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First time buyer max out mortgage vs reasonable first house

Question

Hi all, I am 24 and my partner and I are looking to buy a house this year. We have approximately 70k saved for a deposit and including this could afford a property in the region of 350k.

In the areas we are looking for 350k we could stretch to a 3/4 bed detached house which we wouldn’t foresee ‘growing’ out of, however it would mean maxing out the mortgage and high monthky payments. Or for 250k we could get a 2/3 bed semi which would be perfectly reasonable for now especially as a first house but will never be the ‘dream’.

Now I know this is down to personal opinion but wanted to hear other people’s experience. Maxed out mortgage and regretted being financially burdened? Got your dream house and don’t regret it for a minute?

Thanks in advance!

Answers

Someone answered:

If you go for the £350k house and interest rates go to 6 or 7%, can you still afford it ? what about 10% ?

Rates are very low currently, they may not stay there.

Also consider that if you go for the 250k house you could overpay as and when you can afford it. This will reduce the amount of interest you pay overall.

Someone answered:

Just about selling our first house and moving on to our second.

We maxed out our mortgage for the first place and within a year I was regretting it. I was of the mindset that it's an investment and we should get the most we can afford at the time.

We're now downsizing to sonething more realistic for a better quality of life, savings, holidays, treats. Has been an expensive lesson but I'm glad we're doing it.

Don't over stretch yourself… Live within your means and you'll be far happier as a result. That's my opinion now anyway.

Someone answered:

Some other things to consider…

Lets say you max out your affordability now.

What may appear to be your "dream home" may actually turn out not to be after you've lived there for a year or two. You notice the soundproofing is quite shit, the layout isn't quite right, there's nowhere for the kids to run safely, the nearest school isn't very good (check ofsted), work changes, you get an offer of a better job in another county etc etc etc.

Ok, now back to the maxxed out scenario. What if that house doesn't end up being the right house for your future in any of the above scenarios?

Now let's throw in a curveball…

Brexit causes the housing market to go to shit. Suddenly you're mortgaged to the hilt, in negative equity, and are well and truly stuck in a house that isn't working for you.

My concerns are as follows:

  • you honestly have no real idea of what will work for you as a family with kids, as you are now at 24. I'm assuming you have no kids currently. That knowledge will only come from experience, from seeing what works and what doesn't work for you.
  • longevity of relationship. What will happen if you split and suddenly need to sell?
  • no buffer for "hard times" – with the shit-show of the current political climate who knows where the hell we'll be. Job security needs to be considered.
  • potential negative equity.
  • potential hidden issues needing large amounts of money to remedy. I uncovered a few biggies in this house shortly after I moved in, I'm still trying to get them sorted 2 years down the line and it's really put a dampner on what I thought would be my "forever home". Money I'd planned to use to redo the (very dated) kitchen ended up being spent on more urgent things.
  • Lets say you have kids (3/4 bedrooms, assuming you'll want kids down the line), one of you takes maternity leave. Will you still be able to afford the maxxed out version? What about when you are both back at work and you have to pay for childcare? Kids are bloody expensive.
  • Need to fully consider bills (including potentially a gardener for that lovely detached garden because you're knackered when you come home from work and would rather take a flamethrower to it than spend yet another free sunday mowing the damn lawn)

TL;DR – You are young. Honestly, you have no idea what kind of house would be suitable for you years down the line. The bills alone will be a huge difference between a 2/3 semi and a 3/4 detached. Council tax will be higher. Repairs will be more costly. Throw in the fact that no one has any clue about what the economy is doing… I think maxxing out would be a very bad idea.

Play it safer for now, ride the waves for now. Christ knows where the economy/housing market will be in the near future.