Firstly I know I’m very lucky to be a home owner and have equity. However I can’t decide what to do for the best given interest rates. I have a large mortgage because I bought my ex out after divorce, and knew at the time I was stretching myself if rates went up.
Option one: stay in current home. My mortgage is going up £1000 a month in November and everything will be very tight. It will be 41% of my take home pay. I have done a budget and I will be able afford the basics but limited opportunities for things like days out, holidays, eating out etc. Have no savings and no prospect of saving. My kids are 16,13 and 10 so getting expensive.
The house is beautiful. An oasis of a peaceful garden and located so teens can get themselves everywhere on public transport. We all truly love this house which is why I pushed myself financially to retain it on divorce. It’s also the sort of house that will retain value fairly well even in house price drop as it has features people will always want. I have a private buyer interested.
option 2: Move to smaller home. My mortgage would drop to 8% of my income. Four bed houses (bedroom for each of the kids) that are big enough and cheap enough to move to and in right location for schools etc are like hens teeth but one has come up. It’s much smaller overall and much less desirable area on a busy main road (would worry about the cats) but has got four beds without one being a box room although on wfh days (2/3 a week) I would probably have to have a desk in my bedroom. No extra living space other than lounge and only one bathroom. Long term not such a good investment as it’s probably overpriced now and not as desirable / resilient to house price drops. But we’d be able to save money and have money for all those nice extras. Public transport not so easy (30 min walk vs current 10 minutes from train station and bus hub) but not impossible. Eldest would have 30 min walk then 30 min train then 10 minute walk to college so does add to her day. Middle would be ok as bus route to school goes past the house and I drive the youngest. I work long hours and so teens need to be self reliant for school transport and activities most of the time.
I’ve spoken to the older two children about it and discussed my budget and they’d prefer to stay in the current house. But we have no financial leeway if rates go up again (fixing for 2 years) and I just don’t know if it’s sensible.
option 1
stay put where we live and tighten our belts
option 2 have a better standard of living and be able to save for a rainy day but in a much more crowded and less convenient home
no option of earning more.