Moving house, meaning a big new mortgage in early 40s

[WokeGroaker]

We are moving to upsize as need more space for a growing family. We hope we won't move again after this until we are in old age.

We have found our dream home and would be taking on a big (to me!) mortgage to buy it.
We have paid off a lot of our current mortgage and it is down to £60,000ish remaining at monthly repayments of £400. When we first took it out 9 years ago it cost £900 a month.

The new house means we need a total mortgage of £275,000, and on a good fixed rate deal we've found (fixed for 5 years) the monthly repayment is £1050 a month. We would still have £30,000 in savings and would be left with about £300 a month 'leftover' (after all regular bills, kids activities, groceries etc) but I need to check how much higher council tax, insurance etc would be on the new house.

I am comfortable with the initial repayment but a bit worried about the overall loan amount and what may happen to interest rates in 5 years time.

I am naturally risk averse, as is my husband, but him a bit less so.

Our net household income is £4k a month. Kids are now at primary school and I work part time, school hours so minimal childcare (some holiday care needed.)

We are not extravagant, don't smoke, have no babysitters locally so don't have nights out very often and have no other loans. We do enjoy holidays and hoped to travel more abroad now the children are a bit older but now with Covid, who knows what will happen on that front over the next few years!

I drive a regular 7 year old hatchback and my husband gets a company car (which he pays some contribution towards via salary sacrifice.)
He has good benefits in his job and usually gets a small pay rise annually. No bonuses. Secure employment.

I could possibly increase my hours or move to a better paid job but working regular hours would mean more after school childcare needed.

Does this all seems do-able or too tight in the event of unforeseen events? Thanks

so mortgage of 1050 from 4k? I think that's ok. Plus you could always increase your hours.

Would you actually be given a mortgage for that amount based on your income and expenditure...have you had it agreed? I guess it's one thing what you know you can afford and another what the lenders will let you have.

I think your mortgage is fine, your other outgoings seem high with only 300 left- maybe look at those

That sounds fine. If you need to move, better to do it now than wait. As the dc get older, you can increase hours and overpay. You may come into money at some point too. Go for it!!

I'm risk averse too and I wouldn't do it unless we could comfortably afford on one salary.

Your set up is almost exactly identical to mine. I'm a few years in. It's fine, and I love having the house and we are happy. The only thing, as I'm sure you know, is that if interest rates go up after the fix ends it might get a bit hairy.

I'm not risk adverse, so please read the following with that in mind!

We moved to a (much) bigger house just after I'd turned 40 and my husband was 39. We took out a 30 year mortgage for £269,000, repayments £967 per month. We earn between £3.6-£4k per month, although I work part-time so we do have some wiggle room there. Our cars are 12 & 7 years old. My children are teens and a 4yo.

What did hit us hard though, was the rise in Council Tax, £125 - £275 p/m! Luckily this was part offset by a significant saving in fuel bills as we now have solar panels.

18m down the line, this is all fine and manageable.

I’m 40 we’ve been in our home five years now but our mortgage is still around the same level and approximately £1000 a month
Our youngest is going to school in September our childcare bill is still between £300 and £400 a month definitely looking forward to that ceasing.

I would look at your other expenditure because you’re not going to have a lot leftover every month. I wouldn’t not do it but I would be worried about things breaking down or needing new cars as long as it will not leave you without a float in emergencies I would do it

As a pp said, that mortgage is 25% of take home pay which is perfectly fine, but your other expenses seem really high if childcare is minimal as you say. I would start with addressing those. Our mortgage is double that but other bills on top much, much lower than yours.

2 years ago we were in an almost identical situation. We were practically mortgage free but decided to buy something bigger and needed a £280k mortgage (monthly payment was £1000). I really tied myself up in knots worrying about it but we decided to jump in and I'm so glad we did. I've always been massively risk/debt averse which I think is a good thing, but the extra space has been so good for all of us (esp during lockdown and working from home!) and the debt so far is totally manageable. Good luck with your decision.

We are doing similar but a bigger scarier mortgage. We figure when the 5 year fix ends, the kids will be old enough for me to have a full time job as my youngest is 6.

As long as the house price doesn’t plummet we would still be better off than renting. It is a worry though.

