What the heck to do about house, finances etc...

[Greywarden]

I realise I probably need to see some sort of professional financial advisor about this chaos, but given how amazing I've found Mumsnet for advice about other areas of life, I thought I'd post here!

My DH and I are, superficially, in a quietly good financial position. We both have full-time jobs that pay decently (our combined income is about £85,000 a year, bearing in mind we live in a part of the country with a relatively cheap cost of living, very far from London prices). We own our house outright and own our two cars outright. We have only one DC (no more planned) and are lucky enough to have found a reasonably priced nursery; we also get 15 hours of free childcare, quite soon to become 30. My DH has adult DCs who he sometimes helps out financially but this is not a high level of regular commitment. We have zero debt (university loans etc paid off). We have about £35,000 in savings and are adding to this at a decent rate.

This is a better position than I'd ever imagined myself to be in at my age and I feel very lucky. However, there are some storm clouds on the horizon. Three things worry me.

1. Our house isn't worth very much. In fact it has the bad combination of needing a lot doing to it but also not being likely to increase in value even if we did loads to it. It's a small terraced house with 2 bedrooms (one of which is tiny). My DH did it up himself years ago when broke. The kitchen is 20 years old and falling apart; the bathroom and the floor throughout is very obviously an amateur job; there are cracks in the plaster. My DH did amazingly at the time with the resources he had and basically taught himself to fit all these things / do all these jobs from scratch, but it looks horrendous! Yet even well-decorated houses in our terrace with modern, professional kitchens and bathrooms only go for about £140-150,000.

2. My DH and I have a big age gap. He is mid-50s; I am mid-30s. He is the higher earner of the two of us and has some physical health problems that lead him to want to retire early if he possibly can. His pension will not be great. A big reduction in our income is therefore looming in the next 10 years (and no, I'm not likely to start earning loads more to make up for this - I am close to the top of where my career path is likely to take me and don't have great experience or transferable skills that would allow me to easily succeed in a more lucrative sector. I suppose anything is possible).

3. Linked to the above: at some point I am likely to have a DH in his 70s and a DC in their late teens. My DH's physical health isn't amazing. I have fever dreams of juggling being the breadwinner with care for my DH and university maintenance or general 'launching' support for our DC.

Neither of us are financially savvy at all really. We don't have investments. We don't know what to do with our growing savings for the best. We don't know whether to buy a nicer house (we'd both love to live somewhere less cramped and in a nicer area but I am terrified of a mortgage hanging over our heads when my DH retires). Our house is in such poor condition that I fear it needs quite a bit of investment to make it remotely attractive to buyers, but that could easily swallow the bulk of our savings and I don't think we'd get most of the money back given how low all house prices are on our street. In the meantime we're living in a pretty horrible house, paralysed with indecision, and I'm worried about the future.

Thanks to anyone who got this far and if anyone has thoughts, I'd be so grateful. Again, I do realise that I'm insanely lucky in many ways and that all of these things are relative. And yes, I know that falling in love with someone so much older than me and having a child with them wasn't the smartest financial / practical move, but it's happened, I love my family, and I want to make the best of it all, whatever comes next.

Two "easy" decisions would be to own your house as tenants in common if you don't already, and to make sure savings are either in your name or joint names. Both would help if further down the line your DH needed any kind of state-assisted care.

Ok. So I'm a planner by nature and I think without knowing facts and figures you can't start planning.

So I'd get your house valued as is, and see how much of a gap that is between what yours is now and the recent sold prices of what's on the street.

If it's the same as taking your money and ploughing it into the house then I'd just not bother.

Look at what you want to buy, you're still mid thirties, you have eons to do this and pay it off. I've got friends that age not even on the property ladder yet. And eventually nursery costs will come down.

Work out what is reasonable for you to buy and look what mortgage costs that would bring.

if you decide to stay put I'd use some of your funds to do up your house slowly anyway. You should love where you live and if you decide it's your forever home then you should make it as such.

I'd divert some savings towards doing/re-doing some of the bigger jobs in the house. Wouldn't take on a mortgage or plan to move. Seconding what PP said about owning as tenants in common.

it is likely if you sell your house would appeal to a developer or a young person with building skills looking to get on the property ladder so get it valued, if done up it would be worth 140,000 and currently is worth 100,000 you either use 35,000 to make it a 140K house, or you sell at 100k and use the 135k you have with your house value and savings to buy a ready done up house for 140k ( with no housing costs you should be able to save another 5000 reasonably quickly especially if you do a bare bones frugal 6 months.

then you ask would you rather do up the house you live in or move to a similar size already done up house (albeit perhaps not to your taste)
if your DH is mid 50's and wants to retire early he has approx 10 years more at work and maybe 12 till state pension age

as you are in your mid 30's you could take a small mortgage of say even 50K over 15 years so paid off by age 50. our buyers maybe limited but long term selling for 100k and keeping your 35k savings to use as deposit for next house
if you then took 50 K mortgage would 185k ( including legal costs get you something you would like in your area 2 double bedrooms or 2 doubles and a box room, which maybe DH could use to do a PT desk job after retirement just to payfor luxuries

could you once your child is in school actually live on your income ie would your income pay for food heating utilities transport, if DH retired you would not need childcare and Dh's pension pay for the extras?

you need to sit down with a paper and calculator check DH has enough years N for full state pension, what your bare bones outgoings are, what extras you like you can't live on baked beans for years

you have options sometimes writing them down and a list of pros and cons actually helps decision making but without figures you can't sensibly discuss it even between yourselves

what is important to you, is it being debt free or what

Imagine life with a teen, who wants to have friends visit, would the house work,? If not then move upwards but base it on your salary however have joint life assurance so it pays the mortgage if anything happens to your DH

Is your DH employed? If so does he salary sacrifice additional pension contributions, worth doing so even if for a few years.

Do you have life insurance? A will? What will your step children inherit?

You have nearly 30 years of working life left so I would move and take on a mortgage.