How much would you sacrifice for a bigger home?

[Faith50]

We have long outgrown our tiny home - under 800 square foot. To move to a larger house we would have to stretch ourselves to the hilt. We would have no family holidays/breaks, no take aways, no extra curricular activities for dc, no savings. Dh and I have decided it is not worth the risk and have accepted unless our salaries double, we receive an inheritance or a miracle happens we will be unable to move.

I was depressed for a number of years and our marriage almost ended due to my desire for more space. This was a starter home and 15 years later we are still here.

Has anyone been in a similar situation?

Personally i wouldn't we had the option of the house were in a older house perfectly livable size nothing special or we would have gone for the beautiful new build for about £400 more a month (were in a low cost area) i happily had the older house because i value my holidays and being able to blow some cash occasionally on treats.
If its not impossible to live in your current home i would stop there.

I'm "downsizing" from a small and expensive house in the south east to a big three bed rural property in the West Country that costs £50,000 less.
Working in the NHS I can pretty much move where I like and I decided I'd have a better qutility of life over there and more property for my money.

joint income of under 100k

Yes, you and 95% of UK families. In the nicest possible way (assuming you mean near to 100k) you need to look at what you are spending, cut back and start to overpay on your mortgage. I get that you have 1k of childcare a month, but most people still have that on much lower wages.

I am baffled by needing 2 6-figure salaries, genuinely.

If you've been in the same house for 15 years you would have loads of equity.
Apart from the fact you've paid off half the mortgage property prices have gone up considerably over that period of time.

Only if you haven't remortgaged....

I was in the same situation as you OP. Had been in the same house for 15 years and hated it. It was my ex husbands house before mine and one of the reasons I hated it. But it was a low mortgage and me and the dc had separate bedrooms and it was in a good area. I got a job that meant we could move and I sold the house, but thankfully couldn't find anything to move into, even with stretching myself financially to the max. However I hated my job and if I had moved I'd never have been able to leave my job. Thankfully I took the house off the market and I've concentrated on doing things to the house to make it more 'mine' and pay off the mortgage early. I'm surprisingly happy knowing I'm financially secure, and I think less about the house these days

100k joint income is huge. I’m in London and don’t know anyone with that sort of income. We’re on just over half of that. I’m in a two-bed and we have three children, now teens. They share the main bedroom while we have the smaller room. It’s only when your children are small that you need childcare. It will ease up later. Can you swap rooms and subdivide the bigger room? Is there a dining room you can use as a bedroom? I wouldn’t overstretch yourself financially.

Joint income say £80-£90k. (I'm guessing because you suggest you'd both need to double your salaries and also you'd both need to be on £100k plus, so I think I'm being fairly conservative here.)

Childcare £1000 pcm.

Mortgage presumably a max of about £300k seeing as you got it 15 years ago. So should be £1500 ish per month.

Your joint income should be £4500-£5000 a month even after pension contributions if my salary guess above is broadly correct.

If that's the case then there's another 2k a month that can pay for cars, commute, food, hobbies and possibly a bigger house. I really would have a look at what you're spending and whether you've accidentally started spending on lots of things you don't care that much about. It can be easy to find you're doing that and it might mean you feel you have more free cash that you expect.

Ultimately if you have two of different sexed you're going to have to move or extend or swap you guys into the smaller room and divide the bigger one at some point. Maybe not for a good while but clearly you need to come up with a plan for the medium term.

Mortgage presumably a max of about £300k seeing as you got it 15 years ago. So should be £1500 ish per month.

She says that she lives in a cheap town

tea but also that they would need two £100k incomes to afford a 3 bed...

I know it's baffling

Depends where the OP lives. Anywhere in the outer suburbs of London a decent 3bed semi would cost a min of £350k. In london you are looking at £500k. A lot of middle England earn £100k - hospital consultants & GP's for a start. Also lenders will go up to 5x joint incomes for this sort of salary, but then these earners normally would have childcare of £2k pm at least. Being a mortgage broker I see a lot of these cases & mortgages of £800k are quite common.

350k with a joint salary of getting on for 100k and having previously owned a house for 15 years should be perfectly manageable unless you are monumentally hopeless with money. She says that she lives in a cheap town and commutes for hours so it can't be London.

I'm not sure it's for real tbh.

We earn the same, have home owned for a similar amount of time and could afford a hell of a lot more than 500k if we were so inclined.

We've chosen to stay in the first home we bought as we'd rather have holidays and extracurricular for the dc, and enough money not to worry about the car breaking down or whatever. Our dc currently share, but we have a small third bedroom they can move into when they want. We are fairly happy with our choice.

