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?!

We bought a 4 bedroom from the start although it did need a lot of work which we have sort of done over the years and extended a bit to make more living space but it has meant we have enough bedrooms and able to use a downstairs room as a bedroom so all the kids have their own room. We don't have room for any relatives to stay though, not that we have any relatives left !

I agree with another poster about high childcare costs continuing once school starts. Before and after school club here (SE) is £1000 for 2 children a month. During holidays it’s £400 a week for 2 children (£1600 a month during summer) if no family are around to help.

Cheaper for family to stay in a local hotel or buy a sofa bed!

"Jangle33
@secondtimebuyer1 but are your friends with.

. lower salaries all living in the 4 bed detached
with a garage?

  One has just bought a £650k home after her.    
  husband inherited and sold his mum's house."

@secondtimebuyer1 - as pp have commented and you have confirmed with your comment above, it won't be possible to make the leap to the 'dream home' unless you are fortunate enough to receive an inheritance, are able to move up the career ladder in order to increase earnings or make some compromises in respect of property location, style etc.

We would really like to move to a 4 bed house but such houses in our area are, on average, £150k above the value of our property. We're considering converting our loft to gain the additional bedroom and are setting aside funds into savings to help finance this. We did something similar with our 1st home and our current home (used savings to renovate), so are fortunate enough to have built reasonable equity but it's still not enough to buy the 4 bed we would like. Both DH and I are looking at promotions for salary increases (and career development) but recognise that compromises and choices/decisions will need to be made if we want that 4 bed home.

Can you move to a cheaper part of your area? I work in the civil service too and live in Berkshire but contemplating a move to Hampshire in a couple of years as it’s still commutable to London but cheaper than here (bought our 2 bed mid terrace for £250k 2 years ago!).

The nursery fees will make a difference to the amount that mortgage lenders are willing to offer you so it may be easier in a couple of years. Do you have any debts (credit card balances/loans)? Clearing those will also help. I agree with pp that if you can overpay your mortgage in the meantime that would be a good idea, as would looking for a 3 bed you could put a loft conversion in.

To accommodate the odd visit from family it’s cheaper/easier for you to put them up in a local travelodge!

Most people can't afford their dream home in their area of choice and therefore compromise on area or size.

It's far more normal to assess a realistic budget and house hunt within said budget.

It's rare to do what you want in 2 steps - far more usual to do it in 3 or 4.

Be more open to area and be prepared to look at projects which will still put some people off.

@sansou

Most people can't afford their dream home in their area of choice and therefore compromise on area or size.

It's far more normal to assess a realistic budget and house hunt within said budget.

It's rare to do what you want in 2 steps - far more usual to do it in 3 or 4.

Be more open to area and be prepared to look at projects which will still put some people off.

Yes,

Area. Price. Size. Pick 2. Because unless you either live in a very cheap area or have an unusually high salary (for where you live/ want to buy) you can't have all 3.

We're currently pondering this ourselves.

Have a £130k mortgage & house is worth around £250k maybe a bit more. We also have to repay the old keyworker scheme loan at around 14%

We need a 4 bed, but we're then looking at £475k to £550k and frankly that size mortgage terrifies the bejesus out of me!

We have household income of around £90k and it still seems a big monthly outlay.

There was a good article a few yrs ago about this in the FT, how the housing ladder doesn't really exist anymore. It's not so much an issue with fewer FTBs just more people stuck on the ladder. I know lots of people with good salaries & good equity that still can't manage it.

It's rare to do what you want in 2 steps - far more usual to do it in 3 or 4.

Depends on the market, in an expensive one you don't want to be moving often.

The only people I know who trade up in the area we live in 1.2m plus for a house have significant family help.

It's rare to do what you want in 2 steps - far more usual to do it in 3 or 4.

Is this still the case? With prices being much more stagnant post 2016 I'm not sure if equity gains have been as large as they were in years gone by to justify the huge costs in moving. Certainly the case where I am anyway, I appreciate it's hugely area dependent. Thank goodness for the stamp duty holiday to justify our move last year, otherwise our equity gain from our first house would have essentially been wiped out (not including equity from mortgage repayments).

