How far to stretch for First Home?
Discussion
Just after peoples thoughts...
Been saving a while and cut all fixed outgoings to a minimum and will be looking to buy in 3-6 months. I have now fully got used to low fixed outgoings and no debt. This is making me consider how large a mortgage I want to take on.
We could find a perfectly good home for 2x joint earnings, but should we be stretching more than this? The houses obviously get nicer, but I do hate the idea of more debt.
The flip side of course is we could stretch upto 4x now and buy a forever house first time out.
Plan is either buy forever house now or buy a smaller house and save up to invest in a BTL / Shares, etc.
Would appreciate peoples thoughts....
Been saving a while and cut all fixed outgoings to a minimum and will be looking to buy in 3-6 months. I have now fully got used to low fixed outgoings and no debt. This is making me consider how large a mortgage I want to take on.
We could find a perfectly good home for 2x joint earnings, but should we be stretching more than this? The houses obviously get nicer, but I do hate the idea of more debt.
The flip side of course is we could stretch upto 4x now and buy a forever house first time out.
Plan is either buy forever house now or buy a smaller house and save up to invest in a BTL / Shares, etc.
Would appreciate peoples thoughts....
The Moose said:
Assuming a relatively young age, as far as possible IMHO.
ThisRecently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
kiethton said:
This
Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
That's a good little debt slave, well done!Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
mike74 said:
kiethton said:
This
Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
That's a good little debt slave, well done!Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
Depends on your situation.
If you're young and expecting significant increases in income over the next 5-10 years, then stretch yourself. A 4x income mortgage now will be 2-3x quite quickly.
If you're older and are expecting increased costs or decreased income (I dunno, say having kids soon), then you'd want to be a lot more conservative.
If you're young and expecting significant increases in income over the next 5-10 years, then stretch yourself. A 4x income mortgage now will be 2-3x quite quickly.
If you're older and are expecting increased costs or decreased income (I dunno, say having kids soon), then you'd want to be a lot more conservative.
Different strokes for different folks isn't it, but we definitely didn't stretch for our first home and I've no intention of hiking our debts to move either. For me personally, being easily able to afford our mortgage and all other outgoings with a minimum wage job should the worst happen makes me more comfortable than overstretching. I'm a captain cautious and even though we could afford it, I would worry myself to death if I had a £1,000+ a month mortgage, like most people I know have.
Teocali said:
Just after peoples thoughts...
Been saving a while and cut all fixed outgoings to a minimum and will be looking to buy in 3-6 months. I have now fully got used to low fixed outgoings and no debt. This is making me consider how large a mortgage I want to take on.
We could find a perfectly good home for 2x joint earnings, but should we be stretching more than this? The houses obviously get nicer, but I do hate the idea of more debt.
The flip side of course is we could stretch upto 4x now and buy a forever house first time out.
Plan is either buy forever house now or buy a smaller house and save up to invest in a BTL / Shares, etc.
Would appreciate peoples thoughts....
There's no such thing as a "forever" house. You don't know what is going to happen in the future, nobody does.Been saving a while and cut all fixed outgoings to a minimum and will be looking to buy in 3-6 months. I have now fully got used to low fixed outgoings and no debt. This is making me consider how large a mortgage I want to take on.
We could find a perfectly good home for 2x joint earnings, but should we be stretching more than this? The houses obviously get nicer, but I do hate the idea of more debt.
The flip side of course is we could stretch upto 4x now and buy a forever house first time out.
Plan is either buy forever house now or buy a smaller house and save up to invest in a BTL / Shares, etc.
Would appreciate peoples thoughts....
We bought our "forever" house thirty six years ago, and have moved three times since then, (forunately making money each time in a rising market).
Buy the best house you can (reasonably) afford, but don't be silly.
It's not nice living on beans and toast.
Good luck.
One group of people spend as little as possible, buy a home they don't really like, in an area they really don't like and then spend the all the cash they have saved on spending as much time away from their home as they can.
Another group of people spend every penny they have on the nicest place they can afford, in the best area and can never afford to leave their home to do anything.
