House move - stretch the budget or hold back..?

[Heelheelballball]

We were talking about moving before Covid arrived, planning to move this year or the beginning of next. More space would be nice but the real reason is schools. Applications and catchments, but also to improve the logistics of school runs which are v tricky where we are.

Anyway, we are lucky enough to be able to upsize fairly significantly from where we are. I'm trying to decide how to settle on a budget/house. The two extremes of the range of options are:

1/ Stretch the budget to the max, take on a substantially increased mortgage, leave ourselves with minimal savings. Jobs are secure I think, but I'm aware plenty of people are proven wrong... We could afford the repayments, but would have to carefully save/budget for bigger expenditures like holidays etc. But we'd get the kind of house we could only dream of a few years ago and could see ourselves staying in for the long term.

Or, 2/ Reign it in significantly, only increase our house value as much as necessary (we'd have to increase a bit to move to the area/s we'd like). Do the house up if it needed to hopefully add value. Save money. Move again in years to come if we are still able/want to.

Obviously there is a middle ground to be had, but it would take the full budget to get our "forever" (hate that term!) house...

It just seems so risky to go all in at this point with the world so uncertain and crazy! But when you look at the costs (stamp duty!! 😱) it maybe seems crazy to almost plan to fork out twice in a maybe 5 year (?) period. Ideally I'd wait and save for a few years and be in a better position to move once but the schools issue has imposed a firm time frame.

I know, these are nice problems to have, I'm eye-rolling myself a bit. If you'd have told me five years ago I would be debating how much money to spend/savings to retain I'd have laughed in your face.

What would you do?

Are you saying in the school catchment area you could be in a max budget or lower budget home? What area is that? Because my experience is that if its a good school houses around it vary in 20k not more significantly.

I think option two you would lose money in stamp duty and moving costs twice. Stretch yourselves.

I hate moving house so anything to minimise the amount and expense of house moves.

So in your shoes I would stretch myself. Buy the house of your dreams.

Either Chin. There is a clear increase in prices in the catchments for the couple of schools in question, but even then we could find a top budget house we were happy to stay in I think. I hesitate to say "dream" house, because we'd have to take away the requirement to be close to schools/stations to achieve that. I'd love to be more rural (but not tooo rural!) but have decided not to considering we'll have teenagers in the house before long, so edge of town it is.

Yup, I hate moving too. I like the idea, but the reality.... 😩

Thanks both by the way. I have to say, I thought people would say to play it safe....

This is Hertfordshire the way, with a commute in to London (possibly maybe who knows -when no longer working from home).

I’d stretch. DP and I did this in the 90s, really stretched ourselves; the house was at the top of our budget, it needed doing up, and property prices had tanked. I remember laying in bed sweating over the amount of our mortgage; £68,000. It seems crazy now, but it was a lot of money for us, and while the first couple of years were tight, we coped, and soon thrived in a house that we lived.

Things are uncertain now, but bricks and mortar will always be an asset. Go for it!

I'd be a little nervous, in the current situation. We thought my DH's job was bomb-proof (university) but they are currently talking about redundancies and pay cuts. So if the economy did go tits up, and you lost a significant amount of your income, or one salary, would you be able to service the smaller mortgage on one salary? If not, it probably doesn't matter and you might as well stretch yourself.

My then DH & I stretched 2005. I lost my job a few years later when the banks crashed. Thankfully my ex DH is risk averse so we had mortgage protection. I had a well paid job yet I was out of work for a year. It was awful at the end the job centre were telling me to leave off my qualifications so I could get any job.

So if you stretch get mortgage protection as you never know what’s round the corner. We would have lost the home without it.

I would also go with the house in the secondary school catchment area if your DCs haven’t yet got a place.

Depends which salary. If DH lost his job I couldn't cover even the smaller mortgage, but we would have retained savings to fall back on... Which wouldn't last forever but hopefully tide us over to scramble a plan!

The secondary catchment is our first priority. Ugh, I kinda hate that I'm now that person but there you go..!

Good point about the mortgage protection.

My MIL blamed her dh's decision to stretch them to the max for their divorce. Inflation rates rose, they couldn't afford to go out or have holidays or have any fun and just were flat out paying for this big house. Because of that DH and I have always gone with her advice to buy a house which you can afford to buy and to enjoy life with.

In these uncertain times I would not be stretching. But I am cautious (and we owned our 5 bed home outright at 47, so didn't suffer)

Following with interest as we're thinking of moving in the next few years and have been discussing this exact thing. Terrified at the prospect of trying to apply for an in-year school change but that's a whole other thread!

I would never stretch to my limit. Nobody can forsee what the future holds.
Job, family, illness, interest rates, pandemics!! Etc. Each to their own though.

Stretch. Yy to mortgage protections but in two or three years it’s be fine and you’ll have what you need long term

I thought mortgage protection only covered you if you died, not in the event that you lose your job/get ill and can't work. Have I got that wrong then?

I think it depends on the policy Pirate, but yes unemployment can be covered.

I would be reluctant to stretch to the max right now. Interest rates can only go one way from here.

Personally I would play it safe (which is what we did), if interest rates sky rocket you would be buggered assuming you stretched yourself. Same goes for if something breaks and you have a £££ bill.

Have the savings and be able to go on holiday. Watching every penny is miserable.

We didnt stpretch and i regret it the longer you wait the lesser mortgage years you havr. Thanks for saying the area, i very narrow mindedly was thinking of my city, london when i said about the prices variation comment. Good luck op!

We are going "all in". It's inconvenient that there's a pandemic going on, but aside from that it's the right time for us to move, kids are only small for a short time, we don't want to hang around.

I think you’d be mad to mortgage yourselves up to the eyeballs with the economy as fucked as it is right now, personally.

Could you look for a house you can extend?

We had the choice between a decent 3bed with extension potential or a
4bed with absolutely no room to improve.

The 3bed was so much cheaper, even with a healthy addition to the mortgage to extend we had less to finance than going for the 4bed.

In all houses we bought we had to do something, in one case it was a nasty surprise when moving in and was an unwelcome expense. I wouldn’t stretch myself to the limit.

That's the way I'm leaning Haworthia, I'm naturally fairly risk-averse. It's just the thought that if everything was smooth sailing, we'd be much better off in the long run doing it now. I should have the capacity to increase my earnings enough to give some elbow room in 3-4 years time. But there are a lot of 'ifs' and 'shoulds' in that train of thought, and yes, there are multiple ways we could indeed be fucked along the way.

This is one of my middle ground options reluctantbrit. I don't have the patience/time/will power for a proper project house, but an extension/modernisation we can cope with.

I wouldn't stretch in these uncertain times. I think unemployment is going to go through the roof next year.

You need to consider the effect of interest rates too. You could manage at a push now but interest rates are very low. Obviously a fixed rate mortgage would help but they don’t last forever, Goodness knows what may happen in the economy in the next few years but would you be able to afford a massive rate hike in 3/4/5 years time.