To feel so anxious and unsure about this house move? Does this budget look ok?

[ruminator8]

Long post - thank you to anyone who reads it all!

Background - I am an anxious person who overthinks, worries and ruminates on so many things. Sometimes when I share my worries with others even my DP, they look at me as though I'm mad.

We have been trying to move for more space for over 2 years on and off. Our current 3 bed semi feels to small to be comfortable for the next decade as our kids become teens / young adults and we aren't able to extend to make the house as we want it duo to plot size. We are wanting to move to a bigger 4 bed. Various hitches and setbacks along the way, all related to the housing market or my uncertainty about houses we viewed. We own our home outright, having recently cleared the last of the mortgage of £180,000 that we took out 10 years ago. I've worked part time for the past 10 years since having my eldest. We now have 2 kids, both primary age. I now earn more FTE and work more hours than I have ever done in the past 10 years. My partner earns over £60k pa gross working full time and gets a work car. Our total net after tax is monthly income is £5447. We are both mid 40s. We have no other debts beyond a mortgage (we clear our credit card balance each and only use it to accure cashback). Neither of us expect a promotion in the next few years and we generally get modest annual pay rises and no bonuses. We both have private life insurance, partner gets death in service cover through his work, good sick pay, own job ill health retirement cover and has a good pension he can access at age 60. I have 5 years of critical illness cover beyond the occupational sick pay term in my job and an occupational pension (and a couple of other pensions from previous jobs, all defined contribution schemes so nothing amazing.) I run my own car which is 11 years old.

We have had an offer accepted on a great property at the upper end of our comfortable range at £610k. To make the monthly payment affordable we've applied for a 35 year mortgage on a 5 year fix initially. Total amount we're borrowing is £260k. (We would plan to pay it off sooner as we did with the last mortgage we had which was initially a 25 year term but which we paid off in 10 years.) We will be keeping £30k back in savings a s an emergency fund but will need to dip into this if my car dies soon (amount ?) and also for a few furniture items for the new house - no more than about £3-4k.

I am an anxious person by nature and am more risk averse than most. I grew up in a family that struggled with money and parents who worried about it a lot and refused to have any debt beyond a mortgage. I am riddled with anxiety about this move on so many levels.

• we are buying at the top of the market it seems as house price falls are predicted and while these don't hit all areas and houses the same way, I can't help but worry.
• we are fixing for 5 years for certainty but at a high rate (5.39%)
• we are potentially entering time when kids get more expensive (secondary school / teens) re: food, clothing, general expenses, even if childcare is not such a major expense anymore. There are secondary school buses, uniform, trips etc to plan and pay for and just the general stuff that teens want I guess plus birthdays and Christmas.
• we are not extravagant in terms of the latest brands / tech etc
• we do like 1-2 holidays abroad each year (nothing fancy, approx £3k a week) and a couple of UK weekends / short breaks which maybe cost another £1k total.
• our 2 kids do a lot of extracurricular activities atm - approx £75 worth a month each, with related costs for some of these as and when the need arises - e.g. a new bike / gum shield / kit depending on the sport.
• partner and I don't socialise loads and aren't big drinkers. We have maybe 1 night out a month each (meal with friends) and 1 date night out (meal, drinks, cinema) about once every 6-8 weeks. As a family we tend to have meals out on birthdays or once every school holiday.
• I have a cheap gym membership at £25 a month and partner does his own training so only really spends on kit and occasional race fees.
• Mainly food shop at Aldi / Lidl with the odd treat smaller shop from M&S or Sainsburys now and then.

We have budgeted and have factored in higher energy and insurance costs for the new, larger house. The house needs no immediate work as is in a great state at the moment and has been renovated by the vendors over the past few years.

We have a budget as follow for the new house:

Mortgage £1650 per month

Outgoings (non-mortgage) per month

energy 250
home insurance 40
water 100
life insurance 50
council tax 203
car tax 12.5
mot / service 15
car insurance 25
tv licence 13.25
sky tv / braod band 62
mobile phone 26
amazon 8
car petrol 150
childcare 100
school lunches 26
boiler service 6.25

(Childcre includes after school care in term time and school holiday clubs averaged across 12 months)

Leisure spend per month for all 4 of us:

football 30
rugby 12
gymnastics 47.5
swimming 28
karate 23
cricket 10
gym 25

Groceries / household goods spend per month: £1000

The total leftover after all outgoings above is £1451.5 per month / £17418 per year and have allocated this as follows for now (I think we can reduce holidays and move more to clothes / shoes / haircuts and savings)

holiday 7500
christmas 2000
birthdays 1500
day trip 2000
savings 1418
meals / take aways 2000
clothes, shoes, haircuts etc 1000

DP feels if we don't move now we never will as I always find fault with potential houses and getting a mortgage will only get harder as we get older. My age at my next birthday already means not all lenders will lend us the amount we need over more than 25 years but we are lucky to have found one high street lender who will, hence our current deal.

