AIBU to stretch our budget to stay in our area?

[Nobua]

Have worked so hard for so long but live in a very expensive area. We earn good money (£120 annual joint) but had no family support and our eldest was surprise baby so we’ve always been playing catch up financially. We’re stuck between moving away from the life we love, with the school and friends our kids love, or stumping up the money to pay for a bigger house here.

Our current house is far too small, no real garden, kids basically share a room but we’ve partitioned it so they do have their own space.

We live fairly frugally in general at the moment and £1200 monthly goes towards a debt that will be paid off in 3 months time. If we move to the sort of house we want, it would cost exactly £1200 per month more . So we can afford it but it’s right to the top end of what we can afford (in terms of our actual outgoings, mortgage is already approved in principle )

would you?

If we moved further out, it would cost approx £700-£900 extra per month. But we’d lose our ‘village’ & the kids would need to move schools because it wouldn’t be feasible to commute twice. They’re very happy and doing well where they are.

I guess we could also stay here but I’m so miserable here. The downfall of being in a posh area is also that the kids feel embarrased of our small home when their mates with huge homes come over. The next step up wouldn’t be a mansion but would be atleast workable for sleepovers and hosting.

It’s a really tough call for us! We want to decide soon before we get used to having that money ‘spare’.

I think we need more detail. What would your mortgage be in terms of % of your income? How much would you have left after all bills are paid? It sounds like you need more space but I can see why you're wary of taking on too much.

41% of take home income. We’d anticipate around £1,500 per month left after bills (including clubs etc) to pay for food, days out, clothes/household and extras including savings.

I was going to say yes do it until you said 41%. Our income is roughly the same as yours and we are debating moving where our mortgage would be 25-30%. Above 35% is high.

Can you stay put and do a lift conversion? Put your name on the list for an allotment for outdoor space.

Have you worked out if you can feasibly live and save on £1500 a month?

I wouldn’t, that sounds like it would be a lot of financial pressure. I would also always pick a small place in a good area over a bigger place that has drawbacks or a huge financial burden, I have never had a garden or a big house and my kids shared a room for a long time and we have always been fine, the
locations we have lived in have given us so much more than a bigger house would. But I know I am in a minority.

How would you fund fees, stamp duty etc if you’re currently in debt?
How old are you and how much would you be increasing your borrowing?

Honestly don’t move!
just renovate or make do.

Is an extension an option?

Also, how old are your DC?

41%?? No way, and I’m someone with a high mortgage of £640k.

The debt is short term, not mismanagement, it was for private medical expenses and though extortionate. we felt it was worth it, definitley was. We have equity in our house.

Mid 30s. Would be increasing borrowing by £150k approx.

No room to extend and we were told loft conversion would not be viable as the layout means stairs would take out one bedroom and the layout of loft means room would be tiny so we wouldn’t gain much useable space but would cost a fortune.

41% does seem scary. Interest rates are awful at the moment. But if the banks thought it wasn’t viable, they would’ve refused so surely not uncommon?

What are the house prices like in your area for the next step up the ladder? We’re contemplating moving at some point, but most of the bigger properties in our area are overpriced and sit on the market for months. I can’t see them increasing at any time soon. We don’t feel any pressure to move up right now, and can bide our time and invest what we would be paying as extra mortgage payments into savings.

Is that an option, to sit tight for a while and strictly save the £1500 pm after you’ve paid off the debt?

No way. Too risky. We’re heading into turbulent times for interest rates. I wouldn’t be able to sleep at night.

So you are in a 2 bed and want 3 ifhave 2 kids and own bedroom and a 3 bed house is £150k more ?

I would either stay put & improve the space via layout/furniture etc. Or I’d move to slightly bigger in the same area. Def would not leave the area for space. You’ll have all the space and no friends to call over - what’s the point of that. Communities take years to build!

How old are your DC? Garden space is a strange one, we had a small yard and it was fine. Once they were older anything but a HUGE garden for footie would have been too small tbh.

Do you need to stay out for a year whilst you save up for moving costs and see how the economy settles it all very up in the year currently.

How old are your kids and do you live near secondary schools you would happy with? On the basis people often move for those, I wouldn’t buy a house without this front and centre.

I would also always pick a small place in a good area over a bigger place that has drawbacks or a huge financial burden

I agree. Also I think in this gloomy economic climate, it is unwise to stretch if you don’t need to, unless you’re loaded. The unemployment rate is the highest it’s been for a long time.

how old are the kids, once in secondary they don’t use the garden much expect to sit with friends and chat. Anything more and they take themselves to the park. Don’t think it’s worth loving just for a bigger garden.

I wouldn’t be comfortable with 41%, life is short and your children are only young once, for me this was the time to be comfortable and make memories. We moved away from a village we loved for a bigger home without sacrificing lifestyle and it was the best decision we made. Ours weren’t yet secondary age so they quickly adjusted, we built a new life and had best of both worlds in terms of comfortable home and lifestyle.

It also worked out well because as we later realised the village we loved would have been very restrictive for our teens. They have a lot more independence in the town we are in than they would have had.

So I would keep options open and look at the bigger picture.

Where are you at in your careers? Is there potential for promotion or pay in creases in the short to medium term? 41% is pretty scary but if it was probably going to be temporary then I would go for it.

I think you should go for it. Sounds like you have already thought through the logic and the options and have landed at what you think is the right thing to do for you and your family. Does everyone in the household agree? As PP said, life is short. Don’t spend it being miserable in too small a house when you have the means to change it.
We had the same situation and moved to a bigger house. It was absolutely the right decision. I didn’t even realise the full extent of the impact living in too small a home was having on us until we moved! Especially as our children were also getting older.