I will give rough numbers here for context as I think it’s too difficult to answer without them but I’m rounding up/down a little for the sake of ease. Sorry for length but detail needed I think.
We currently live in a 3 bed semi worth around 500k (south east) with an outstanding mortgage of 280k. We have 3DC and are rapidly outgrowing it particularly the bedroom space. We have viewed some properties and are looking to move to a 4 bed priced at 600k. However we’d need to release some money to fund the move as we don’t currently have a huge amount in savings - around 8k - as I’ve just finished Mat leave. Therefore to move we’d need to add approx 120k to the mortgage.
We’re currently still on a very low fix rate of around 1.8% that is due to finish sept 2025. Therefore our mortgage broker is saying that we’d be best off porting our current mortgage for the 280k and getting an additional 1 year mortgage to cover the additional borrowing of 120k and then when our low fixed rate ends, get a new mortgage to cover the entire borrowing.
I can’t help but be really worried about mortgage rates going up in the meantime though and then being in a position where we are taking out a mortgage we can’t comfortably afford. We have been on a low rate for such a long time that we have got really used to our mortgage never being a worry.
Some more numbers for context:
Current combined take home pay is just over 6k after pensions and student loan
The current mortgage is only £1080. Once our low rate ends, if we get a new rate of around 4.5% then this will already increase to £1450 if we don’t move. If we do move then it would be around £2k per month assuming we’re on a 4.5% rate.
In terms of other outgoings, I won’t list them all but we do have 3DC and two cars (one we bought outright and one that has a payment of £250 a month for the next 3 years). Usual other expenses of council tax, bills, food, general life. We actually don’t spend much in childcare due to flexible working, family help and the 30 hours funding. No other debt apart from DHs student loan which he is on track to pay off within two years. The affordability calculators tell us we can borrow up to £460k so we are well within that at 400k. I do also have scope to increase my income if needed as I’m part time and employer would like me to increase my hours if possible, although we’d have to spend a fair bit more on childcare if we did this particularly during school holidays so Im not sure it would be entirely worth it.
I use a zero based budget and save for irregular costs such as car MOT in sinking funds throughout the year and I’ve calculated that on the new mortgage rate from sept 2025 we would save around £800 per month if we move but if we don’t then this would be £1400. However this all assumes that interest rates will still be 4.5% ish in sept 2025 and current world events etc are making me nervous about rates going through the roof and then being stuck already living in a house that we can’t afford. WWYD? Thanks for any advice. I know no one has a crystal ball but just not sure whether it’s an unnecessary risk.
(usual disclaimers - I have posted this in money not in AIBU so I’m hoping not to get a load of people saying how I’m just lucky to be able to save anything etc etc - I’m aware of this. What I’m asking is whether it seems sensible/financially risky or not to move and take on a bigger mortgage. We both have FTE salaries of over 60k so are very fortunate but also therefore really should be in a position to save a healthy amount each month)