Does this all sound reasonable ? Am I being ridiculous in being so anxious about it all? Sleepless nights and feeling sick etc. I think part of it is the whole way house buying goes and feeling we're paying too much / moving at a bad time. And part of it is my general anxiety. Help!

Don't move. Rent a room in your local library to work. Much cheaper. You really shouldn't behhar yourself into retirement for the sake of a lightly larger bedrooms.

The only thing that would concern me in your position would be paying for/towards university for the DC, and maybe the emotional difficulty of downsizing again in due course if you need to and you’d rather not.

Otherwise there is slack throughout your budget and you are obviously good at planning/budgeting.

I would opt for a shorter term on the mortgage if I were you, chuck most of that £30k into the deposit now and start saving again from scratch and overpaying the mortgage even just a little, as you have loads of leeway to cut back in an emergency and could use a 0% credit card if necessary. I’m not saying do that, just illustrating that I think you’re being over cautious if anything.

This.

Your mortgage to income rate is fine IMO.

I think if you want to move you can easily cut your cloth accordingly, save more and spend less. Your holiday / day trip/ Christmas/ birthday type spend seems incredibly high for your income, and saving less than 10% of your disposable income seems crazy.

The only thing I would say is don't underestimate how knackered you might be in 10 years time. By mid 50's you might be really needing to work less, yet you've tied yourself into a big/long mortgage. Plus uni costs for kids....I was off the "I'll never retire" view but that can really change... We are in a 3 bed semi, and our mortgage runs to age 65. At this point I wish I had more of options

Thank you! This is what I was trying to say, but you’ve articulated it far better.

I would hope that it would be possible to get a 4% rate in 5 years too, which would also help!

I think I have a different perspective to finances than most but I’d be fine with this.

Financial security isn’t really about what you save from month to month but your overall equity, pensions and savings. As long as you have a reasonable cash buffer, I don’t think it really matters if you’re saving month to month.

Across my lifetime I’d prefer spend my money in the period I have children at home when it benefits them than saving it so that I have more to spend once they leave home.

If the more expensive house becomes unmanageable financially you downsize. It’s hard to know where you’ll want to live in ten or twenty years so just choose something that suits your circumstances now. You may do better financially in the long run by having a more expensive house anyway as it’s likely to go up in value more than a cheaper house (though could also lose more value). I’m probably £100k better off for living in a house which is more expensive than I need.

I also don’t think it matters if your mortgage is long. I extend my mortgage for as long as possible so as to minimise the amount I have to pay. If I have the cash I’ll overpay or save (probably save as you can usually beat mortgage rates by investing). When you remortgage you can also pay off a lump sum Psychologically you may be more likely to make the payment if you have to of course but a longer term gives more flexibility in what you pay.

What would give me pause in your situation is that house prices may be falling whilst mortgage rates could be at their peak. I think I’d be tempted to delay a few months or to consider a tracker mortgage to start with or shorter fixed rate. I do understand the desire for certainty but my feeling is you’d probably end up paying a lot more interest over 5 years at a 5% fixed rate than on a tracker (but that’s a gamble and probably not worth the risk if you don’t have a lot of spare cash).

I'd do a tracker with no or low ERC

You could Switch your holiday and savings amounts for a couple of years to give you a buffer. Camping is character building.
I'd also switch meals out/ takeaway amount with clothes shoes etc. You don't really need £1000 a month for groceries and £2000 for takeaways and meals out.

As a family that has hit hard times I wouldn't move in your position and take on a new mortgage- what if the proverbial hit the fan? I wouldn't give up the security of owning outright in your position OP. I think your fears and jitters are valid and not over the top at all despite your income. I would listen to your instincts and stay put but enjoy the security.

Should be fine as you can cut down on xmas and holidays if you want to.

You will have to watch spends but sounds like you do anyway!

2 Kids at uni will be 1000 a month pardntal contribution ... but some way down the line

Assuming you’ve already accounted for pension as salary sacrifice, I think it’s fine.

Obviously you will need to cut down somewhere if you want to overpay the mortgage.

I don’t really understand those saying you should be putting £1k plus into savings. What would it be for? You already have £30k = 6 months buffer. You might as well put any extra towards the mortgage.

OP here - I'm at work today but will update / reply more later. Still feel so torn!

Just a few quick points in reply to some questions / comments so far:

Pensions are already factored into the sums for us both as are deducted at source.

We prioritise eating well at home hence the high grocery bills.

We have a water meter.

Moving isn't just for bigger bedrooms for the kids - we also want more and more separate living space. Can't extend or convert the attic where we are now as house not suitable / plot not big enough. No space for a garden room either.

Downsizing in 10-15 yrs or so could be an option, yes.

