should you stretch to max mortgage for bigger sq footage

M

mir2001

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I have a dilemma and I'm hoping someone who has been there and done that can offer some advice - I'm looking at 2 houses right now.
First house - a house that is quite small (890 sq ft) but will allow me to have a very comfortable repayment level.
Second house - nice size house (1150 sq ft) that also has a nice extension that gives the house a very pleasant kitchen/dining / living area that runs across the width of the house. However mortgage repayment will be max I can afford and I will have to seriously curtail any spending (incl holidays) for a few years. If I had to take a lower paid job I would probably have to take in a lodger too to cover things.
Question is : Is the second house too much risk or should you stretch to larger replayments now on the basis that these will not seem too bad in a few years and you will have a better property to live in and sell on in the future.
 
I would advise avoid buying a place that doesn't meet your longer term requirements for the following reasons:

1. You'll pay stamp duty on the 2nd purchase (Irrelavent if you're not a first time buyer now)
2. Both the costs and inconvenience of selling and buying simultaneously in the future.
 
I've been working in IT for 10 years so its likely that my income will not go up by a large amount from now on unless I do a lot of training or move to management (latter is highly unlikely).
 
Maybe stay within your comfortable limit so or consider waiting and saving a little longer for the house you'd be happy with?
 
moneygrower said:
Maybe stay within your comfortable limit so or consider waiting and saving a little longer for the house you'd be happy with?
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Offer for the 2nd house the amount you think would leave you with a reasonably comfortable mortgage. All they can do is say no - so you would have nothing to lose.
 
Ok, been there, done that ;)

We were deciding between a 1300 sq ft 4 bed semi for €240,000 finished or a 1850 sq ft 4 bed detatched for €280,000 builders finish so add another 20k to finish.

We thought about it long and hard and to get the €300k house would push us to our limit. But we went with it as we loved the house, close to schools, we have one daughter and want more and the bigger house offered us a playroom plus room for more kids, bigger garden, end of cul de sac etc. Also has room for extension and we could add another 700 sq ft if we convert attic.
It boiled down to buying a house which was cheaper but less suitable long term and upgrading in a year or two or buying the house that would be suitable for us in the future. Figured the extra 60k was worth it when you take stamp duty, selling costs, legal fees etc for upgrading in a year or two.

I would avoid pushing yoursleves too far on the repayment front though. We always wanted a 25 year mortgage and the bigger house over 25 years was a struggle to pay. My partner lost his job a few months after we bought the house and we got into a bit of debt the 4 months he was unemployed as my wage was just enough to cover the mortgage and we had to rely on credit cards for food and bills. When he got back to work we were able to remortgage and put it over 35 years which allowed us to pay off our debts and gave us some breathing room. We hope to increase payments over time as our earnings increase and still hope to be mortgage free at 50.

So, as long as the bigger house won't cripple you financially (I don't mean not being able for holidays etc- I mean being able to cover the mortgage and have food on the table) and allow you a bit of breathing room in case of any disasters (job loss, illness etc) I'd go for it. I wouldn't if it would cripple you and leave you struggling because its worth missing the holidays, clothes, dinners out etc but it wouldn't be worth the stress of worrying every month if you can cover the bills.
 
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