once our (future!) children are out beyond nursery age, it might get easier, but perhaps the cost just change from childcare to other child-related costs?!

Any general advice on how to account for all this when working out what monthly mortgage we can afford?

Thanks!

Spendless

That's a 'how long is a piece of string' question but I can say that in the early years your biggest expense will be childcare or loss of income.

It's years since I saw it but I once read an article that gave the biggest costs as (approx as from memory)

Under 12 months - nursery furniture/equipment
1 - 5 years - childcare
5 - 12 years  - hobbies
13+ clothes/socialising

Obviously there are many variables within these, you might manage on the minimum of nursery items, or be gifted things/buy 2nd hand and Dance lessons and horse riding are going to be more expensive hobbies than joining the local Scout/brownie group

tooldle

Considerable childcare costs beyond nursery age, was my experience. If working full time you will still need breakfast club/ after school club and holiday care costs. I based our budget on full time nursery fees plus an extra couple of hundred for all the extra bits (food, clothes, nappies, shoes etc). As the childcare bill reduced, i used the excess to overpay the mortgage. My young adult is now 22, so you may need more than a couple of hundred to cover the extras. 
Don't neglect your pension as none of us know what is down the line. Is your available income likely to increase (promotions, job changes etc), giving you more to play with? 
We waited until daughter was 5, to up size. Moving the summer before she entered full time school. To be fair, maternity leave was very short in those days and hence weekdays were largely spent in work and not at home. Weekends etc we would be out and about, so space did not present an issue.

greengirl89

Thanks both - that's really helpful.

We actually love our flat at the moment and as it's 2 bed we could stick around, but the value has hardly changed in 4 years (we've sold for 10k - 4% - more than we paid for it), whereas 3/4 bed houses have gone up well over £100k in the same period. If we leave it a few more years we might miss the boat on a 3 bed! 

Beckyy

I would consider taking your mortgage over the longest term possible, you can always over pay or pay off early, it gives you so much more flexibility.

You might find that as a parent you wanted to work less, (or maybe not, it's personal preference) in which case consider loss of earnings if you would be able to reduce hours. Compressing hours can be useful for some families but the days will be long. 

Personally, I think once they reach school age it can become more difficult because you're dependent on finding before/after school care if your work requires it - and school holiday arrangements can be a pricey deal also.

If you're looking at moving and definitely starting a family look at childcare and schools in the area too, a good childcare provider is worth their weight in gold. 

In a nutshell, I'd take a longer mortgage term, scout out a house near good family friendly facilitates, and save hard now so you have a good buffer

HeatherWillDo

Yeah, i agree with the above me and my partner had a 20 year mortgage on our first home and in hindsight just was not worth the bigger repayments. I would go long-term if it's your big forever home!