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.

We are mid 30s; have 300k equity over 50%. We have only really had minimum wage jobs until the last couple of years.

House prices have gone up a lot. We were lucky to buy and sell at good times.

The amount of "extra" mortgage you're planning on taking out is a perfectly normal amount to owe on a property at your ages, depending on house prices where you live. This wouldn't bother me at all.

The only thing that would put me off is the 35 year mortgage. Are you realistically going to be paying it until then? Or is it for lower payments now and you plan to shorten the term later (overpaying with your wages in future, any inheritance etc)? If it's the latter, I really wouldn't be concerned at all.

I’d do it. 820 sqft is tiny. Maybe ok with one child but extra space is wonderful when they get bigger. Will the 2000 sqft place have a nice big garden? If you can afford the fixed rate now then I’d definitely put in an offer. £500 spare a month is great!

They absolutely are. We’ve been mortgaged til that age for the last 8yrs at all the big banks. Santander, Barclays, Natiowide, etc etc.

Do you really need a bigger home? Could you clear out clutter?
Remember that as children age they often have less stuff - bulky toys etc get replaced with smaller items and they then have more room.
Being mortgage free allows for more experiences which cannot be replaced. If you do return to work, you can have even more fabulous experiences.
You could also wait until you do return to work and re-evaluate your situation without stressing yourself in the mean time.

What are they supposed to do? Well, I guess they could also get a job. I did and built a career. Then gave it up and went to uni at 32, worked 16h a week at my university reprographics department which more than covered outgoing costs on top of a full maintenance loan (and I still think of it as the best job I have ever had). Financed my own driving lessons and bought my first car outright. The world didn't stop spinning. And when it came to postgrad jobs, I was seen very favourably due to the wealth of experience I had prior to university degree.

How many bedrooms in each? Where you are now and looking at?

Did you already do a thread on this op? Guessing it really is a dilemma for you! I would stretch myself for a bigger place but I recognise we really are all different.

Bully for you, wouldn’t work for everybody and things have changed massively.

Did you already do a thread on this op? Guessing it really is a dilemma for you! I would stretch myself for a bigger place but I recognise we really are all different.

I thought this as it's quite similar to another OP this week, but they were looking at £500k houses in the midlands, that thread is quite recent OP so worth seeing if you can dig it out, can't remember what sub forum it was in sorry!

To the person questioning the validity, I'd assume inheritance?

We have mortgage approved up to age 70. As others have said on other threads you can always downsize if it goes TU or if you just want to when you are older.

If you can sell it and haven’t piled up debt in the process.

Loft conversion?

Have you accounted for higher everything on a bigger house? Insurance, gas, electric , water, council tax, any maintenance ?

Right now the economy is not in a place where i would cheerfully overextend myself.
You can't afford it.

Agree. My housing situation would have to be much harder to cope with than OPs before I'd consider taking this kind of expense when I didn't have to.

Also concur with the pp who mentioned loft conversion. Is this a possibility?

Mortgage debt isn't the same as consumer debt. It's the closest thing many of us get to generating wealth and investment income.

I'd wait til you are back to work, then borrow absolutely as much as you can on your joint salary and the equity in your current place, on a repayment mortgage. Buy a house with that money that is a bit future proof - not somewhere that prices would slump in a downturn, or the fanciest house on its street...all the usual advice about reliable investment property. Make it somewhere you can live as a family for 20 years with the space needs you'll have.

As you pay the mortgage back your investment is appreciating. The more expensive your house, the more money you make because it's still likely that in the long term property value rises higher than mortgage repayments take from you.

While you are youngish and earning there is no sense being mortgage-free. You should be using your borrowing power to generate as much wealth in the longer term as you can, while retaining enough liquidity to cover yourselves in case of bad luck (though now I'm getting flashbacks to that thread about the rich woman who said she was so rich she didn't have any savings,and refused to believe that her spare money was savings!)

Actually there's never any point being mortgage free, unless you have no income and can't downsize. All the people saying "But how can you have a mortgage you are still paying back when you are 75???!!" are missing the point that as soon as you are older and the children leave, you downsize and pay it off then.

Obviously if your children are still home and you are 75 that's hard - but frankly we will all be screwed then, so there's not much can be done!

We are in a similar position and have decided to go ahead and get a bigger house. We see it as an investment for our future as our savings are currently sitting in an account doing nothing. A house is a great investment. The only difference is that we are both working full time. I wouldn’t even contemplate it on one income for financial security reasons. Why don’t you go back to work - it is difficult during the pre-school years but the sooner you go back the sooner you will start to build your career and have an opportunity to increase your income. The £500 left over at the end of the month would not be enough security for me.

For me it would depend on what you're prospects of increasing your income significantly enough to pay that down long before you're in your 70s.

Exactly this.

Move your ISAs for a start !

How about a loft conversion ?

Insanity beyond all measure! You're mortgage free and are considering saddling yourselves up to the eyeballs with debt in your middle age!?

We're only a few years older than you, have just under £100k left on the mortgage and have an eye on paying it down and getting rid.

there must be something mid way - agree that something that needs tons of work not ideal, but semi detached rather than dethatched?
that said, if you are confident that you can get a good longish fix now, and are confident that you'll be looking at two salaries when it comes up for renewal, it's still worth considering.

Really I think there are two questions here. What to do now, and what to do when you go back to work.

We stretched ours to the top of our budget and have absolutely no regrets. We have a wonderful house and great lifestyle because of it. And a smart investment for the future. But given you aren’t working and given interest rates, I personally would hold off for 3 years til you have more income and interest rates have hopefully stabilised a bit. I was 40 when I bought my first house, so I think you have plenty of time (though not sure you’d get a 35 year mortgage, the longest term we could get was 27 years).

Don't people remortgage to bring the term down???
we probably had mortgages that were.meant to last for 35 years but remortgaged every 2/3 years and are now.mortgage free after about 17/18 years (admittedly that is probably a short time period but still)