To take on a mortgage in the middle of a cost of living crisis?

[MarianneVos]

Current situation: 3DC under 4 years old (so none in school yet), small 3 bed semi. We're tight for space: DH and I both WFH two or three days a week with desks in bedrooms as no other space, pram has to live folded up in dining room so barely space to get round table, tiny kitchen (no space for dishwasher/tumble dryer), one bedroom is box room, only one toilet in bathroom upstairs etc. Location nice countryside but a bit isolated, country roads often with no pavements, would end up being taxi drivers to DC when older, have to drive to office. But it is liveable although frustrating.

Potential move a few miles away: 4 bed house with home office spaces downstairs, 4 toilets (one downstairs), 3 bathrooms, decent sized kitchen, playroom, utility room, cloakroom, big hall that could leave pram in. Pretty much dream home and location except for garden which is small, but we have discovered we are too lazy for garden maintenance and couldn't afford this size of house in this location with a bigger garden. Walking distance to centre of large town, great bus service, cycling distance to my office, big housing estate so safe roads for walking/cycling, near parks. We currently have a large amount of savings.

Currently we're mortgage free. New house would involve £100k mortgage, which is less than 2x either of our single gross salaries. 25 yr mortgage fixed for 5 years is 20% of my take home, or 15% of DH take home (IE 8% of joint take home). Hard to say how secure our jobs are, location means we'd have a good choice of employers though. Current childcare costs are very high but will only go down as DC start school. We'd have a small cushion of savings (about three months of take home) but everything else is going towards the house.

YABU: you should stay put to have the extra security of being mortgage free with decent savings in cost of living crisis
YANBU: it's worth the extra risk of a smallish mortgage and using savings to get a forever home that would be much more ideal for the family

That's not a big mortgage , I would go for it

That sounds very doable. Go for it. It will improve your quality of life.

That's a tiny mortgage for such a huge house. Go for it.

That's a tiny mortgage with a lot of positives.

however, I'd ask what you've been doing with your salaries till now? have you got hefty savings? Have you been spending all you earn? Can you stress test losing 1 Jon and interest rates on the mortgage?

Yep, we have built up a lot of savings (mostly pre DC but we're still saving about half my salary) and although we're not extravagant we don't watch the pennies so there's lots of discretionary spending to cut down on if we needed to.

What's the area like? Is it likely to reduce or go up? Is it more stable than your current location?
Personally I'd go for it, we renovated our home from a similar size to 5 bed 4 bath 2 offices and love the space, we only have 2 kids but couldn't face going back
Yep from me!

My current location is a village so there's less housing stock so things are rarer, the new location has more houses so things coming up more frequently (but one this size is rarer), but quite a desirable family area so I think they'd be similar in terms of price stability.

Both will probably go down if we get a house price crash next year as is likely, which would overall be better for me as the price differential would reduce, which is another thing making me hesitate. But, if course it's a gamble that would happen, plus being able to find another buyer, and another house to buy I like as much!

If you love it for you and your family then I would do it now, with such a small mortgage needed it just seems sensible to get it done.

£100k is such a small mortgage and it sounds like it'll really improve your quality of life. Go for it!

If it’s any comfort we’re in the midst (all fingers and toes crossed) of upsizing to a bigger mortgage than you’re looking at (and a bigger % of salaries repayment) and I have no qualms.

Whilst I don’t expect to make money on the house I think if you’ll be there 5+ years it will retain its value (and if it doesn’t then when you sell other houses will have gone down too) and we, like you, will still have space in our budget and before our fix is over both DC will be out of childcare.

The mortgage sounds fine but also think about the cost of energy usage in a larger house - that is likely to outstrip your mortgage costs as you'll have to sign up with a new provider and depending on what you currently pay may be significantly more than you're used to. If you confident you know what your predicted bills would be based on your energy usage in the larger house, and paying those bills plus mortgage will still be fine for you, go for it!

And beware the "house price crash" hopes, do not make your decision now based on something that may well not happen in the future.

If you can comfortably afford the repayments it's a great idea

There’s a huge psychological barrier in taking on a mortgage, however small, when you’re mortgage free. But it is a small mortgage and the benefits are massive by comparison. I’d go for it if it were me.

Best to do it now before mortgage rates go higher

You’re in a very privileged position to be able to get a tiny mortgage on a huge house, whilst also having big savings? I’m not sure what you’re even concerned about?!

You seem unusually risk adverse. So it's approx 1x joint salary?

What's the point in living the way you are on decent salaries and net worth?

Surely you will pay it off in a fraction of the 25 years?

Go for it. As @wnikat said get the mortgage tied down soon. Also go for a very long mortgage like 5 -10 years if your planning on being there for the long haul.

No brainer, you could pay it off in a few years with a bit of overpaying and hard work and be mortgage free again.

We could be mortgage free if we lived in a house that was just about big enough, and put up with lots of frustrations like you listed. Instead we have an affordable mortgage, plenty of space in a great location.

You're better off than us and would have a smaller mortgage- buy the bigger house it's a no brainier! Good luck, please update the thread!

It sounds quite affordable. Obviously you will need to add the costs of comprehensive insurance in case of illness or death, if you haven't already. But what will the difference be in bills?

Sounds like a long term move - so I'd go for it and fix the mortgage for 5 years at least till it's clear what's ahead.

I'd also check energy rating of the house and think about heating costs - though our 4 bed is much cheaper to heat than our previous 3 bed - as it's not open plan and it's much better insulated.

If you are moving to a town and can cycle to work then you will be spending less on petrol I imagine. That should offset some of the bills by having a larger property.

It sounds like you’ve thought it through carefully and I’d go for it in your shoes. Also your dc will thank you in years to come, independence to meet up with friends and get out and about without parental assistance

I don't think the housing market is going to go well in the near future, so you may get less than you expect for your current property. Asking prices are down in the last few months (not sure about sold though). However it's not a very big mortgage and you are both working. You just need to factor in affordability if interest rates spike in the near future and think about the cost of utilities/inflation and whether a mortgage on top of this is affordable. Also bear in mind we are entering a long period of recession.

In the long run you will probably benefit, but I think you need to consider the short term (hopefully) economic issues we are all facing too.

Yes I would definitely buy the bigger house in your situation. Try not to think of the negative things that might happen. You'll be fine.

House are being reduced here already but I would move for a £100k mortgage on a bigger house if I were you.