How do you upsize!?

[secondtimebuyer1]

This is a very first world problem and I know we are lucky to a) own our own home and b) have stable incomes.

We bought our first home in 2013 for £285k- a 2 bed bungalow. In 2015 we borrowed an extra £50k and converted the loft so we now have a three bedroom house. Mortgage is now £203k and house is worth £420k. We are desperate for a 4th bedroom so family can stay (post lockdown) as they all live up north.

When we bought our combined household income was just under £50k. We have progressed in our careers and our combined income is now £84k - despite our pay increases we still can't afford to upsize. A detached 4 bed with garage (our forever home dream) in our area is £700k- these are relatively normal family homes. We'd need a combined salary of £100k+ to afford a house like that- how do normal families afford it? We both work full time in professional jobs, nursery fees are crippling and I feel like we're just keeping up. If we were first time buyers we'd need a £42k deposit just to buy our own home- would never have happened!

AIBU to think the only way to really upsize, in the south east, is win the lottery or inherit?!

It does seem impossible without huge increases in salary.

We have a 650k house that we bought ten years ago for £350k. We’ve spent money extending it, but it’s grown in value by, in effect, £150k.

It was a real stretch to buy it at the time, we still had nursery fees for 2.5 years after we bought it and I only worked part time. It was also a doer-upper. For a long time, I’d have said ‘we couldnt afford this house now.’

I’d now say we could afford it, but only because the nursery fees are long gone, and I work more hours.

Ironically, adding extra bedrooms wasn’t that useful as the years went by - it not for the purpose of guests. Our regular guests also live a long way away - their children grew into teenagers who no longer wanted to come, but who were too young to be left. Others went on to have five very unruly children who I don’t like having to stay, and is too many to accommodate anyway. Circumstances change. Our spare bedrooms are now two studies for our children.

I’d always advocate stretching yourselves if you have stable jobs though. Or extending the length of your mortgage initially, then overpaying later - that’s what we did.

My husband is the sole earner and his wage is between £40k and £45k. We bought a 3 bed semi in Cambridgeshire in 2011 for £125k. We sold in 2019 for £215k, and bought a 5 bed detached in Cornwall in 2020 for £294k.
Could you look a different areas perhaps? Or buy something that needs work?

Lower figures then you, but we went from a 3 bed terrace to a 3/4 bed semi, with 1.5 garage, workshop and 100ft south facing garden.

Only way we afforded it was salary increases allowing us to whack another 100k on the mortgage.

This house is our 'forever' house as there is no way realistically we are affording a similar house but detached, as it would be about 200k more. Luckily this house comes with planning permission so can build a 4th bedroom with ensuite over the garage but doubt it will ever be needed as pretty sure we are a one and done family.

Move area.

It really is that simple.

Every single person i know who has upsized their property has moved to a less expensive area. Whether a big move, inner London to country town or within towns move from walking distance to train station to right on the edge of the town.

Going from a converted 2bed bungalow to a 4 bed/detached/with garage house is a huge jump in property type, wherever you live. To answer your question, most people do that in several moves, benefiting from an increase in value each time.

All excess money should go on the mortgage. No fancy holidays or new cars with monthly finance packages. Do not increase your living costs just because it had a payrise.

Space children out or just have one, so nursery fees have less of an income.

Everything goes into mortgage then you’ll start paying off the capital. We were mortgage free pre 40 following those rules.

Frankly though I think aiming for a 4 bed detached with garage at that salary is unachievable. They’d be about £1.3 million plus round here though!

Yes, you move area or moderate your expectations. You can't always get what you want. DH and I started off in a Zone 1 central London flat but knew we wouldn't be able to afford a family house in the same area (aka moon on a stick), so we moved to a cheaper less central area when we had DC. It's a very well-worn path.

Could you make some compromises that allow you to buy a new build for £600k? You can then use HTB equity loan which will keep your mortgage fairly low for 5 years as you will effectively "only" have a £480k home. After 5 years, remortgage for the rest of it. Repayments will be higher then but you also won't have any more nursery fees so should cancel off.

The reality is most families don't live on 4bed detached new builds with big gardens. They live in 3bed semis or terraces. They comprise on gardens for schools. Or move away from family for more space.

We had a choice recently. 3bed semi Vs 4bed detached. The 3 bed had a big garden, great school catchment, lots of other facilities. And not near the river. The 4bed was close enough to the river that we could carry the canoes down (but apparently hasn't flooded in recent years...). Extra bedroom and bathrooms. Not so good school catchment.
Price difference only 70k (Yorkshire prices... Another thing, not living in SE!). But that difference means paying off the mortgage quicker while having holidays etc.

Very happy with our choice for 3bed!

Truth is, unless you win the lottery, you can't have everything you want to life.

Honestly, I would make plans to holiday with your family rather than try to host them. It would be cheaper to get a villa in Spain once a year and fly them out, than pay £300k and take on a huge debt burden.
Or if you like holidays in the UK, invest in a 4 bed holiday home near the coast - in a location you can all get to. Rent it out when not in use by the family to cover overheads.