Are you on an interest only mortgage, or have you borrowed more over the years? By 15 years into a 25 year term you should be hitting the capital repayments hard.

If your DC have childcare costs of £1K a month, they are under school age, and so don’t need expensive extracurricular activities etc. Equally any takeaways won’t be for their benefit. Holidays at this age can be cheap and cheerful - they’ll be happy with a UK camping break if you will!

Additionally, if you earn in the region of £70K+ as a household then you have plenty of income to play with if you budget.

Are you sure you haven’t prioritised lifestyle creep over more space and a bigger house? It’s all about choices in the end.

We were interest only for the first few years then we went into negative equity.

Yes, mortgage is around £1500 a month. We had a small deposit so rates are not great.

Yes, we remortgaged a few years ago

We spend £600 per month on travel between us.

@theluckiest

Silly question but how do people add to the mortgage?

Eg we have one and it's about 3 years left, do we just call bank and ask for 40 grand to be added...

Whats the process? Is it cheaper to borrow money this way?

Meant to add wouldn't mortgage lender simply push one to get bank loan?

Yes, pretty much Blowing.

We just spoke to our mortgage provider, submitted an application and it was processed just like the original mortgage.

@blowing. You could approach your bank for a further advance, although the interest rates on those are generally at their Standard Variable Rate, or you could remortgage to another lender. There would be the usually affordability checks and so on, buy certainly a lot cheaper than a bank loan. Typical 2 year fixed rates for a low ltv are 1.2%.....going up to 1.5%.

How on earth is your mortgage £1500 pm when you bought in a cheap area 15 years ago? What's the rate and how much equity do you have?

That payment suggests that you've borrowed a lot extra or your interest rate is pretty awful by current standards - have you looked at improving your rate? Have you always applied for a new mortgage when your current deal runs out? If you're on the standard variable rate, that can be a rip off, so unless you have bad credit, or your income has dropped a lot, you really should make sure you are always on a deal, otherwise you could be throwing thousands of pounds a year in extra interest down the drain.

Or that you don't actually live in a cheap area, of course.

When you say you have remortgaged, was that to get a better rate, or borrow more money? What was that money spent on? If it was to pay off debt rather than to fund home improvements or start a business or similar, that suggests that you may currently have a lot of unnecessary spending, that you could cut back on if you wanted to.

Not to 'never having anything nice' levels, but just cutting back a bit, combined with getting a better mortgage rate, to free up money to buy a bigger house. And if you bought somewhere closer to work to reduce travel costs and in an area where you get more for your money, that's not necessarily a rough shithole, I'm sure it must be achievable.

Also, it sounds like the Moneysavingexpert money makeover might help you go through your finances, to work out where you might be going wrong.

www.moneysavingexpert.com/family/money-help/

We were interest only for the first few years then we went into negative equity.

Negative equity doesn’t really matter if you don’t move- it’s only if you’re forced to sell it affects you. But I can see if you spent 5+ years owing more than the house was worth that you wouldn’t have built up as much equity as you might expect by now.

Yes, mortgage is around £1500 a month. We had a small deposit so rates are not great.

That is massive. So your mortgage is £250K+? Presumably you’re not on the rate you started with your small deposit (which was then swallowed by negative equity anyway)? What is your current LTV and your current mortgage rate?

Where do you live? You say it’s the cheapest area, and with your commutes I assume they’re to London, so SE?

Yes, we remortgaged a few years ago

I assume you mean you borrowed more? If this is the case then you made your choice about housing vs other things at that point. You can’t accrue equity towards a house move if you draw it down and spend it.

Yes, mortgage is around £1500 a month. We had a small deposit so rates are not great.

To echo PP - you claim to be in a cheap area yet your mortgage is 3 times ours? We only had a 5% deposit, bought our 3 bed 5 years ago and our mortgage is £500 a month - we overpay (by not much) and now have £30k equity after only 5 years, rate of 2.09% too. Your figures for a 'cheap area' are bizarre. We are also a 2.5 hour train journey from London if we wanted it.

Whats the process? Is it cheaper to borrow money this way?

Don't forget you are paying the loan off over a lot more years than a bank loan 🤦🏻‍♀️. Adding to your mortgage is a bad idea in my opinion in terms of long term security.

I really can't understand why moving to a 3 bedroom is house is unaffordable when you are already in a two bed and have £90k coming in?

And surely when your childcare drops by £500 a month you can afford a significantly higher mortgage? Given that it will fall another £500 a month a couple of years later?

The figures simply don't make any sense to me.

If mortgage is £1500 a month then presumably the house is worth £300k.
This to me for a two bedroom house hardly seems like a cheap area, it's WAY over the national average.