Twins, One Bedroom and a Mortgage Letter That Scares Me

A reader writes:

My wife and I have twins, a boy and a girl, who turned two in March. We live in a one-bedroom apartment in a complex off Constant Spring Road. When we moved in it was just the two of us and it felt like plenty. Now the cots are pushed against our bed, there are clothes drying on every chair, and I do my overtime paperwork in the bathroom with the door shut so I don’t wake anybody.

We have been saving. Not as much as we planned, because nobody tells you what two of everything costs, but we have something. Last month the bank gave us a letter saying how much they would lend us. I nearly dropped it. It is more than I thought, and when I worked out the monthly payment it is almost double our rent. My wife says that is the same as other people pay and they manage. I look at the number and I feel sick.

A two-bedroom rental in a similar area would cost more than we pay now, but not as much as a mortgage. My mother says renting is throwing money away and we should buy while we are young. My pastor says pray about it. I have prayed. I still don’t know.

Part of me thinks we should just stretch, because the children will only get bigger and prices will only go up. Part of me remembers my father losing his car when I was ten because the payments got too much. I don’t want my children to remember that about me.

Do we rent something bigger and keep saving, or do we buy now while the bank says yes?

— Andre, Kingston

Our response

Andre, thank you for writing so honestly. The feeling in your stomach when you looked at that figure is not a lack of faith. It is information, and it deserves to be taken seriously alongside your wife’s confidence and your mother’s advice.

First, a word about the bank’s letter. A pre-approval tells you the most a lender is prepared to lend. It does not tell you what is comfortable for your household. Lenders look at your income and existing debts; they do not see the cost of nursery fees next year, the car that is getting old, or the fact that one of you may want to work fewer hours while the children are small. The figure you are approved for and the figure you should borrow can be very different.

It may help to lay out three honest options.

1. Rent a two-bedroom now and keep saving. This eases the daily pressure straight away. The cost is that your deposit may grow more slowly. Before choosing this, work out how much you could still save each month at the higher rent, and set a date to review.
2. Buy, but well below the maximum. A smaller or older home, or one further out, might bring the payment closer to what you pay now. Remember to count the costs that come with owning: insurance, property tax, maintenance and any strata fees.
3. Buy at the level the bank offered. Some families do this and manage. If you consider it, test the budget first: for three or four months, live on your income as though you were already paying the mortgage, and put the difference into savings. If it works, you will know. If it does not, you will have learned that cheaply, and your deposit will be bigger.

Some questions to talk through with your wife, ideally on a quiet evening rather than at the end of a hard day:

• If one of us lost income for three months, how would we pay?
• What will childcare and school cost over the next five years?
• Would we still have an emergency fund after paying the deposit and closing costs?
• Does the mortgage rate stay the same, or could the payment rise?

Renting is not throwing money away. It buys you a roof, flexibility and time. Owning builds equity, but it also carries risks and costs. Neither is more godly than the other. Proverbs praises the wise woman who “considers a field and buys it” (Proverbs 31:16); the emphasis is on the considering.

Your memory of your father’s car matters too. Talk to your wife about it. She may not know how deep it runs, and sharing it could help you decide together rather than pulling in opposite directions.

Finally, speak to someone independent: a mortgage adviser who is not selling you a product, or a financial counsellor at your credit union. Ask them to show you the payment at a few different loan sizes and interest rates. When the numbers are laid out calmly, the right path often becomes clearer, and the peace you are praying for may come through that very conversation.

This article is general information only and is not financial, legal, tax or other professional advice. Please speak to a qualified professional about your own circumstances.

Reader letters may be edited for length and clarity, and names and identifying details are changed.

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