Buy the most you can afford?

clint_S · 3 March 2017 at 11:49AM

I was in a similar position a 18 months ago. We had an AIP of £380K, the house I wanted was £270K, the wife didn't want Mortgage payments over a certain amount (meaning a Mortgage of £200K). We bought a house for £230K. It's slightly smaller than the house I wanted, but with the savings we're going on two holidays this year, bought a new car, can pay for all the improvement to the house and garden, and have enough saved up to pay of 25% off the house. If either of us were made unemployed we could easily live the same standard of lifestyle for a year, without worrying about how we would afford the mortgage.

I did have to negotiate up with the wife, but she loves the house we are in, and the lack of financial worry about ifs and buts has kept the stress levels down.

clint_S · 3 March 2017 at 11:55AM

It really depends on the type of risk taker and how you like to manage you money. The wife even asked the Financial Adviser whether she felt we could afford the £230K property, which was met with a chuckle.

trailingspouse · 3 March 2017 at 12:03PM

I've had three forever homes, so I would never buy anywhere expecting to stay in it 'forever' - that's an awfully long time, and things change.

If the thought of buying the 4-bed is making you nervous, then I think that's all we need to know. Don't do it.

You buy a house to live in it. With the emphasis on the live. If you can't afford to live, then there's no point.

Greyhorse · 3 March 2017 at 12:15PM

We do love the 4 bed however to purchase would mean borrowing money from parents to cover the shortfall and paying this in addition to the more expensive mortgage as we do not have enough equity in ours. This is more the problem than the mortgage itself but family would lend us the shortfall.

If we buy a 3 bed it is likely we will want to move however we might love it there too so it's hard to tell! All of the 4 beds in the area start at the 200k. House we like is 230k.

The cheaper mortgage is somewhere in the £700 figure and the more expensive one £1000 per month.

Our joint income is around £2600 per month however isn't likely to increase significantly any time soon.

Mrs36 · 3 March 2017 at 12:23PM

I have always pushed our budget as much as we are comfortable with and it has worked out so far. We are currently purchasing a house that will be a long term home (I'm not sure I entirely agree with the sentiment of a 'forever' home) and have pushed ourselves, but nowhere near what a mortgage companies affordability said we could borrow (I still wanted to be able to sleep at night!)

Borrowing from parents would make me VERY nervous, and I can't say it is something I would do personally. What would you do afterwards if the boiler broke, or your washing machine? If you are borrowing from family that seems a bit too much of a stretch.

Also, how important are the luxuries and days out to you? I am not at all bothered about holidays or new cars, but if that was important to you the last thing you would want is to resent the house for preventing you from doing all that.

kilby_007 · 3 March 2017 at 12:35PM

According to Tesco's mortgage calculator, I can "afford" to buy a 450K house with a 20% deposit. Would I be able to "afford" to make the monthly repayments if the interest rates went back up to 5%? Absolutely not. We're looking in the 300 - 350K range. Don't max yourself out, there's no safety net as interest rates can't go any lower, and house prices can't get much higher. If prices come down and interest rates go up, the best case scenario is that you're going to be skint and not moving house for a long time... worst case you lose the house and declare bankruptcy.

neilio · 3 March 2017 at 1:00PM

Greyhorse wrote: »

All of the 4 beds in the area start at the 200k. House we like is 230k.

Wow! What area of the country is this?

Keep_pedalling · 3 March 2017 at 1:09PM

If your parents can afford to give that money then fine, if not I would not do this. Lenders are going to want a gift declaration from your parents, and yes they could lie but that is not a great idea.

Slinky · 3 March 2017 at 1:18PM

Could you compromise and find a 3 bed detached at somewhere in-between price wise?

always_sunny · 3 March 2017 at 1:26PM

it really depends on personal circumstances and what the plan might be for the buyer keeping in mind that planning is good however reality often differs.

I decided to buy within a set budget based on what I would be comfortable to pay monthly not what I could afford. I could afforded more but I had no need.

Are you buying a property to the max because it will be your nest egg for retirement? Today there are other options that have better incentives.

Grandparents see property = retirement plan, it's a different game now.

Buy the most you can afford?

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