The £2000 in the annual budget isn't for takeaways - it's for days out e.g. we pop into the nearest city with the kids in half term and go to the cinema and out for lunch. Probably an over-estimate tbh.

We're not alone in wanting more space. Most people I know with similar incomes and age of kids have wanted the same over the past few years but have been able to take the cheaper option of extending / enhancing their current place and not having to move and pay stamp duty etc.

£3k for an annual 10 night holiday abroad 4* AI for 2 adults and 2 kids is reasonable to me given our joint pre-tax income is close to £100k. We would love to take the kids on long haul trips Florida, Kenya etc like their mates but that would mean not moving and day-to-day that feels more the priority. And investing in a larger property is what some advise due to the long term rises in property values, blips aside. The last point is one DP feels a lot. And I think he feels we underspent on the current house in some ways and didn't think long term enough, although we didn't expect to live here as long as we have initially and thought we'd have upsized about 5 years ago. Covid has definitely delayed things.

What's your gut feel OP?

If yes, can you cut your budget a little? Where could you cut it?

I think you should definitely move. A house which works is so important as a family and even more so as the kids get older. Your figures look fine to me, you’ve got a good buffer for emergencies and if you want to save more/ overpay the mortgage then you can cut back on holidays etc for a couple of years.

The only thing I’d consider is possibly fixing for 2-3 years rather than 5 but I am not a huge expert any more than the next person.

It looks very affordable to me, if thinks change you also have a ton of discretionary things you can cut down on. I would do it in a heartbeat 💓

Hi OP, you can have an interest only mortgage. We do, and we make capital payments to reduce it. Then if times get hard you are ok.

We had four different lenders offer us a 37yr term when we were 37yrs old - lenders absolutely will offer it. People act like the term of your mortgage is set in stone, and it isn’t at all. Some years you may be able to make big overpayments, interests rates go up and down, an inheritance or windfall can be put on the mortgage, your salary may improve, a remortgage can get you a better LTV and a better rate, you might downsize when all the kids are gone and find yourself with a healthy profit - all of these things mean the term can be adjusted as life goes on.

I get why you want to upsize OP. We did it this year, after years of procrastinating, and it has been genuinely life changing on a day to day basis.

We’ve got more room to hang out together in comfort, the kids have more room to have friends around. It’s changed so many simple day to day things for the better e.g. room to congregate while a meal is being cooked, which means we now gravitate more to healthier home-cooked meals, whereas previously it was a chore for whoever was cooking to be alone in the kitchen. It’s lots of little things that add up to a big thing.

We also took out a longer mortgage term with a plan to overpay in the short term, and a backup plan to downsize in 10 years if necessary. The main constraint was the stamp duty and fees, which with a £600k house does mean you have to be sure you will stay in the house for a good few years to make it worthwhile.

You're both mid 40’s and taking out a 35 Year mortgage?

Thing is though this house doesn't have to be permanent. My approach to house buying has been that I want a big enough house whilst I have a young family, Covid especially showed us how important it is to have comfortable and adaptable space, it's about more than just the number of bedrooms. We stretched ourselves to move into a perfect family home with a long term mortgage, as it happens our income has grown substantially since we bought so we'll likely be able to pay it off much earlier than anticipated when we took it out, but if we didn't we would have likely looked at down sizing or moving when the kids were grown. Not always ideal, and I know it's nice to have a big house with adult kids too, but ultimately the decision at the moment is about getting the right home for family life, then seeing where you are down the line. It's impossible to predict the future, a long term mortgage doesn't have to mean you will be a slave to it forever, assuming house prices don't catastrophically crash of course!

This is exactly the view we have taken after spending too many years (including the covid ones) in a space that was too small for our family. We are all so much happier in a family house and we'll look where we are in 10 years time or so and reassess.

I wouldn't personally fancy it, but it's probably doable. Really a lot of it is about value judgements. Difficult for anyone on here to tell you whether better living space is more or less important than greater wiggle room to retire earlier.

OP there’s something amiss with your numbers

Borrowing £260,000 over 35 years should be about £1,378 per month

Payments closer to £1650 per month mean the term only needs to be 23 years

Should add that is using an interest rate of 5.39%

Its your choice, some on here would say yes some would say No.

If it was me would I take out a 35 year mortgage at mid 40s? NO.

That mortgage payment is fine now, but have you budgeted it against your pension income because you'll be paying it long after you retire. What happens age 60 when the pension is available and youd like to live more and work less but cant?

If its affordable over 20 years go for it but any longer and youre restricting future options.

The house prices are not that big an impact. If they drop then your existing house would drop too. We bought at the top of the market, but there was only 90k between the houses we bought, and i got 50k more than we would have done for the home we sold and were not planning to move so its irrespective.

Wish you luck with your choices but whatever you decide just be happy in the choice and enjoy it