The rest of us fall in the middle somewhere.
If its your first place stretch yourself as far as you can, inflation and pay rises will likely see you fine after a year or two
Another group of people spend every penny they have on the nicest place they can afford, in the best area and can never afford to leave their home to do anything.
The rest of us fall in the middle somewhere.
If its your first place stretch yourself as far as you can, inflation and pay rises will likely see you fine after a year or two
I'm 40 and bought my first property at 20, I have always stretched myself, its what I was advised to do and its worked, because to be frank I'm not great at saving money but also the housing market and economy for most of those years have worked in my favour.
That said assuming you don't live in London or the SE the last decade has seen pretty stagnant house price inflation (alright perhaps.slightly better than cash savings but not much) and there's the real chance that the next decade could see stalling house prices against some very real inflation else where... Who knows?
That said assuming you don't live in London or the SE the last decade has seen pretty stagnant house price inflation (alright perhaps.slightly better than cash savings but not much) and there's the real chance that the next decade could see stalling house prices against some very real inflation else where... Who knows?
You need to find a happy balance. What feels right to you now, stretches you a little, but allows some contingency.
I'm cautious and didn't stretch myself nearly enough and I do regret that sometimes. I was mortgage free by 40 but not in a house I'm altogether happy with so will have to mortgage again to move on. I suspect had I stretched, I'd already be in my forever house and probably still mortgage free or close to.
The thing is, hindsight is a wonderful thing. I've remained employed and some things have fallen favourably for us. However, had I stretched and things had gone the other way I may have been in trouble.
Only you can truly decide what works for you. Good luck
I'm cautious and didn't stretch myself nearly enough and I do regret that sometimes. I was mortgage free by 40 but not in a house I'm altogether happy with so will have to mortgage again to move on. I suspect had I stretched, I'd already be in my forever house and probably still mortgage free or close to.
The thing is, hindsight is a wonderful thing. I've remained employed and some things have fallen favourably for us. However, had I stretched and things had gone the other way I may have been in trouble.
Only you can truly decide what works for you. Good luck
I think we still view having a big house as a symbol of our status in life - so people will stretch to say they have a 5 bed detached or whatever.
We have had a 1 bed flat and 2 x 3 bed semis. That's all we need - it's a little short on garage space, but I didn't want a house with rooms I don't need just to get a bigger garage!
We have invested in a rental house, though, rather than have a 'status' house to live in.
Buy what's right for the life you want to lead - don't worry that you need something big just to show you've made something of your life.
We have had a 1 bed flat and 2 x 3 bed semis. That's all we need - it's a little short on garage space, but I didn't want a house with rooms I don't need just to get a bigger garage!
We have invested in a rental house, though, rather than have a 'status' house to live in.
Buy what's right for the life you want to lead - don't worry that you need something big just to show you've made something of your life.
Disastrous said:
Can't afford a house?
Not quite.Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.
I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.
mike74 said:
kiethton said:
This
Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
That's a good little debt slave, well done!Recently-ish stretched to 4x earnings to buy a flat that needed work, put a further 1x earnings on 0% credit cards. Owing to the work I've done on the place I'll clear at least 1x earnings if I sold but instead will re-mortgage (to incorporate the CC debt) and reduce the LTV so the rate should move from 3.5% (90% LTV) to ~1.5% (65-70% LTV).
It makes sense if your young with no dependents, worst comes to worst you've always got time to start again and make the cash back!
Good news is repayments, even now, are only 24% of combined take-home so not disastrous
mike74 said:
Not quite.
Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.
I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.
Well done for being born in a different generation.Own my own house, purchased when prices were sensible, now mortgage free, six figure savings in the bank and work 15 hrs a week.
I just enjoy laughing at people getting themselves into unprecedented levels of debt buying into the current property bubble yet they seem to think it's something worth boasting about as if they're some kind of financial genius, rather than just admitting they've had no other choice than to bend over and apply generous amounts of lube in order to become the proud owner of a mortgage.
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