AIBU to go to the top of our budget for a bigger house?

[LoftyOtter]

We’re currently mortgage-free but considering moving to a bigger house as our current home is getting too small for our growing children. To do this, we’d need to borrow £275,000 over 35 years. Once the mortgage and all bills/food are paid, we’d have around £500 left each month for savings and emergencies.
Right now, we’re on one income as I’m a stay-at-home mum, but I plan to return to work part-time in 3-5 years, which would ease things financially. That said, it’s hard to ignore how comfortable it is being mortgage-free—we don’t have to worry about unexpected expenses or big financial shocks.
Would it be crazy to sacrifice that security for more space? I keep going back and forth between thinking it’s worth it for our children’s sake and worrying that we’ll feel too stretched.
Has anyone been in a similar position? Any advice would be really appreciated!
We are both late 30s.

So a mortgage until you are nearly 75???

Would you have any money for stuff other than bills, food, savings and emergencies?

How confident are you re return to work? Are you eg a doctor or nurse so employment a cert or is it a little less sure? Would waiting til you’re back in work be tenable?

Possibility to borrow to extend now as a stop gap?

When you say it's too small - what does that mean? As in it is logistically not going to work long term living there or if would be nice to have more room. If the latter honestly I wouldn't bother, you said it's good for the kids but having you relaxed and not stressed about money and in a position to give them opportunities such as clubs, activities, holidays, save for uni etc is probably more beneficial. Also that's a very long mortgage period at your age - that's post retirement age!

Don’t disagree it’s daunting but think this will be more and more the norm. Everything - age at which people can buy, expect to retire - is being pushed later in life.

How big are your children getting? I have never known a child to grow so big that they couldn't fit into available room. From experience, the more they grow, the less space they need. Our teen is in a box room with a single bed and a desk and it's still her preferable hangout despite plenty of space available downstairs in the "living quarters". My friend's kids shared a room until the eldest turned 18 and moved out. They are not short of money but decided that they loved the flat and the area too much to make sacrifices for a solution to a relatively short term problem.
I wouldn't personally intentionally put myself into a stressful financial situation over a bigger house "for the children" when the children themselves often would much rather have more family fun and memories that extra money allows. Why not sit tight and review when you go back to work?

Exactly,

OP - are you sure you would get a 35yr mortgage? Typically mortgages aren’t given that extend past normal pension age.

To me it depends on how small your current place is and how much you need the space. How old are your children/how many/how many bedrooms do you have & want etc?

Is there a middle ground option here? Moving out of your small mortgage free home, but not taking on over a quarter a million on debt for a big house?

What type of house could you get with a £150k mortgage and a shorter term?

In mortgage illustrations they show how much you’ll pay back in interest over the term of the mortgage for every £1 you borrow. It’s quite eye opening to see how much money above what you’re borrowing that you will pay them in total and really made me question how far into our budget we wanted to go.

Is it all or nothing?

So could you move to a different place that isn't as much (I'm assuming you would get the money from your current property)?

Most of life you will be out of the house, school and work, plus older kids go out a lot too. The big toys soon make way for expensive hobbies and smaller electronics. What feels squished with toddlers becomes more manageable later.

It depends on your priorities too.

I think a bedroom each for kids is a lovely luxury, but we're happy with small rooms and a shared bathroom in a house with a 70s bathroom and kitchen. If you like en suite and everything insta ready then that's a different budget.

I'd rather live in a small house than have a mortgage hanging over me.

I wouldn't move, in fact I sold a larger house to downsize in my 40s with two big teenagers.

In what way is the house getting too small? Do the dc have their own rooms?

Agree with all the cautious words from previous posters.

Have you considered adding more space to your current house? Loft conversion, side return extension, garden room etc

I'm in a very similar position and our plan is to stay where we are until circumstances allow us to make a big move north where we'll get more house for our money with either no mortgage or max 50k mortgage

I'm mortgage free and nothing would make me go back now. Especially at the terms you've stated, with a 35 year term. Would you both be happy working until 75 for a house your kids left 20 years previously?