We recently downsized out of the larger family home. It was the running costs that were ridiculous. Heating, insurance, council tax, maintenance and repairs. The mortgage was just the tip of the iceberg!

That sounds fine to me - lots of people I know are upsizing and taking on bigger mortgages in their 40's. Sounds like your income will cover it comfortably.

One way to look at it would be to do the move now whilst you have a family, make it a 15 year ish home and then if you want to be mortgage free sooner look to downsize a bit sooner than planned?

That's my back up plan if we don't manage to be mortgage free by the age I hope to be, but right now I need a family home for my family so I took on a mortgage I was happy we could afford in the immediate future and didn't worry too much about mortgage length at this time. In reality we should be able to overpay in future to be mortgage free at a good age, but if it doesn't go to plan we accept we might not be able to live here for decades.

I would be a bit nervous about only having £300 left over, we also weighed up lifestyle and house, house is really important but so are holidays etc for us. If £300 left over still enables the family lifestyle you are happy with, then I'd go for it.

I think it’s fine! Our monthly income is around £5200 and we have a mortgage of £1560 a month, plus £1000 childcare a month. We manage ok but there’s not much leftover for holidays etc.

We are early 40's and I think this is something we will do but probably in about 5 years time. And we would take out a 22 ish year mortgage taking us to age 68. We currently pay 900 a month on a mortgage which will end when we are 64. The new mortgage (if interest rates don't increase massively) will be approx £1300 but will base things on our outgoings increasing by £600 a month although our council tax is already the max for area
My thinking is we do live in a lovely 4 bed detached house in a great area. But we have 4 children. They do all have their own bedrooms as my daughter uses what was the faulty large playroom downstairs as her bedroom. But our kitchen is small and so is the garden and can't really extend kitchen as the garden would be even smaller
We need somewhere with a bigger drive and overall more floor space and a bigger garden. It doesn't worry me taking on a bigger mortgage but my husband isn't keen. I feel it is affordable and feel we wouldn't want to be in a huge house when the children have grown up so could downsize again before the end of the mortgage term
Saying that our current income is about 500 a month higher than yours and I would look to increase my hours before we lived adding another 500 ish a month and we would still have plenty left over for holidays and savings
The £300 a month disposable does seem low and I don't think I would go for it unless this amount was higher

Most people in their 40s don't have other options due to house prices.

Its doable, but tight

You are currently spending c£2700 a month, excluding the mortgage, seems a lot, have you closely looked at that?

The £30k in savings could soon get eaten in to if you fin work needs doing on your new house. Inevitably, even if on the face of it work doesn't look like it needs doing, money gets spent when in a new house, to make things 'better'. Have you closely checked and factored in to your sums all the costs involved with moving; stamp duty, legal costs of buying and selling, removal costs? It soon adds up

I think things may be tight for a few years, but should get easier as kids gets older and you could work more, but I would think very carefully about what sacrifices you may have to make, and whether you are prepared to make them, for the new dream house

Thanks for the replies. Lots of consider!

Yes, our calculations include moving costs (stamp duty. legal fees etc)

The house is quite recently renovated to a high standard and I am as sure as you can be that there is nothing likely to need doing there short term.

I do worry that the £300 surplus isn't enough e.g. to save for a good holiday every year and we would have to dip into savings for that which we couldn't replenish.

I may be able to get more hours at work or could look to change jobs to one at a higher salary and / or more hours. But that's not guaranteed obviously.

I am going to chat more to my other half about it all to double check all the figures and look for easy savings. We make a few monthly charity donations and have done for years but these may need to pause for a while.

I like the idea of it being a 15 year house and then possibly downsizing if mortgage not paid off. Neither of us are likely to have any significant inheritance from family at any point.

We moved when I was mid 40’s and added 140k interest only to the mortgage over 15 years, the plan is to sell in about 7 years and downsize. The rest of the mortgage is paid off and the interest only bit costs £150 per month.

We've just gone from a small mortgage of £400 a month to a big mortgage at £1400 a month. Slightly terrifying but we needed a bigger house and 4 bed houses in this area are just crazy prices.

But the house is STUNNING and we love it. We were also lucky to make a good profit on the old house so paid off a lot of bits and pieces we had, plus still had savings. This meant we only had to find an extra £200 a month in our outgoings (if that makes sense).

Our council tax has been the big adjustment. £176‐£230 a month.