All very good advice above … sounds like the OP is cutting this close … but the family sounds young with several decades of their working lives ahead of them to recover in the worst case scenario …
“- The house appears to be in absolute top nick; fresh paint, good quality floors, no squeaks, 1-year-old boiler, oven looks decent, bathroom looks clean and shiny. Windows look in good condition.”
Of course the surfaces look bright and shiny … that’s the easy (and cheap) part of the affair … is there a crawl space and have you crawled through with a screwdriver poking everything looking for dry rot and/or bugs … is the line where the ceiling meets the wall along the perimeter of the outside walls dead level all the way around, say within 1/2 cm … are the plains of the roof in fact flat plains and not wavy … these are the things that make construction contractors rich …
For £235,000 … I’d recommend a certified house inspection … call it cheap insurance …
It wouldn’t hurt to get out another sheet of paper and work the numbers as if this was an investment in the general sense … do all the basic risk/benefit calculations … see what these numbers say … as I mentioned, cutting this close increases your risk of default, you’re getting hammered on liquidity risk … are interest rates expected to go up, then locking in a fixed rate mortgage now cuts your interest rate risk, and of course you’ll be beating inflation risk with the locked in monthly payments …
Again, use a separate piece of paper … this is just another way to look at this deal and maybe provide you with some insights that you might miss otherwise … remember, the principle portion of your monthly mortgage payment is capital, how much the house appreciates in value is your capital gains, and that principle portion is in effect free rent since you’ll likely see every shilling of that back in your pocket at some future date …
We started hunting about a year ago and cast our net wide every possible direction from London, with the criteria of finding a 2- or 3-bed house an hour from London by train, and ideally with a garden. We’ve gradually narrowed down to one area which sees to have a higher concentration of said properties.
We don’t own a car, and I don’t have a license. Train journey is an hour, with 15 mins walk to home/work on either side.
We did consider me taking a career break - wife earns more - but right now we simply can’t afford it. We’re both 35, so not that young any more.
There looks likely to be considerable investment in the area around the adjacent satellite town over the next few years as a major company looks set to move in so I’m suspecting house prices will appreciate and lots of local jobs will come up.
Interest rates have dwelt on my mind, what with Brexit, but reading up online people seem to insist it could go either way. I don’t know if this is typical financier hedge-betting, though.
We’re re-visiting the property this weekend with some landord friends who will give it a critical eye and whether it’s worth going for or not. Plus we’ll have a survey done n he house before we seal any deal.
We’ve factored in a few thousand to over stamp duty and property tax, but it will clear out our savings.
Having looked at the DWP website, frustratingly we appear to be beyond the pale for child tax credit and working tax credit, whether I keep working or not.
Make sure you get a full survey done. One where the surveyor will poke and prod and lift the carpets. This will cost you a lot of money, but will be worth it if she finds something untoward.
It sounds like you’ve done your homework, and have a pretty good handle on the market. Predicting prices into the future is very difficult, but a major employer can indeed boost demand.
Predicting interest rates is a fool’s errand. I’ve been predicting that interest rate increases are right around the corner for at least five years. One of these days I’ll be right. But no matter how you look at it, mortgage rates can’t go much lower than they have been. But one thing to think about is that most home buyers are looking at monthly payments as their yardstick of affordability, not the purchase price. If interest rates go up, that creates downward pressure on home prices, to keep the monthly payment affordable. I’m not making a prediction on this particular home or neighborhood, but rising interest rates raise monthly payments, reducing the amount purchasers can borrow , which reduces demand. On an individual property, of course, there are lots of other factors at play, including seller motivation.
Food for thought.
It sounds like you are contemplating moving to a suburb. Is it reasonable to live where you are contemplating without owning a car? I don’t know squat about London, but it is very difficult here in the US to live anywhere except in the center of large cities without a car. How will you get to the grocery store? Your kid’s school for events? The hardware store? Etc.? If you have to buy and own a car, that adds a lot more expense to the household.
Congratulations on becoming a dad! It is basically amazing, apart from those brief moments where it appears to be unbelievably stressful and terrifying. But these moments pass.
Childcare is eye-wateringly expensive everywhere; we too found that it was basically the same as the mortgage. I think it’s worth taking a second look at childcare vouchers - from personal experience and per this site two working parents should be able to get £486 on salary sacrifice, not £170. Depending on what your employer is offering, of course. This should make a big difference.