@folloyourarro similar where I am, no real change from 2015 & when you factor in stamp duty (expensive area) some have made a loss.

My DS and DIL are in the OP's position and bought their first house 15 years ago. He's improved his house and values have doubled in his area, but to get a bigger house they've decided to move to a cheaper area where they can get a nice detached house in need of renovation, with room to extend. It's a big step, but the house is in a convenient place, in a good area, with outstanding schools.
Bite the bullet and move, a lot of his friends have decided to do this now they have found the can often work from home so are not so tied to living in the city.

Joint income £85 is not that high for London.
Also lots of people have inherited money or money gifted from elderly parents.

@folloyourarro

It's rare to do what you want in 2 steps - far more usual to do it in 3 or 4.

Is this still the case? With prices being much more stagnant post 2016 I'm not sure if equity gains have been as large as they were in years gone by to justify the huge costs in moving. Certainly the case where I am anyway, I appreciate it's hugely area dependent. Thank goodness for the stamp duty holiday to justify our move last year, otherwise our equity gain from our first house would have essentially been wiped out (not including equity from mortgage repayments).

We bought our first house in 2008 for £123k, sold in 2013 for £125k, and it's now on the market for £175k.

Is this still the case? With prices being much more stagnant post 2016 I'm not sure if equity gains have been as large as they were in years gone by to justify the huge costs in moving.

Houses on our street have gone up massively in the 2.5/ 3 years we've owned ours.

@Ellpellwood judging by those dates I think you were quite unlucky with timing, buying around the time of the credit crunch and selling when a lot of areas hadn't caught up pre 2007 prices, and then obviously there's been a bit of a flurry this last year.

Houses on our street have gone up massively in the 2.5/ 3 years we've owned ours.

Lucky you, I did state area dependent, I've moved around a lot and I've noticed stagnation in our old stomping grounds since 2016. Although actually the area we have bought in has increased significantly ("up and coming area") but that'll probably stop now we've bought here

[quote folloyourarro]@Ellpellwood judging by those dates I think you were quite unlucky with timing, buying around the time of the credit crunch and selling when a lot of areas hadn't caught up pre 2007 prices, and then obviously there's been a bit of a flurry this last year. [/quote]
Not particularly unlucky - the people we bought from paid £140k in 2006 so lost £17k. It meant we bought a 4 bed house for £170k with the 5 years of equity we'd built up so there was method in selling when we did!

I was just pointing out that in a fairly normal town 100 miles from London all of the increases have been in approx the last 3 years.

I think you have to wait until the nursery fees are replaced by after school care and holiday clubs. To be honest, I'd wouldn't out myself out financially to have guests. I just don't think it makes financial sense to stretch yourself for people who don't live there at least a few days a week.

I agree with other posters on here about it being done in stages. You are trying to make a huge leap and need to be willing to move a few times usually. We bought our starter home at £105k which we sold on for £140k, we then bought our next home for £225k which we ended up selling on for £375k. After that we bought the house we are in now for £535k but recently had this valued at £620k and we now plan to move on to the dream house at £750k-800k ish. We have always bought houses we can improve and make money on. Ppl think we are mad looking to move again but we are still in our 30s and now our children are both in primary school, we no longer have the associated childcare costs.
We could never have afforded to leap up £300k.
You may need to be willing to move and then move again! It's a bit of a pain but it's worth it to get the dream house (if that's what you want!)

Let your family book into an air bnb! Why would you stretch yourself to have a guest bedroom ? Madness. Enjoy your house as it is.

Where we live we are in the process of buying our first home, a 2 bed place, that we have gotten as a fixer upper......330k. A 4 bed locally to us, semi would be around 550k, a detached with garage etc anywhere between 650-850k. We are south east, Hertfordshire/Cambridgeshire borders.

@Cantbebothered2 but surely most of your stages up the ladder have been funded by pay increases as your equity is not that dissimilar to the OP?