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.

If you're planning to go back to work in a few years then move at that point when you can reduce the mortgage term and not have money be so tight, I wouldn't move now.

@Hadalifeonce so I’m thinking if we fixed for 5 years, if that did happen, we would be back to having two incomes coming back into the household.

Yes absolutely. You can sell when they are 18 or move out and get rid of the mortgage again.

I’d buy the bigger place.

we have a 30 yr mortgage and I’d be 65 before it’s paid off.

Butttttt we will well sell before then. The way I see it, it’s not forever…
We went big on the basis we’ve got 20 years to raise the kids in a spacious house with nice garden and we can downsize later.

in the interim we get the benefit of price rises and nice living environment.

the whole I must pay off the mortgage thing is a very British preoccupation…

Historically, property has gone up in price longterm, outpacing inflation by a long way. This depends on your particular location though. So assuming you would look to downsize again at some point, it could work well albeit things will be financially tough for some years.

Then again, there's lots of questions. How old are the dc? Could you live indefinitely in your current property or is it not viable at all? Could you find a bigger but cheaper property in a new location?

I'm worried about your lack of income as a sahm. If you split with your partner, you would be in a very vulnerable situation with that mortgage, as neither of you could afford to leave without selling the home.

If your priority is to be a sahm and then work only pt - fair enough - but this ambition is maybe more suited to being mortgage free. It's a lot of pressure on your partner and his employment.

Exactly! We saved a lot over the last 5 ish years but that money has been dormant basically, we would be much better off if we had stretched to a bigger property earlier. The reason we had so much in savings was because it had taken us so long to find a house but in that time just sitting on savings was a useless use of our money and a poor investment.

You say you’re sacrificing financial security for a bigger house, I think it’s the opposite, you’re sacrificing financial security buying staying in a small house you’ve already paid off!

If I had found a house a liked earlier I would have jumped at it and you should too.

35 years is a long time and yes it won’t be as comfortable but you can shorten that as your financial situation gets easier.

Also don’t forget during the few months that it takes for the purchase to go through you can be saving! During that time (4mibths ish) we looked after every little penny (and I mean every penny) and that saved a fair bit which we can now put towards doing bits in the new house.

Is your partner happy to take on the responsibility for paying a mortgage? How stable is his work?

Well, you could wait until you’re back at work. Would the children be in school then?
More room sounds great, a bigger house you could stay in for years, more equity when you eventually sell etc. But, if this mortgage is dependent on one income, there’s not much wriggle room for unexpected issues, either with the house, or job.

I’d wait, save as much as you can and then buy something that is in good repair, so you’re not having to throw money at it.

Yes, I stayed too long in a small house mortgage free, and should have moved long before I did. Mortgage free is irrelevant if you've not got the living space you want. It's made such a huge difference to our lives to have enough space for all of us.

What size houses and numbers of children are we talking about?

Could you compromise and get a bigger house for, say, £100k more?

Almost £300k more sounds like loads.

500 to pay for everything after bills is tight IMO. If something goes wrong and you need a new boiler, new car, new roof that won't go far.

How much in savings do you have?

What pension provision have you got? Also whatever happens the entire lot needs to be paid off before retirement otherwise you’re going to find retirement on your husbands private pension( state will be worthless) assuming you’re still together, grim if you are paying a mortgage too.

We were in you exact position 22 years ago, mortgage free late thirties. Our house has 2 large bedrooms, one single one and a big garden so maybe the decision was easier .

We decided to stay, we increased our investments and there is the right time right place element but we have never ever had to worry about money. We enjoyed overseas holidays every year and sometimes a few times a year. We have also recently retired in our mid fifties. We do both have really decent pensions. No regrets here. Most of my friends that are a similar age live in bigger houses but are still working. We are on the last stage of buying a Motorhome to go travelling round the UK and Europe for a few months.

A house is not a liquid asset, to move and then downsize again, that’s two lots of fees. Do you know a lot of elderly people? I do through my voluntary work, many cannot face moving. The memories, neighbours , where they raised their children. It’s not as easy as people make out. You can have great plans throughout all your life that are thwarted by external forces, Government and family circumstances but the battle with your own brain. No one really knows how they will react until in that situation.

@randomchap so my husband is the one that is really wanting to do it, whereas I’m throwing more caution to the wind. His thinking is that the money isn’t earning much interest in the bank.
He is a teacher at middle leader level in a school.

Once and if the sale goes through would have 10k emergency money set aside. However, I know this isn’t much when it comes to needing a new car etc (if ours needed replaced).

How are you going to fund uni, cars,house upkeep( boilers, central heating, kitchen, bathroom, carpeting, outside etc electricians alone are ££££) and life disasters? What about redundancy and how much savings for that have you got? Also have you factored in how much extra teens cost?

We’ve just had a £3k electrician bill..The longer you leave houses the more they cost.

Uni? It sounds like kids are barely out of nappies. I think making decisions about uni is premature.
I agree with you that it seems like a frivolous purchase but let's not make decisions based on financing unis which 1. Is too far into the future, 2. Is not a definite and 3. Doesn't need to be financed by parents at all (if kids go after the age of 25 or if they live at home).

This doesn’t work now. Graduates are finding finding work hard and need to come home during term time, often after uni. Rent is astronomic . I know many young adults in work needing to live with parents to get a deposit together.

We really stretched ourselves at age 38, and frankly it paid off. We kept reducing the term and amount too, so actually only had the mortgage 14 years. However we bought the grottiest house in the nicest location, and the location was very much in demand (got people knocking on the door to ask if might be selling)
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It really isn’t premature!!!! The cost is massive and so many families are struggling because parents didn’t save before. Loans do not cover living. We have to pay monthly living costs and top up rent. It’s £500 per month per child minimum.

I would buy the bigger house on a five year fixed rate, overpay when possible, and when you're working in a few years remortgage for a 15/20 year term. Bish bash bosh.

We're going to be doing something similar.

I would not borrow over a term more than 20 years myself, 25 tops in your circumstances. Just because they will lend over a longer period doesn't mean you should. You might not want to work so long!

We went from mortgage free to a 100,000 mortgage for 25 years. Which takes us to our 50s. Much less intimidating. Is there not an option for similar for you? A bigger house that's not so much more expensive?

Having a mortgage again has been an adjustment. But you cut your cloth. The budgeting isn't a big inconvenience or anything, its just life for most people. In our case we had 5 of us in a 3 bed and our children couldn't easily share due to age gaps and sex so we didn't have much choice about getting a 4th bedroom. If our younger two were both girls or boys we probably would have stayed in the mortgage free house. You have to really think about if you need extra space or just want it. If you just want it, then how much do you want it?

What teen wants to wait until 25 to go to uni and not everybody has a uni or the right one on their doorstep. Trust me it’s a massive shock when uni comes. We had no extra cash to save for it and having done nothing on the house are now having expensive bills for that on top of uni. We did what the op is suggesting and I would not recommend it. Thankfully our mortgage will be paid off when we retire and we have good pension provision.

I don't necessarily think you should stay in this house but I'd be wary of that level of mortgage from what you are used to.

A much bigger house will have significantly higher running and repair costs.

How old are the kids now and what do you have in the way of living space? There aren't any options to knock though a small kitchen for example? We rejigged our downstairs and it made a huge difference. Or to get the kids better furniture for their rooms.

If you have one tiny living room and a small kitchen and the kids bedroom is 6ft x5ft then moving makes more sense but don't underestimate how much it all costs and how much you'll need to change other aspects of your life to accommodate it.

Is jumping up such a level really the only option?