WWYD? Upgrading to a better home vs having a large amount of disposable income

[Stephlingx]

DH and I are late 20s, purchased our home 2 years ago - private sale for a very good price, so we have a relatively low mortgage for the house we have. Since then, our circumstances career wise have changed dramatically and we now have a large amount of disposable income left each month after mortgage and outgoings. Currently have no DC, but house is large enough to accommodate a family and is also close to a good school. The downside is that it’s a newish home on an estate so there are the usual issues associated with this e.g. not enough parking (driveway space for one car), v close to neighbours, overlooked from all angles and overall the area we are in isn’t particularly ‘salubrious’. In this situation would you:

A) stay put and enjoy the disposable income. Short term putting money in to savings but also spending on holidays, meals out etc. Longer term, option to not have to go back to work after DC, regular family holidays, private education etc.
B) stay put but dramatically overpay mortgage. Mortgage free within 8 years (albeit not in the ‘dream home’)...would get by but no luxuries and would be scrimping and saving if had DC during this time.
C) sell home, use equity as a deposit to buy dream forever home in a desirable area. Mortgage repayments would be considerably higher. Manageable now and even if had DC (could just about afford to cut down to part time hours), but no room for luxuries such as regular meals out and family holidays etc.

It’d be really helpful to hear what you’d do in this situation!

When is the plan to have children roughly?

Personally I’d enjoy the extra cash - save half, half overlaying the morgage

Once you have a decent amount then save for a holiday or two before kids come along

The thing with children is you have no idea how you’d be as a stay at home parent, you may love it or hate it.

Also with the uncertainty of the U.K. housing market it may be best to stay out for now

I think I would stay put for now, cut down a bit to build up savings, and then buy desirable home (providing you still had some disposable income)

A

@GreenTulips within the next 2-5 years I hope.

Then spend the next two years building up savings and going on holidays while you can - these don’t need to be all singing and dancing unless you really want to go do the ‘big ones’ and splash the cash. Sometimes those holiday memories are what gets you through mother hood!

Overpay the morgage where you can and then reasses the market at that point.

@GreenTulips thank you

I would stay where you are, pay your low ish mortgage, use your disposable income to both invest wisely (get professional advice) and do whatever things you feel you want to do before you have children. Sell up and buy nicer house when you can get good value on a sale of your current house and when your investments support the kind of deposit you want to have.

My dh and I have stayed renting (instead of buying, we weren't really in a position to get a mortgage due to dh just starting a business and the need to move for my work on relatively short notice), but we've used our disposable income to make some investments (about £30-40,000 over the past few years). We'll likely end up with at least £250,000 when we cash them out next year to buy a house, possibly more meaning we may be mortgage free. Being a new build, your house isn't likely to grow in value much, but you can build a pretty nice deposit if you are smart with your investments.

I would also travel and enjoy life before you have children. Take some dream trips, have some very nice meals out, nice weekends away to enjoy it being just the two of you.

i would stay put and save to be honest. If your house is an area you like and a decent size, seems pointless tying yourselves into a larger mortgage for the sake of it when you could be saving for 'what ifs' or paying off your mortgage sooner.

We were in a similar situation. Started doing A, got broody sooner than expected, had DS, DH got a job working from home and suddenly our house was too small and we ended up doing C. I work part time now and we get by fine although definitely fewer luxuries. It does feel nice to be in our forever home though and we are slowly doing it up to make it perfect knowing that we’ve got another 40/50 years in it.

Definitely definitely stay put. Have a couple of adventurous holidays in the next couple of years as once kids come, holidays are the first things to take a hit.

But also try to overpay on mortgage a bit. Maybe of your disposable income, seperate it into "fun" and "overpayment".

Trust me you'll be glad of it when you do decide to move on.

I'm in a minority and would go C. It is easier to move before children come along, get your forever home and then start to think about kids. You say you could manage your forever home on part time hours so you would have flexibility to up your hours if you wanted more income.

Now is the time to make the move while you have the time, salaries and no del pendants. The rest will make it more complicated later. Don't stretch yourself too much.

A. I chose this and much happier now than I was living in a big house. It means I have savings, lots of holidays and no money worries.

A. Definitely. Children are expensive, and having a bit of a cushion when they come along is really helpful. It means you can, e.g. take a full year of maternity leave, give up work if you want to (or sadly if you have to, e.g. if you have a child with special needs). Or if your child is miserable at school, you can move them to private. Or give up work and have the space to find a new job if you discover your job is too stressful while also looking after children. Or work part term. Or or or ...
I also agree that holidays are worth taking now when you don't have DC.
Your circumstances will change dramatically when you have kids. You won't know exactly what you need until you have them, but a bit of financial flexibility is a really really useful thing to have.
(And yes, moving with kids is a pain. But it's much easier than moving from a big house to a small one with kids because you can no longer afford the big one, or struggling along in jobs which make you all miserable because you don't have the savings to allow you to go part time or change careers.

I'd go with C.

An estate home in a not-great area won't be worth as much as a larger forever home in a good area by the time you retire.

Stretching yourself now (get a long term fixed low interest rate), and in a few years your salaries will have increased and the mortgage won't feel such a stretch.

Is your current house somewhere you'd like to raise a family in? I'm suspecting not...

Stay put and overpay as much as you can on the mortgage, you'll be mortgage free and have all the financial security that comes with that.

Similar situation- we moved, very happy with the decision although having to budget for the first time is a bit tricky.

Stay put. Spend half, pay half towards mortgage. It was a great relief to be (almost) mortgage free before we had children. We had 2 in nursery at the same time for a couple of years and it would have been a struggle if we also had a mortgage to pay.

How much do you 'value' a nice house/area v fancy holidays and eating out?

How much do you 'value' private education over what you could get from the state + top-up tutoring?

I'd rather have the nice house, which will increase in value, provided it really was affordable. Then if you are saying you could still afford part time work, I'd save the difference between part & full time now either against future maternity or overpaying the mortgage in chunks.

C for sure. You'll be able to get a better mortgage deal if you're both working/no kids.

You're in such a strong position. I'd stay put for now and set up two savings accounts - one long term for when you need a bigger house or money for starting a family, the other for fantastic holidays or other fun things to do before you have children.

Meanwhile start looking at areas you'd prefer and the kind of house that could be right for you to upgrade to.

B
mortgage free in 8 years -wow! It would be worth things being tight for 8 years to then have loads of disposable income and be mortgage free.

We did C in our late twenties, missed out on the holidays etc.

Now, in mid forties with late teen kids we are so thankful we did.

I think now is a good time to climb the ladder, prices are flat and rates are low.
We are in a similar boat and went for what I would describe as option “C minus”.
We went big(ger) but not the biggest we could afford.

While ongoing costs (mortgage + maintenance) will be higher than our current place it’s still very manageable for us.

The better/larger houses we looked at were AMAZING but would have needed way more monthly money in real terms (upkeep as well as a bigger mortgage) and this was a factor in our final choice.
We discussed it and ultimately we didn’t want the pressure or to give up everything else we enjoy for a fancy house - It just wasn’t worth it to us.

Our choice means we still have a decent chunk of disposable income so can enjoy it and also means we have options in the future (forI can give up work or go PT)

Can you get something on the cheaper end of the scale in the nice area? Or a smaller place that has potential to extend?

There will always be a bigger house in a better area.

My mortgage is tiny - house is nice and accommodates our needs perfectly. I enjoy the security of having savings, no other debt and a mortgage that doesn’t limit my choices

Enjoy the income - have some flash holidays and build up some savings. Then see what the future brings.