Upscaling lifestyle

[HaggisMcKilty]

Hi folks,
Looking for your thoughts on lifestyle choices as I now enter my thirties. It's a complicated subject, but I'll do my best to explain my situation below. I'll caveat by saying its very first world problems, but it's stressful for me..!

About me:
I'm a 31 year old professional grossing around £100k/year with two properties. My home is worth around £270k (mortgage free in 6 months) and my rental flat is I.R.O. £300k (50% leveraged) 1.6% APR fixed for 4 more years. My other half earns £50k and is 30 years old, now expecting our first child in 6 months..! Very excited. I have a career average pension scheme, and £700/month PCP car for another 3 years. My other half has very little in the way of pension however.

The ask:
I have a number of options open to me:

1. Continue living within my means and pay off the second mortgage over 4 years. Budgeting for small weekends away domestically within UK (really enjoyed visiting York, Bath, London, Oxford). I could then pay down the car and own it outright at end of term, and begin investing heavily in S&P500 to augment my pension, with aim to retire early (55). The disadvantage is we really dislike living in a terraced house with no driveway. We also hate brick architecture and want a sandstone house (I'm from Scotland and always found it so beautiful). We also find it hard to make friends where we are (it tends to be older people with grown up kids), OR;
2. Relocate from N. England to buy a more expensive property around Oxford (doubt we could afford much for our budget, but we really love the area & weather). It would be much closer to the lifestyle we're looking for, but the obvious disadvantage is being locked into the trap of much greater cost of living;
3. Relocate to colder Scotland, get more for our budget and be closer to family & friends but take jobs with reduced pay (though money really isn't everything). The tax in Scotland is also currentlt higher, and I'm concerned what may happen if they somehow hoodwink people into independence. The upside of this option is, well it feels like home (as dumb as that sounds...)! Somehow this option feels a bit like moving backwards though and I get a gut feel that I might live to regret it?

What would you pick in my shoes? And how important is being debt-free relatively early in life?

Ps. Preference on Edinburgh vs Oxford vs Manchester?

Best,
Haggis

It's a good point to be fair..! Because my pension is career average I think it locks me to state retirement age (67). If I take it early it penalises me, but I can offset using private pension (part of my option (1) above. Any experience using a SIPP?

To be honest it's more my girlfriends friends and my family. My own friends are scattered around London and Northern Scotland. I found making friends easy when moving around the UK in my 20s but it's definitely getting a lot harder into the 30s 😳. Partly why we've remained in N England is to be within weekend commute distance of her support network.

It's a sad truth, and one I can only see becoming worse as uncertainty continues (to put it politically sensitively). Working from home may be the saviour, but most jobs are beginning to require proximity to an office as a minimum. I guess there's always plan B: emigrate to USA/Canada 😅

You never know, Scotland may gain independence, be fast tracked to EU membership and end up more prosperous than the rest of the U.K.

We made a few decisions that served us well both financially and in terms of lifestyle

being near family helps

don’t overextend on the house if you can avoid it

focus on function of the house, not appearance

Most importantly, think about schools now, don’t wait until it is time to send kids

I suppose its possible..! Though it feels akin to Brexit: cutting off easy access to your biggest market. Either way, what will be will be! Just trying to reduce my risk exposure with baby McKilty on the way 😂

Function of the house is a really interesting point. What sort of things did you look for? Proximity to schooling, public transport?
I've always been a sucker for old Georgian blonde sandstone and sash windows.

I used to work in financial services in Edinburgh. Plenty of people in the dept I worked in would have earned £100k so it’s not impossible if your experience is in certain sectors (I wasn’t far off when bonus was included and I was far from senior). House prices are high though and the type of sandstone house you are looking for (especially if you don’t want terraced) could be in the region of seven figures.

Function is so personal. We wanted detached to minimize noise, off-street parking, and space to work from home, which we both did regularly even before Covid.

for schooling, you need to look at all the schools your child could likely end up attending if you buy a particular house and decide if you would be happy with all of them. Don’t just look at early years because you may be in one place a long time. In especially dense areas this does become tricky.

I’ve been trying to formulate a response, but my brain keeps going back to £700 per month for a car! Could you change your car to free up more per month, which might then help you decide which location would be doable?

Definitely Edinburgh!

