Have we left it too late to buy a bigger house?

[braindumpoclock]

We're a family of 4 living in a small Victorian terraced house in London, which we've extended to the max. DCs are now aged 14 and 11. Most of our neighbours with kids the same age have long since moved out to bigger houses, and have been replaced with younger couples who are starting new families. We've been happy here, but it's small, and it has always been unsettling to see so many people moving in and out around us.

A year ago, we decided it was time to trade up. We put the house on the market, just as the market ground to a halt. We've had to drop the price a couple of times, but now, finally, we have an asking-price offer. There is also a bigger house in a nice area that we would like to buy and can (just) afford, albeit with a much increased mortgage (our current mortgage will be paid off in 3 years, but the new place will give us a mortgage until we retire).

We should be happy and excited, but we're hesitating. Have we left it too late to trade up? DC1 will be heading to uni in just 4 years, and DC2 in 7 years. If we move to the bigger house we will have more space for them to live with us into their adult years if they need to. But maybe we should stay where we are, and use our spare money to buy them a property instead? I can't work out what I want to do - the thought of staying is sometimes comforting and sometimes depressing - the thought of moving is sometimes exciting and sometimes a scary over-commitment.

How on earth do we decide? By trading up we'd be doing what most people do, but we do have some friends who are choosing to prioritise future properties for their children instead of bigger properties for themselves. There's no easy answer, and I know there will be mumsnetters in both camps, but I'm interested in your thoughts and similar experiences.

I'd move, the new nouse will escalate more in value because it's worth more. 5% of 100 is worth more than 5% of 50. You can downsize in however many years of you want and you've more equity to release.

Or you can leave e it to your kids and they can buy their own houses. You've a number of years left to go with the kids, inc the coming home to study phase at uni and summer holidays, then maybe coming back to stay after they finish their degrees for a period.

Then they can even stay with you and save for their own deposits, or come back and visit you with their families. Life is long and being a parent doesn't stop when they go to uni.

I'd upsize and now.

I have a friend in your situation, they decided to renovate their loft instead of moving.
They have been mortgage free for a number of years, but wanted the space for her mother to come live with them.
Husband and wife will move to the loft, her mother and two adult children will have the three bedrooms.
For them to move to a bigger house, would mean taking on over 100,00+ mortgage and that was not an option.

Students really don’t fully move out at 18 when they go to uni I’m afraid, especially if they are living in halls where they get booted out every holiday. I would suggest that it’s going to be at least 10 years until the youngest isn’t living at home for decent stretches still.

I'm in your position too OP, but with a two bed flat and a 10yr old DD. I have no idea what to do either. Would so love to live in a proper house, but then she might move out in 8 years.

Could you rent your house and then buy a bigger one, moving back into original house when your kids have gone, or possibly converting it into two flats, one for each child?

So you have four bedrooms? Yours, one each for the kids and a spare?

I'd stay and be mortgage free !

I grew up in London and had a tiny tiny bedroom as a teenager. But it was fine. Got good furniture with lots of storage(cabin style bed) and my dad built in shelves possibe high up. Still had friends round to visit - if I had a sleepover, we took over the living room but that was maybe twice or three times a year.

They don't need massive rooms. The eldest might start to be out lots soon.

Imagine being mortgage free...before your eldest has even left for uni. That would be brilliant and you could save loads for either your retirement or the kids.

Hmm. Mortgage-free in 3 years vs mortgage till retirement is a big jump.

I think I’d go mortgage-free. If your DC want/need to live at home into early adulthood then they just have to put up with the available living conditions

On the other hand - do you LOVE the new house & new area? If you do, move anyway.

If you are lukewarm, stay. Mortgage free in London with teens would be my dream!

Trade up and move to a bigger house. You’ll love the space.

When your eldest goes to uni they’ll be coming home in holidays and DC2 isn’t going anywhere for seven years.
Also, it’s a good investment.
Your DC may well marry and have DC of their own and you’ll have a family home big enough for them to visit you and stay with you.

Stay!!! Enjoy your home and go.on lovely holidays ! Big house is more cleaning .. no way . Absolutely no no no to moving.. listen to your gut !

We did move up somewhere bigger but the difference being the mortgage wasn't much more so very affordable, DC was much younger than yours, we could also save, build up good pensions for early retirement, invest elsewhere -we bought a holiday cottage with inheritance and savings, DD will still get a deposit from us and can stay her as long as she wants and live here cheaply while she saves.
If we couldn't have done most of that by moving, we'd have stayed put.

