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Original poster

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

59 replies

Stephlingx · 02/06/2019 00:35

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!

OP posts:
hodgeheg92 · 02/06/2019 14:56

We did C, although had DD earlier than planned after moving.

If you could do C and then still afford to go part time then you can definitely afford it. Our expenses have reduced since having DD because we don't eat out very often and holidays with a little one are nowhere near as good. Yes, we could have had more holidays before she came along had we stayed put but we didn't want to take the gamble with our fertility.

KingaRoo · 02/06/2019 14:58

These are all extremes though aren't they? Why can't you overpay on the mortgage now while also enjoying a bit of disposal income i.e. not "dramatically" overpay. Then once you've built up more equity in your home, you then have your DC and at that point make the decision about whether you wanted to work PT etc and stay where you are or move to the dream home?

jameswong · 02/06/2019 15:05

Don't love any option. Interest rates aren't going up (much) anytime soon. If I were you I'd invest the remaining money, keeping some for a good holiday each year. If you invest regularly, and just keep paying off your low mortgage, you guys will be in a really strong financial position in not too distant future.

Assets and liabilities. When the things that make you money passively (like stocks, bonds and property) are higher than the costs you need to pay to live, you've achieved financial independence/security. The feeling that will give you, considering how much life throws at all of us at times, will be more powerful than any enjoyment of a "forever house".

Qweenbee · 02/06/2019 15:07

Overpay but enjoy some extra disposable income with a view to renting it out as a btl when brexit etc stabilise the market, then either buy your dream home or but another similar house if you want to be a sahm. The income from your rental and possible capital gains is an investment.

GibbonLover · 02/06/2019 15:09

Stay put for the time being. Imagine if you go for option C now and you ended up needing IVF or one of you was made redundant (sorry to be a bringer of doom but it is sensible to consider all possibilities)? You could very well be up shit creek without a paddle. What if you have children and the 'dream home' is completely unsuitable for their needs (God forbid)?

CanILeavenowplease · 02/06/2019 15:13

I have been mortgage free since the age of 40. It has made a massive difference to the quality of our lives - I am a single parent with no financial contribution from the ex, for context. A good school will mean a lot to you in years to come, as will having options like not working or working part time. You would successfully be able to navigate illness, and disability as well as maternity and it takes a massive burden off knowing no one can take the roof from over your head. Option B would be my preferred option.

Hortz · 02/06/2019 15:14

We did B more or less.
We bought a decent house but by no means the most expensive we could afford so our mortgage was manageable (even thought interest rates were 15%).
We over paid massively and were mortgage free by the time DC were at primary.

PrimalLass · 02/06/2019 15:15

A step between the house you have and a forever dream home?

palahvah · 02/06/2019 15:18

I think now is a good time to climb the ladder, prices are flat and rates are low.

This. Obviously make sure you've done the stress test on your future finances if you are planning children, and if rates are higher.

SinkGirl · 02/06/2019 15:21

I’d move now, while rates are low - over time if prices rise you’ll be much better off putting your money into a more valuable property.

Purpletigers · 02/06/2019 15:22

I’d go with A as you simply don’t know what the future will hold . What if your child needs you at home , had additional needs .
I’ll plant a fast growing hedge around the boundary of my garden as priority , then I’d save as much as I could and overpay the mortgage. I’d still have the annual holiday but I wouldn’t go on multiple weekends away and I would be drive a brand new car . When you have next to no mortgage the world really is your oyster .

Yabbers · 02/06/2019 15:26

I wouldn't be moving until things settle a bit with the economy and Brexit. Nobody knows what's going to happen next and if I could be comfortable knowing if either of us lost a job or had to take a pay cut, I'd stay where I was. I wouldn't be overpaying the mortgage if I were planning on moving, I'd build up a nice big savings account.

Notthetoothfairy · 02/06/2019 15:27

B and move in a few years (maybe once mortgage is paid off).

ShopoholicIn · 02/06/2019 15:34

C

eddielizzard · 02/06/2019 15:35

I'd do a little of all. Start saving a decent chunk, over pay mortgage and go on holidays. I wouldn't go crazy with the meals out, just as a treat and not a regular thing, because you end up not appreciating it. Spend time with your friends.

hiccupgate · 02/06/2019 15:36

We did option C about a year ago. Very similar situation to you. We've now got a baby and honestly, being in a bigger home, on a better estate that we can grow into was absolutely the right decision. That said, we were ready at that point to forgo a bit of disposable income to get us into a better position for the long term - you might not want to do this yet!

Wolfcubisthefemalenominal · 02/06/2019 15:37

I’d do A and when I had a comfortable cushion of money to potentially have time off post dc and, knowing I had some pension pot, then I’d start throwing money at the mortgage

Reastie · 02/06/2019 15:37

I’d overpay the mortgage as that could then have an effect on buying next house and how much equity you have but I’d also not completely spend all disposable income on overpaying and go on a couple of nice holidays or treat myself to something occasionally.

TaleOfTheContinents · 02/06/2019 15:39

Definitely B!

If you were mortgage free in 8 years, you would be in position A in 8 years' time so you would get the best of both worlds! And at that point, you could move onto your next (dream) home with a lot of equity. Also, B still comes with flexibility - you could scrimp and overpay heavily but also decide to splash out some months.

DC3dilemma · 02/06/2019 15:39

Focus on getting mortgage free where you are.

Then reassess your priorities while on mat leave with your first. You’ll appreciate the freedom of having a minimal mortgage then and have a better sense of what your priorities are -bigger house and full-time work or staying put and working part-time or not at all for a few years.

LightsInOtherPeoplesHouses · 02/06/2019 15:40

I'd stay put, save/pay off the mortgage. You can decide whether to move or not in a few years when, hopefully, the whole Brexit mess will have happened/not happened and we'll have an idea of the fall out.

Personally I would not make a large financial commitment with all that looming if I had the choice not to.

saraclara · 02/06/2019 15:41

D
Get a better home, but not the ultimate dream 'forever' home.

It's much easier to move now, when you're both earning and there are no children. But at your age there's no need to look for the forever home. Just one that doesn't have the disadvantages of the one you have.

That way you should be able to still have enough disposable income for holidays, and work part time (or not at all for a little while) when the kids come along.

sweetkitty · 02/06/2019 15:46

We chose to stay put BUT we have a 5 bed house on a newish estate that we’ve extended, we have 4DC.

To move to a 5 bed in a nicer are would add another 170K onto our mortgage, as were in our mid 40s we though no we will just be happy where we are. We have a few big holidays planned, bought newer cars and spent money sorting out the house. Our disposable income means the children can do nice things like horse riding lessons etc.

yoursworried · 02/06/2019 15:49

C. I wish I had stretched myself more before I had kids. Instead we bought an a 'stepping stone' house. I don't love it or hate it, but it's not my forever home. Now I'm trying to do it all with kids in tow and it's a pita.
I would say get settled into your 'dream' home now, it'll be worth more to you in future.

redwoodmazza · 02/06/2019 15:54

I'd go for C too.