To move to a bigger house but have less money ? £1900 mortgage

We moved from a 1.5 bed to a 3.5 bed about 18 months ago and pushed our costs considerably (London, no plans to leave). Together we bring in around £5,400 and our mortgage is £2,300. One child in nursery with associated costs. We still waste some money, but are generally reasonably frugal overall, I think. It definitely feels doable to me and I'm really happy we moved when we did - I love having some space & being able to host.

I wouldn't personally buy a house that needs significant work at this point, even if it was cheaper. You're in your late forties, both working, and have two small children - I think that's enough to be getting on with, and the point of moving is to increase your quality of life, not add more stresses of a different kind. Plus getting work done is really very expensive now. I say go for it! Good luck!

editing to add: Partner is in early forties (I'm late 30s) and that did have an impact on the mortgage terms available to us.

I don't really understand why you would get a shorter mortgage than now?

If you have 30 years left, then a lender was happy for you to be X years old when it finished.
You've not gotten 10 years older with the mortgage term staying the same.

The south east is ridiculously over priced so I’d move to a cheaper area to get better value for your money.

We moved abroad and went from a 3 bed to a large 5 bed detached with 2 acres. We’ve made new friends here and the schools are better too!

I would wait until nursery fees have finished so you will have more disposable income. In the meantime save some the extra money that you'd be spending on a mortgage and then take a shorter term out when you do move so that your mortgage would still finish 20 years from now rather than 20 years from when you move iyswim.

Even better if you waste money. Have a look at your finances and see where you can save and start making some changes so you have more disposable income. Do you both have stables jobs? Or a skill where you can find employment easier if made redundant. Most people would not be able to survive well in their current circumstances if one person lost their job..absolute worst case you could see the bigger house and moving back to a smaller house if something had happened. Yes, you would have wasted money on stamp duty I guess but your new buyer house may have increased in value and provide more equity. From what you have said I don't think you acting unreasonably to get the new house.

I’ve always tried to keep my mortgage payment between a quarter and a third of our take home pay. And when’s it’s been a third, it’s always felt a tight squeeze.
So at £5200, I wouldn’t go over £1300- £1700.
I would try and buy something cheaper, or extend the term to 25 years.
Once your nursery fees reduce, you could then overpay.

As pinksparkles says you could take out e.g. mortgage insurance to feel safer if one loses jobs

You definitely will need that extra space.

Re: holidays- your kids are young enough now they won't kind doing stay-cations etc so you can save there

Personally I’d opt for a longer mortgage term now to reduce the monthly payments short term to cope better for the next few years. You will always have the option of readjusting the term every time you remortgage and taking a few years off once nursery stage is done or wages increase. You also always have the option of overpaying (usually up to 10% of the mortgage value without fees every year). Taking a longer term mortgage now doesn’t mean you won’t still pay it off in 20 years.

Are you looking for mortgages online or going through a good broker because in my experience they can get much better rates. Also can extend term past 20 years.. (obviously you want that paid off a lot sooner but this will be doable if you keep reducing the term)
I would be cautious about buying something that needs loads of work unless you are good at DIY as it is very expensive to get anything done these days.
You need another bedroom for sure its just 1000 a month for another bedroom in slightly bigger house doesnt add up for me...

We were worried we were going to get stuck where far from parents so we moved hundreds of miles to be closer before the kids started school. We had to push ourselves to the limit but it has worked out and now all the kids are out of nursery it's made our savings leap up again. Just make sure you can afford an increase in interest rates. You can also get insurance for mortgage payments if you lose a job or take a mortage holiday so there are ways of dealing with it. We just took staycations and had a tight budget but its worked out well. Work through all the scenarios and figure out what you could do. Better now than later.

DH and I had a huge mortgage 20 odd years ago (when interest rates were extremely low) which left us little wriggle room in terms of disposable income. It didnt help DH was self employed though. The financial stress put a strain on our marriage, and we ended selling up to move to a cheaper area, which benefited our family in the long run.

If you going to proceed with this, you are going to have to budget and be prepared to make sacrafices.

Our mortgage payments are 1900 and we bring in a min of 7480 per month. We still manage to save 2500 per month too though as we have no childcare costs. I would say it will be tight until nursery fees are done. How much could you save etc on that. That would be my main concern.

I'd do something between the two options - overpay for a few years and look to move once your eldest is in school and you know she has settled (or before if it gets you into a better catchment)

It will give you a better feel for making those monthly payments and build up equity in the mean time.

Oh and just a note that a bigger house comes with 'so' many extra bills. The heating, any sort of house maintenance etc. We have to get new windows and we worked out that it's twice as many windows as our old house so therefore thousands more. So it's all that too which we hadn't entirely thought about.

No scope to go up into the loft to create a room ? More than double your mortgage for an extra room seems really high - the new house must offer more than a single bedroom ?

You’re gonna need a bigger house. But maybe not one which has over twice the mortgage attached.

I normally say don’t burden yourself with a big mortgage, but a 2 bed with 2 kids of different sexes will feel more and more challenging.

With a boy and a girl sharing you are going to either have to move, extend, or someone sleep in the lounge. Moving is probably cheaper than extending, so really it’s a matter of sooner or later.

Does it have to be a £1000 per month increase? Have you searched and made sure there’s nothing in between?

How old are your kids? If you’re paying nursery fees presumably that will stop in the next couple of years then you’ll have more disposable income.

Also, I know you are “older” but consider a 25 year mortgage to keep your monthly repayments lower, then overpay as much as you can. That’s what we are opting for, and downsizing to a cheaper area once the kids are through school.

I'd move if I were you. 2 beds isn't enough.

Are your pensions OK?

I would do the move, having budgeted carefully for the higher overheads of a bigger house and factored in all buying and selling costs. And hold on to a rainy day fund.

Your childcare bill will start to go down once your 2 year old gets more free hours, and then 3 year old starts school.. then both at school.

Look at your expenditure and budget carefully to still give yourselves some savings.

Bear in mind Secondary schools when you move.

Then you have options:

Downsize again when Dc are young adults/ pay off mortgage using pension lump sum etc.

We did something similar a few years ago when my children were 4/7 - moved from a small 3 bed (but with the kids sharing as we have house guests many weeks a year) to a larger 4 bedroom in a slightly nicer area. We don't regret it but we are stretched for sure and the kids have only gotten more expensive as they've gotten older. I think I thought it would go the other way once we weren't paying nursery fees but they're actually much more expensive now - and only going in that direction as my daughter is into adult sized clothing and we need to start thinking about college/university fees soon.

However we don't regret it at all. We love that we can host lots of people (we have friends round for holidays a lot), it's great for the kids to have their own rooms, we really like our neighbours and we have no intention of moving again for at least 10 years or more. We've had to really pull back on holidays and meals out and such but we would probably have done so anyway now that everything is so expensive. We just replaced that with other things - UK weekends and lots of hosting. My kids definitely like that they can have friends round easily now too.

This can be mitigated to an extent by making sure you have the right protection policies in place.

This is a tough decision OP.

Your wish for more space will only grow as your kids get older.

We had similar situation (our DC now 14 & 11) - we were able to extend our house, but those bigger repayments in order to do so, really do make a huge difference.
we have to budget very tightly to be able to maintain the same or close to the same lifestyle.

yes, nursery payments won’t be forever, but other child related costs tend to creep up as they get bigger (clothes, food, holidays once they need own rooms etc)