AIBU to go to the top of our budget for a bigger house?

There is saving and there is saving. £500 a month is perfectly reasonable but only if it is genuine savings not holiday fund, Christmas fund, "oh I forgot to incide my bimonthly haircut" fun etc. Don't look at food, bills and petrol and think you have £500 at the end of that. Use money saving expert budget planner. I have about £700 left at the end of the month but when I plug all the extras - mot and car service, holidays, Christmas and Birthdays, odd classes and workshops I attend a couple of times a year, clothes and any ad hock purchases, I basically end up with 2k at the end of the year of legitimate savings.

Re savings, we have the following approach (a la Dave Ramsey)

£1,000 - pot for small emergencies like a new washing machine. Anything spent out of here is topped up the following month
3 months expenditure - in another account incase of redundancy (should be 6 but we're working towards that)
Investment savings - S&S ISA, retirement savings

Generally pay off holidays once booked so don't save for those.

For those saying £500 is not enough to save at the end of each month, how much do people usually save?

When you say £500 left to save what do you mean? Long term savings? Holidays? Christmas? Birthdays?

You have just inadvertently proved my point. If you believe things have changed massively in the last 10 years, they are going to change again "massively" before OP's kids are of uni age.

A mid level teacher isn't ever gonna be earning mega bucks unless there's a lot of promotion going on. OP what's your job? Will you be the higher earner?

We have always lived in a small house (1000 sq ft) with a small mortgage (it's just gone up with the new rates but still only a grand a month) which leaves loads left over. I'd much rather have holidays, no worries about paying for university, driving lessons etc. teenagers are expensive. Also less cleaning to do and just a nicer life. Make your small home pretty and lovely and the size doesn't matter!

Also to the pp saying kids go to local universities - SO many of us live nowhere near any universities at all! So this isn't even an option for an awful lot of people. Never understood why some people can't realise we don't all live near big towns.

I wouldn’t do it. Holidays, orthodontists, car, new fence etc etc, it all adds up and £500 a month leftover would be tight.

I think you'd be mad to do that.
I would much rather borrow less and buy a house that needs a bit of work, then you're at least adding value.

Don't people remortgage to bring the term down???
we probably had mortgages that were.meant to last for 35 years but remortgaged every 2/3 years and are now.mortgage free after about 17/18 years (admittedly that is probably a short time period but still)

We stretched ours to the top of our budget and have absolutely no regrets. We have a wonderful house and great lifestyle because of it. And a smart investment for the future. But given you aren’t working and given interest rates, I personally would hold off for 3 years til you have more income and interest rates have hopefully stabilised a bit. I was 40 when I bought my first house, so I think you have plenty of time (though not sure you’d get a 35 year mortgage, the longest term we could get was 27 years).

Really I think there are two questions here. What to do now, and what to do when you go back to work.

there must be something mid way - agree that something that needs tons of work not ideal, but semi detached rather than dethatched?
that said, if you are confident that you can get a good longish fix now, and are confident that you'll be looking at two salaries when it comes up for renewal, it's still worth considering.

Insanity beyond all measure! You're mortgage free and are considering saddling yourselves up to the eyeballs with debt in your middle age!?

We're only a few years older than you, have just under £100k left on the mortgage and have an eye on paying it down and getting rid.

Move your ISAs for a start !

How about a loft conversion ?

Exactly this.

For me it would depend on what you're prospects of increasing your income significantly enough to pay that down long before you're in your 70s.

We are in a similar position and have decided to go ahead and get a bigger house. We see it as an investment for our future as our savings are currently sitting in an account doing nothing. A house is a great investment. The only difference is that we are both working full time. I wouldn’t even contemplate it on one income for financial security reasons. Why don’t you go back to work - it is difficult during the pre-school years but the sooner you go back the sooner you will start to build your career and have an opportunity to increase your income. The £500 left over at the end of the month would not be enough security for me.

Mortgage debt isn't the same as consumer debt. It's the closest thing many of us get to generating wealth and investment income.

I'd wait til you are back to work, then borrow absolutely as much as you can on your joint salary and the equity in your current place, on a repayment mortgage. Buy a house with that money that is a bit future proof - not somewhere that prices would slump in a downturn, or the fanciest house on its street...all the usual advice about reliable investment property. Make it somewhere you can live as a family for 20 years with the space needs you'll have.

As you pay the mortgage back your investment is appreciating. The more expensive your house, the more money you make because it's still likely that in the long term property value rises higher than mortgage repayments take from you.

While you are youngish and earning there is no sense being mortgage-free. You should be using your borrowing power to generate as much wealth in the longer term as you can, while retaining enough liquidity to cover yourselves in case of bad luck (though now I'm getting flashbacks to that thread about the rich woman who said she was so rich she didn't have any savings,and refused to believe that her spare money was savings!)

Actually there's never any point being mortgage free, unless you have no income and can't downsize. All the people saying "But how can you have a mortgage you are still paying back when you are 75???!!" are missing the point that as soon as you are older and the children leave, you downsize and pay it off then.

Obviously if your children are still home and you are 75 that's hard - but frankly we will all be screwed then, so there's not much can be done!

Right now the economy is not in a place where i would cheerfully overextend myself.
You can't afford it.

Agree. My housing situation would have to be much harder to cope with than OPs before I'd consider taking this kind of expense when I didn't have to.

Also concur with the pp who mentioned loft conversion. Is this a possibility?

Have you accounted for higher everything on a bigger house? Insurance, gas, electric , water, council tax, any maintenance ?

Loft conversion?

If you can sell it and haven’t piled up debt in the process.

We have mortgage approved up to age 70. As others have said on other threads you can always downsize if it goes TU or if you just want to when you are older.

Did you already do a thread on this op? Guessing it really is a dilemma for you! I would stretch myself for a bigger place but I recognise we really are all different.

I thought this as it's quite similar to another OP this week, but they were looking at £500k houses in the midlands, that thread is quite recent OP so worth seeing if you can dig it out, can't remember what sub forum it was in sorry!

To the person questioning the validity, I'd assume inheritance?

Bully for you, wouldn’t work for everybody and things have changed massively.