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

Is there a middle ground option here? Moving out of your small mortgage free home, but not taking on over a quarter a million on debt for a big house?

What type of house could you get with a £150k mortgage and a shorter term?

In mortgage illustrations they show how much you’ll pay back in interest over the term of the mortgage for every £1 you borrow. It’s quite eye opening to see how much money above what you’re borrowing that you will pay them in total and really made me question how far into our budget we wanted to go.

To me it depends on how small your current place is and how much you need the space. How old are your children/how many/how many bedrooms do you have & want etc?

Exactly,

OP - are you sure you would get a 35yr mortgage? Typically mortgages aren’t given that extend past normal pension age.

How big are your children getting? I have never known a child to grow so big that they couldn't fit into available room. From experience, the more they grow, the less space they need. Our teen is in a box room with a single bed and a desk and it's still her preferable hangout despite plenty of space available downstairs in the "living quarters". My friend's kids shared a room until the eldest turned 18 and moved out. They are not short of money but decided that they loved the flat and the area too much to make sacrifices for a solution to a relatively short term problem.
I wouldn't personally intentionally put myself into a stressful financial situation over a bigger house "for the children" when the children themselves often would much rather have more family fun and memories that extra money allows. Why not sit tight and review when you go back to work?

Don’t disagree it’s daunting but think this will be more and more the norm. Everything - age at which people can buy, expect to retire - is being pushed later in life.

When you say it's too small - what does that mean? As in it is logistically not going to work long term living there or if would be nice to have more room. If the latter honestly I wouldn't bother, you said it's good for the kids but having you relaxed and not stressed about money and in a position to give them opportunities such as clubs, activities, holidays, save for uni etc is probably more beneficial. Also that's a very long mortgage period at your age - that's post retirement age!

Would you have any money for stuff other than bills, food, savings and emergencies?

How confident are you re return to work? Are you eg a doctor or nurse so employment a cert or is it a little less sure? Would waiting til you’re back in work be tenable?

Possibility to borrow to extend now as a stop gap?

So a mortgage until you are nearly 75???