I'm on the side of trading up for all the reasons already given. I think that's the most financially astute thing to do as the value in a bigger house will increase more than the smaller house. Particularly if the new house also has scope for further extending.
Prices will rise again in London in due course, so I wouldn't worry about the current situation.
In a few more years you may be able to overpay on the mortgage and pay it off earlier than you expect- if we have high inflation in the future which is probable with Brexit, it will make it easier to overpay/ or remortgage.

Do you need to be mortgage free?

Buying a bigger house is fine if you need the room , we moved giving the kids extra space, but intend to downsize when they go - freeing up some equity

Would you waste the money otherwise or put it into savings? The money you make in London houses would outstrip the 'in the bank savings' anyway plus it'll be a retirement fund

I'd move and enjoy the space and keep the kids having options for the future

I would definitely move. Mortgage free doesn't mean the same to all. It is the cheapest money you can get to invest and it is wise to take advantage of that.

When prices are softening, trading up is more beneficial to you.

It would be a no brainer for us, but then currently our mortgage does not cause financial stress.

Thanks all. As someone said above, "Mortgage free" has issues of its own. We're both in good jobs (me part-time), and can easily afford our current mortgage - in fact we could pay it off with a lump sum now if we weren't keeping that aside for a deposit - so the concept of "mortgage free" actually just raises lots of questions about what we would spend our income in on the future - knowing our over-cautious natures it would mostly be in low-risk low-return saving accounts! Of course we could buy a rental property, but that is less tax-efficient and more risky than investing in a new home.

I'm starting to think this decision entirely depends on what we think London house prices (and interest rates) will do after Brexit, and I guess we're not the only ones worrying about that.

I’d be inclined to move. My friends whose parents lived in London and could accommodate them in their early twenties all moved back home while they did their first jobs after university, so it’s likely you won’t really be empty nesters for quite some time.
If you can comfortably afford the new mortgage then you could always over pay it? And if you are worried about interest rates then get a long fixed term? If you are planning to live in the house for 10-20 years then you don’t need to worry about property market fluctuations.

I’d move. The kids are young enough to need to be at home for a long time yet. London is always going to recover from price drops imo, so any would be temporary. I think you’d look back with regret if you stayed and think “if only” we had.

A crude test - if your vendors pulled out today, would you be upset or relieved?

With a room going spare I would definitely stay!

*I would definitely move to a larger place - then when your DCs are older, consider downsizing and using some of the equity to get them on the property ladder

This!! We have literally just done this. Moved from a smaller house to much bigger house in same area. We will sell when the mortgage term ends, downsize and give the kids some capital to be able to buy somewhere.....I don’t regret it for one minute. The London market (where we are) has dropped but like you, we bought so long ago that it worked ok in our favour as we bought a much bigger house then we could have afforded 2 years ago when things were booming. The new house has a much bigger ceiling price than our old house so we did the right thing.
I would move if I were you

I also think it’s crazy your 6’ son is a 7’ room so your parents can stay over in a bigger room!

You’d only have the mortgage til you retire if you stay in the house until you retire. How old will you be when both kids leave Uni?

You might downsize again, having enjoyed a bigger house in the mentime.

I’d move.

It’s nice to have a house that more comfortably fits those living in it. Kids are back & forth from Uni and it’s nice to have a comfortable sized home for them to do that.

Your bigger house will gain more capital and you can, if you wish, downsize later on.

We are in a similar position OP. Less than 8 years on the mortgage and set to be mortgage free on a flat in SE by 40. Had children young so they will be grown up by then. So may people are saying that we will be young enough to start a mortgage again and trade up, but I love the idea of not having a mortgage at all to pay.

Definitely move. Even if your youngest left on the dot at 18 that’s still years away, plenty of time to enjoy the space moving would give you. We moved recently to a bigger house and it was absolutely the best thing we could have done.

Plus...they’re only 11 & 14 now, that’s plenty of time to enjoy a bigger house before they’re even thinking about university! They might not go to university anyway, they might do a number of other things meaning they're at home full time for a lot longer.

Stay. Give your DS the bigger ‘spare’

Stamps duty alone will be many tens of thousands. Spend that on hotel for the GPS or nearby Airbnb rooms.

Oh the ‘problem’ of not knowing what to spend your income on once you’ve paid off mortgage. Max out your pensions. Max out your ISAS. Have some in higher risk investments. Plan to retire early.

You have a 4 bedroom house already? I'd stay, move eldest DS into the bigger spare room - he can sleep in the little bedroom if grandparents stay but at least he has bigger bedroom most of the time. Mortgage free would be best option for me.