But you would have to take on a huge mortgage to go from a £270K brick property in the NE to a Georgian sandstone house in Edinburgh.

You can’t even get a decent 1 bed in Edinburgh for much less (if you want a character property and relatively central).

How would you feel about having a mortgage again after being so so close to being free?

Good point namechanged . I was saw £100,000 income and mortgage paid off and didn't really think about the value of the existing home which yes wouldn't stretch too far in many areas of the country now sadly. Also OP now sounds less positive about going back to Scotland anyway for work and just life. Still stand by the view of making things work in the region you most want to be in as it is east to get stuck somewhere and this has lifelong implications -I had not child care support near by as no family so had to work to create my own network and later was whizzing up and down motorway to see elderly parents at times of crises. I didn't really understand how this would feel when we chose an area for financial reasons and made a life . Wish we'd gone for the smaller shoe box house nearer to home and progressed from there in hindsight.

Can you put some focused effort into building the support network where you are? Me and OH live away from both families but between work socials/bumble BFF, new mum groups, etc we have built a great support network here who are every bit as good as family! Does take a bit of concerted effort though! But if that’s all that Manchester is lacking….

Function of the house is more about the layout and flow and efficient use.
For example a period three or four storey town house with the sitting room on the first floor, might be quite hard work with a family, consider running up and down with laundry and toys and let's not talk about vacuuming so many sets of stairs.
Open plan living can be messy and expensive to heat. Period houses are often damp and cold.
Young children need to be on the same floor as their parents. Older children can have an En suite room on a different level.
I like to park on the drive and use the front door but others choose to park at the back and take their shopping in the front door.
I prefer somewhere with gas to oil or LPG.
How do you shop and cook? do you like a galley kitchen or a live in kitchen with sofas and TV . How important is a utility room/ laundry room will you have pets, lots of gear for hobbies? Walking boots , golf clubs, etc etc.
You have made prudent decisions so far but I am also alarmed at the monthly car payments I would say it is a very an unwise use of funds.

I guess the way i'd justified it in my head was that as a household (our net being ~£8.5k/month) the £700 wouldn't be missed, but I do see how much quicker the debt would be paid off without this. It's an EV and cost £0 to run each month in terms of "fuel" so hopefully that makes it somewhat better..! 😅

Yeah it's definitely offputting to be honest. As of this moment, it'll take me around 4 years before i have £650-700k capital available, and would then need to add around £300k mortgage to get the dream house in Edinburgh, which would easily add another 3-4 years onto that journey to mortgage freedom. Then i'll be nearer 40 than 30 which is a big difference for investing in stocks... Might be time to scale back my ambitions.
Are there any particular areas of Edinburgh you'd recommend for something maybe more down to Earth in price?🙄

Given the current rate of inflation and your current childless stage of life, I think your overall strategy is unrealistic. Agree £700 per month for car payments is a lot. That money should be going towards a pension. Given the changes in capital gains tax, car tax for electric vehicles etc no way will you be able to retire at 55. Try reading about the FIRE movement. Good luck with the baby etc.

Not sure about cheaper areas to recommend, as I’ve always lived close to the centre.

However, my parents live in the lower half of a Victorian stone villa, so while not technically detached, has all the advantages of a front and back garden, curb appeal, garage etc but for half the price of a complete villa.

There are loads of these in good central areas such as Bruntsfield, Grange, Morningside etc. I think theirs was last valued at £800,000 so a lot cheaper than a true detached. In fact whole townhouses or villas are in fairly short supply, the majority have been subdived.

For example, like this one. I know it’s maybe not the most attractive, but gives an example of a more reasonable price for the type of building. In fact I used to go for piano lessons in this property and it had a lovely garden in the back.

www.rightmove.co.uk/properties/127622843

Or this one, round the corner from where JKR used to live.

www.rightmove.co.uk/properties/124797947#/?channel=RES_BUY

I’d go for Manchester

Op can easily afford 700 right now
Young
Earning loads
Presumably loves the car

Would you go for something like this?

After your update, I wouldn't discount Oxford actually. Especially if you have a good support network in London.

Oxford will give you relatively easy access to London and the financial uplift / career development that provides (for most careers anyway) and I think there are quite a few similarities in the "feel" of Edinburgh and Oxford.

Something like this?
www.rightmove.co.uk/properties/129302987

£0? Who pays for the electricity then?