What are the current living arrangements?

They'd have to be extreme to warrant such a shift. Is the 35 year term to make the payments manageable? The total amount repaid would put me off too.

I’ve never heard of an older person regretting buying too big or too expensive a house in their younger years. Why? Because their house has increased in value (probably by way more than they could have saved in the time) and this means they have more financial security and have set themselves up for retirement because they have the option of downsizing and releasing capital. And of course they’ve enjoyed a bigger house.

We we’re mortgage free and now have moved and have a similar size mortgage to what your talking about (also in late 30s).

It was nice to have more disposable income and it felt more comfortable each month, but saving up our money in ISAs with low interest rates rather than putting it towards property was a really bad use of our money and a poor investment for the future. I felt our savings were doing nothing for us. I feel much more financially secure for the future now! In fact we wish we had upsized years ago because we’d be in a better financial position now and we wouldn’t have missed that extra disposable income each month.

My sister is at the point where she may pay her mortgage off soon, she doesn’t need a bigger place but she knows she ought to buy a bigger one for a good investment for the future and setting herself up for when she does need more space.

I’d go for it if I were you!

Mortgages don't scare me and I've never felt the crippling need to pay it off asap like some people do, it's just a monthly payment for my dream home and will eventually stop one day....

But, to go from mortgage free to £275,000 mortgage is quite the leap, especially on one income, is there really no compromise between your house and the one you're looking at?

The main thing that would scare me with what you've written is £500 left over a month, that sounds very little (to me, when you're in the desirable position of having cheap housing), that must be a huge lifestyle change?

Is there any scope for adding space and value to your current property?

Can you explain your current situation and what you are aiming for?

It is difficult to understand how needing an extra couple of rooms (for example) would require £250k input. Even in London.

I am single with empty nest and I would feel uneasy with £500 disposable income to cover savings, holidays, life’s unpredictable expenses. I could manage, and have managed on far less, but it’s not clear why you would put yourself in this situation.

We moved to a bigger house 2 years ago and it was exactly that much more expensive a house. Things are definitely tighter for us now although in theory we have more than £500 a month left over. Are we massively happier? No. More maintenance and cleaning with a bigger house. I'm working more and don't get to enjoy the bigger garden we paid for as much. And I am thinking about maybe downsizing again in a few more years. Based on what you have said, I wouldn't. See what you can get that's cheaper.

Thank you for all your replies. Much appreciated. Regarding the 35 year term, we would change that once I was back at work to collapse it a bit quicker.
Our house has 3 bedrooms, however, 2 rooms are very small, and the living space isn’t great. Unfortunately, we can’t extend as the garden is far too small.

Maybe if you get a mortgage where you are not penalised for over payments, then when you start to work, your wage can go directly into paying off the mortgage and you will get it paid off much sooner.

I wouldn’t do that to be honest. £500 left a month wouldn’t be enough for me.

£500 doesnt sound like much spare money
a car needs fixing
a new boiler
new furniture?

We did almost exactly the same. Early 40s moved to a bigger house and borrowed 270k on a 28 year mortgage

At first we had a similar amount of spare cash, and it was quite tight, however over the last 5 years our income has increased significantly and we are now very comfortable.

You don't know what life will throw at you. If you do make this stretch my only advice would be to ensure you have life and critical illness insurance, just in case

Otherwise, go for it. The difference in our quality of life now in our larger house is immense.

When I was starting on the property ladder, I did my sums, and worked out that I could just about survive on what was left, as long as I had a pay rise very year. My dad asked me what would happen if mortgage rates went up 50% in the next 6 months. I realised I had to re-evaluate my thinking. It took me longer to get my bigger home, but I didn't compromise myself financially.

@Nic834 This is my dilemma. Due to not having many outgoings at the moment with the kids being so small, and no mortgage, the money we invested in a bonds and ISA received very little interest.