House Prices!

[TinyAcorn]

Argh! House prices!

My wish to own a paid off house by the time we retire is warring with our desire to have a nice comfortable home with a short commute!

I don't want to be swayed by the local norms and estate agents/mortgage advisors ideas on what we can afford so I'm coming to mustachian central for some advice.

Main question is how much can we 'afford'? Houses we like (admitting with a few nice-to-haves over our basic needs, garden and garage etc.) in the area we want - walkable village location but still 10-15min commutes for myself and hubby - run to £330-370k.  We have circa £5k coming in monthly (take home) and £35k deposit (on top of a 10k emergency fund and 10k credit card limit) making a mortgage payment of approx £1350 around 27% of take home pay...

Net worth is approx £280k presently but majority in pension wrappers.

Help please! I can't decide if this is reasonable or consumer sucker McMansion behaviour...

Talk some sense into me please if we're way off track for considering this...

[SuseB]

You don't say how old you are, whether kids are in your future or not or the timescale for living in the house.

If you are dual-income no kids currently but kids are in the future, then I would be wary because household income will probably fall temporarily during periods of mat leave etc and a big mortgage payment can be a real burden then. If no kids on the horizon it looks pretty affordable. Saving/allocating a bigger deposit would improve the mortgage deal you could get. Best deals are after 60% LTV, you currently only have a 10% deposit. Could you buy a less good house and add some of the 'nice to haves' yourselves? Could you look in the 'second best' area and get a house of the kind you want for a bit less? (In our case we eventually bought one village over from our target location and essentially doubled what we got for our money! Would never have realised without doing a drive around our target area to explore a bit further).

Just a few thoughts!

[TinyAcorn]

Thanks @SuseB - and apologies for the lack of pertinent details!

I'm 36, hubby 42, two kids 7 and 4. We're hoping that this will be a long term purchase, either last purchase or last before downsizing once kids have flown.

We're looking at surrounding areas - prices are better but struggling to find walkable communities and would extend commute toward 30-40mins each way due to traffic bottlenecks.  I suppose we're still weighing up quality of life vs paying off house quicker...

I lean toward lesser commute as I used to have an hour each way and I've been enjoying the change since we moved (we're presently renting in our ideal location while looking). Hubby leans toward lower house price or bigger house for same cash...

[vand]

A lot of this stuff depends on your situation, how you expect your careers and future earning to progress, how secure you think your employment situations are etc.

I think 27% of take home on the mortgage is fine.

A lot of the FIRE community bandy around a rough 25% rule of thumb for all housing-related expenses, but I think that is a bit harder in the UK where housing costs are generally higher and/or you are not a mega-earner.

As you say, it becomes a trade off between higher home prices vs longer commute and higher travel prices.. the market is pretty efficient like that. Good luck.. I am soon to be faced with a similar dilemma, as wife has been dropping hints that she wants a home upgrade within the next couple of years.

[SuseB]

With kids I think the walkable aspects become much more important. I have three and live within walking distance of primary school, doctors, park, tennis courts etc. It has been brilliant as they have grown up, and now they are able to be independent and see friends etc very easily (they are 8, 11, 13). Oldest now gets bus to school in next village, but can walk it if there is bus trouble. When we bought (with two young kids) we picked based on this location first, then garden, then ability of house to both meet our needs right then and to have potential for the future - in our case we converted the loft after a couple of years. My DH has a longish but straightforward commute (35mins of dual carriageway); it is the only downside! But he could change jobs if it got too much. So I am leaning in favour of a house in your preferred location, but I would think about plans for a) doing your own improvements to a less-than-perfect house, and b) looking at remortgaging for better deals as soon as you've accumulated a bit of equity etc.

[londonstache]

TinyAcorn, I think this looks sensible to me.

I'm reevaluating some hardcore mustachian ideals and I think quality of life is huge. If areas are walkable and commute is shorter I think you potentially stand to save money on:

• car usage - as presumably you'll walk/bike more
• food - I tend to eat more 'convenience' food when I'm tired/longer commute
• family time - not a money saver, but a big one on quality of life

Based in London I've grown into the mindset that <60 minutes = short commute, but I think if you have a clear FIRE plan in place then QoL is a definite factor. Definitely agree with remortgaging when you can get closer to 60% LTV.

[TinyAcorn]

Thanks so much for all the advice @SuseB, @vand and @londonstache

My head is spinning somewhat but I've booked some viewings over the weekend both in preferred location and surrounding areas to test importance if location vs house.

Just found out from our eldest primary school assessment that our boy will likely have some SEN needs so this may mean that schools, inc secondary, may become more of a priority consideration...

Thanks again for helping me get my head on straight, and glad to hear that I'm not straying too far outside of sensible - even if we do decide to pay more for village life ;o)

[Manchester]

How much is your rent currently?  If your mortgage payments are similar then you'll have a good idea of how affordable it is? 

I'd definitely recommend buying over renting though.  Our housing market is more predictable than the USA and it's very rare that the value you of your house would decrease over a 10 year period.  Even if you're not actively paying down your mortgage, your N/W will increase with the value of your house.

[poppydog]

We are retired now and about to downsize.  Through our working life we moved three times, upsizing each time.  On all three occasions I worried that we had outstretched ourselves. Each time within a year or two I wondered what i had been worried about! 

You will likely find that you adjust to your new budget sooner than you think.  Good luck.