A brainwave actually struck me this evening, folks.
We were stressing over paying for childcare, while simultaneously one day hoping I could pack my day job in and be a stay-at-home dad, but without making the loss of my income super awful.
But for some reason I drew a total blank about the fact that I could get a job on weekends. And I could care for baby on weekdays!
B’duh :smack: Doing some rough sums, if I even got a minimum wage job that occupied me Saturdays and Sundays, we’d end up taking home sightly more than if I continued at my full-time job in London.
Plus we can scrimp a little more with the Marriage Allowance, which sends a bit of my tax-free Personal Allowance to my wife.
£150/month for food is less than a pound per meal per person. That seems quite low, particularly if the grocery bill will be including baby-related things like wipes and diapers (to go on the baby’s bottom; I believe you British call them “biscuits” or something like that ;)). And even if you are breast-feeding now, baby food will be a separate expense soon enough.
Also, just as for some parents half the reason they had a baby was to throw it up in the air, for others, half the reason to have the baby is to dress it in tiny clothing (that has to be replaced quite often). Budget for clothes appropriately.
What’s a “congestion charge”?? Is it what in the US we call a toll? Over $14 a day, man, I can’t think of a commute that costs that much without driving tens of miles, but I’m pretty rural.
It’s kind of like a toll, it’s designed to reduce congestion in London by charging vehicles going through central London. It picks up license plates by camera and computer and if you aren’t already pre-paid, you get sent a bill.
The money is used to fund infrastructure maintenance in London.
In London the congestion charge is Mon-Fri between 7am and 6pm.
You’ve received great advice about money, but I feel there hasn’t been enough talk about time. Time is worth more than money, especially while your child is small.
Working an 8-hour day, plus 3 hours commute is just torture. I don’t know of any day care places that are open 11 hours per day. And the slightest delay will put you way over on childcare. Here in the US they charge you $10 the moment you’re late, and a dollar a minute thereafter.
Even if one of you stays home, the family is unlikely to survive the kind of time deprivation you are talking about. And if your wife does the long commute weekdays, and you work full shifts on the weekend, how exactly will you two ever hold a conversation?
It’s too far from work. People do it, but they tend to be very unhappy people.
I quite agree, but this arrangement is pretty normal for London working families. London is just too damn expensive for anyone below ‘substantially wealthy’ to live anywhere close to London’s urban centre.
Do realise that buying a house will fix you in one place and hamper your abilities to change jobs. I still suggest you find your new jobs first and then look for a place.
Some really good points raised already. You should take a look at your grocery spending over the last few months to do a reality check on your food budget, and don’t forget to include the bottles of milk/loaves of bread that you buy in addition to the big shopping trips as well 150 pounds per month seems very low for a family of three.
Some more things to consider - how are the local childcare and schools in your target area? Where are your families? Would it be better to live closer to the grandparents for visits/child-minding?
Childcare’s cheaper there than where we are now. The schools are above average - the locals are proud of them.
Wife is American, so family are not here. Mine are in the next county, but one half lives in the middle of nowhere are the other half lies in my hometown, which I hate for being bland, tacky and generally shit.
There have been a lot of good points-to-ponder raised, but one thing I haven’t seen.
How long do you plan on staying in the new house?
In the US, the recommendations are usually don’t think about buying if you aren’t going to be in the house for at least 3-5 years. Personally, I lean towards 5 years as a minimum. Why? Because of all the incidental costs of buying a house/getting a mortgage. Mortgage fees here are usually between 1 and 2% of the total loan amount. Then there are inspection cost, legal costs, moving cost, etc. If you are planning on moving in just a few years, you probably won’t ever recover that money. If you are in for the long haul, then the amortized costs are more reasonable.
In the US homes are one of the best investment one can make. Sooner or later it will be paid for and you’ll be way ahead of the game. I’d recommend doing so regardless of how scary the move seems, that is, as long as you can afford the payment and you’re secure in your employment. You have to live somewhere.
But no matter how you look at it, mortgage rates can’t go much lower than they have been. But one thing to think about is that most home buyers are looking at monthly payments as their yardstick of affordability, not the purchase price. If interest rates go up, that creates downward pressure on home prices, to keep the monthly payment affordable. I’m not making a prediction on this particular home or neighborhood, but rising interest rates raise monthly payments, reducing the amount purchasers can borrow , which reduces demand. On an individual property, of course, there are lots of other factors at play, including seller motivation.