@Jangle33

All excess money should go on the mortgage. No fancy holidays or new cars with monthly finance packages. Do not increase your living costs just because it had a payrise.

Space children out or just have one, so nursery fees have less of an income.

Everything goes into mortgage then you’ll start paying off the capital. We were mortgage free pre 40 following those rules.

Frankly though I think aiming for a 4 bed detached with garage at that salary is unachievable. They’d be about £1.3 million plus round here though!

Well it does sound fun...

I can’t quite decide if the humble brag at the end is intentional.

I wouldn't want to take on that kind of additional debt just so family could stay every now and then

This surely

All excess money should go on the mortgage. No fancy holidays or new cars with monthly finance packages. Do not increase your living costs just because it had a payrise. * Space children out or just have one, so nursery fees have less of an income. Everything goes into mortgage then you’ll start paying off the capital. We were mortgage free pre 40 following those rules.*

And if you die at 41 what do you have to show for it? There is more to life than paying off a mortgage (and insurance for your loved ones if the worst happens) I personally plan on spending the healthiest decades of my life living more than that with more varied goals than paying off a debt I can more easily manage spread across a few decades rather than 1 or 2.

Sorry bold fail there!

You need to be creative on how you use the space if the only thing you are after is a spare bedroom for visitors.

When we were young we were 3 siblings and always 2 share and 1 had a bedroom to herself (we rotated on every house move and we moved a lot). We always had a big study, which was the most used room of the house, fairly independent from the house and it had a sofabed for guests.

If I was in the position of my parents, I would have put a double bed in the room that wasn’t shared and a truckle bed under one of my siblings beds as it was much easier for one to loose night access to the usual bed than having the whole family blocked from using the main room.

An alternative is creating pods in a bedroom basically splitting the bigger bedroom in two tiny ones. Well planed it works very well, it will be £££££ but not as expensive as a 4 bedroom house.

@callmeadoctor

Is OP coming back?

I'm reading. There's not much more to say about my situation than I've already shared.

I wouldn't regard a 4 bed detached house plus garage as a typical family home

I think the big changes which would enable you to upsize would be (1) promotion, (2) no nursery fees and / or (3) inheritance

Thinking about it, back in the 70s my parents bought their big house when my mum’s mother died. Her dad was already dead and she was an only child.

Even then when property was so much cheaper and indexed very differently to wages, I doubt they would ever have been able to afford such a big house without an inheritance.

Thinking about it, I think that what want to do is jump a step really. Bungalow to 4 bed detached with garage is a big jump.

The only way to jump a step, even ignoring the moving area which normally has to happen as well, is city style bonus or inheritance.

So the next move for you, if you want another bedroom, is a four bed semi.

@folloyourarro still alive at 41 thank you.

Driving a lovely perfectly good second hand car, far more environmentally friendly. Opt to cycle wherever possible, again for environmental reasons.

Holidays in U.K mainly, focus on spending time together making memories or popping over to Europe.

Mortgage paid off so will be upsizing in due course. Then will downsize when kids leave home and help them with sizeable deposit/money for travel etc.

Much rather have this life not spending it on fripperies/keeping up with the Jones’s and their new Audi thanks!

Unless I am totally missing something (haven't RTFT) surely you'd look at areas where the house you want is within your budget. For example: the 3 bed semi detached we live in could cost less in other surrounding villages, or could cost considerably more in acity. Post codes have a massive impact on house prices so surely that's what you'd look at first.

Many people I know live in smaller houses, even flats as they aren't willing to budge on location so they accept that that's what their money buys there. For me and DH, the house was more important so we decide to move further out of the city where our money bought more house.

@Jangle33 you get the point I am making though, I'm glad you're still alive! I'm glad that's worked for you, but for me foreign travel is what makes life worth living (I appreciate that's not the case for everyone!) Id much rather pay a (manageable) mortgage until I'm 55 and live the life I want to live in a good sized house, travelling abroad rather than putting limits on my life just so I can say I am mortgage free from 40, you're not guaranteed tomorrow so there's a balance between living for the moment and being sensible for the future. Nothing to do with Audis, I drive a 6 year old Focus!

Get a sofa bed?

@folloyourarro I was fortunate enough to travel a reasonable amount when I was younger. It’s all a case of priorities of course and variety is the spice of life but I am very conscious of my carbon footprint.

I think the point though for me generally is a lot of people overextend themselves - we live in a perfectly adequate house whereas a lot of friends have had a nightmare during covid times as there’s no wriggle room financially in the case of furlough/redundancy. The OP seems a little obsessed with the 4 bed detached - can I blame social media for this....! In a non rising house market buying smaller and whacking as much as you can into the mortgage is a very sensible way to go up the chain, no? I’m trying to present another option!

Being in negative equity unable to sell the house just because I’d got a massive mortgage just because the bank would it give it me, for me would not be much to show at 41!