Swapping livingroom with bedroom

[henmama]

Just bought this 3 bed end of terrace. All the rooms are pretty small. Apart from the large bedroom. Its me, Dh and 2 cats moving in.
To move the bedroom downstairs to be closer to the bathroom for those midnight toilet runs. We spend a lot of time in the living room and would be good to have a bigger space for that.
I've never seen anybody do this in this type of house.
We don't have money for renovations so trying make the best of what there is.
Pic added to get a feel of the layout.
Any thoughts?

I think an upstairs lounge might feel odd for visitors, but I have friends who use one of their upstairs bedrooms as a second living room for hobby-type things, which frees up space in their downstairs lounge.

If it was my house I think I'd save up to convert bedroom 3 into a bathroom at some point.