Is this house move and mortgage level sensible on our income?

[Bluestar608]

situation - we are currently considering a move from our semi to a detached house.

move would mean putting down a 15% deposit with a 30 year mortgage (taking us to 65)
All fixed bills (mortgage, council tax, car, childcare etc would come out at £3000 a month - the mortgage is £1350) we would have £2000 left over increasing to £2500 later in the year due to increasing hours. This would be to cover food, fuel, savings, all discretionary spending. currently we only have £2k in savings and would be taking £10k out of equity from current house to start some redecoration and cover anything unexpected immediately. No credit card debt. I could probably do with a new car in the next year but happy with anything as cheap as I can but it’s an extra fixed bill!

the home needs cosmetically redecorated with maybe a new kitchen in the next 10 years. House is about 50 years old.

does this seem sensible? Or achievable?
just want to gauge thoughts. I feel like we have a good income and I’m scared to loose the benefit of that to a mortgage.

Yes, but where are you going to get the money for stamp duty, solicitors, agents?

You have zero buffer for anything going wrong
houses need spending on every year
around 1% of purchase price to keep everything ticking over
so say your home is £500,000 that’s around £5k per year for mainetnace
50 years isn’t super old but what’s the survey said?

Personally I wouldn’t, you don’t have much in savings at all, will have a low loan to value and the amount left over after mortgage and bills isn’t huge especially if that needs to cover food and savings as well as anything else.

I’ve accounted for that out of the equity from our sale. Should have said we are sale agreed currently and this would be on the house we would move to

We already own a house with limited buffer. And suppose I’ve just thought that’s the reality at the minute for a lot of people.
not got to the stage of survey yet - already in the panic!

The survey is critical
a rewire for example would be a few grand, a new boiler, etc

Would you be able to afford the house if the interest rate on the mortgage increased by 2% or more? I think in the current global climate it’s smart to expect all costs to oversee. If you can afford that, go for it!

I think 2% is on the conservative side but yes how will you cope when/if interests rates increase or if you have an unexpected expense?

Interest rates are currently at 4.8-5.2%. We can manage with that for the current payment.
is there anticipation things could go to 7-8%. I know we need to be mindful it’s possible but is it likely?

So a net income of £5k per month and mortgage would be £1,350? Seems manageable.

A 50 year old house could need rewiring, replumbing, insulation, windows etc. Renovation costs could be expensive.

I think a lot depends on the survey. Is it a full structural survey or just a homebuyers one? Get a full structural survey done. It will reveal if the boiler will need replacing in next few years, any damp, rewiring needs and most importantly any signs of subsidence. In your position I think you can just about afford it providing you understand you probably won't be able to afford overseas holidays, new cars etc for a good while. If you are willing to go without those things you could probably just about afford it but you'd have to take a careful reign on cash outgoings. Remember things like council tax, electric, food, water can all go up without much notice and as they are essentials you'd have to pay. I'd personally fix mortgage for 5 years so you at least know what outgoings will be and protect against mortgage rates going up. I'd be trying to save a little buffer in case of job loss before I splashed out on redecoration in new house unless you can DIY.

Generally speaking my view is that if you are having to extend the term to 30 years to make it affordable (other than on a first property in your twenties), you are borrowing too much. Can you afford the payments on a 25 year term?

You're asking on Mumsnet, which is skewed towards those who can afford to talk of buffers. £1350 housing costs is really pretty modest, I'd do it. Your earnings will also increase over time, so it's unlikely you'd end up needing the full thirty-year term.

Achievable maybe. Sensible, no. I would want way more than £2k in savings before I did that.

No one can predict the future but yes I do believe interest rates will go up in the next 6 months. I don’t know what things will look in 2-3 years time.

Who knows!
At Christmas there was the expectation that interest rates would drop over the course of 2026. The best rate of savings you could get was 4.1%
And these were thought to drop to closer to 3% by the end of 2026.
Instead inflation is increasing and it's likely that the base rate will stay the same rather than dropping as expected potentially with rate increases if they need to limit inflation. We have looked again and savings rates are up 0.5% compared to at Christmas.

Everyone has different appetites to risk so it's difficult advice in these situations.

My partner and I are very risk averse and what we would do in these situations is different to another. For us that has provided us the luxury of flexibility. When we bought our first house my partner had started a new job he hated. It was a relief to know he could quit if it got too much and find another job. He luckily found another job first. I was made redundant last year and it's given me the option of having a career break to be with my children. My eldest is needing more support since starting school than she did when she was in nursery.

Get a proper survey done and double the cost of any of the tasks you think you will need doing. We bought our last house in 2022. We budgeted for replacing the garage roof, but when it came to it. The joists were rotten too so they needed replacing and there were a few other jobs we realised also needed doing. Cost of materials has increased between buying the house in 2022 to doing it in 2024. The £10k ballpark turned into £17k actual.

I would get the survey results back and go through each room and work out what needs spending now and in the next 5 years ... Then add another 30%.

We thought our kitchen would do us 5 years, then we moved in. Realised the layout was completely impractical. We changed it bit by bit over 2 years but started within 6 months of moving in, it came in at £10k doing it ourselves and keeping most of the existing units just replacing the doors. This did include stone work tops however

Second hand cars have increased quite a bit in price. In 2020 we bought a 8 year old low mileage ford focus for £5k. It needed replacing last year and an 8yo low mileage focus was now over £10k.

Your monthly figures seem reasonable but I would uneasy with only £2k in savings. You need to look at how quickly you can build savings up should you need. When you look through the list of things that need doing and covert to number of months savings. - for example of we saved £2k a month our roof and other bits would have been 8.5 months savings. New car 5 month savings. Factor in Christmas and summer holiday and it might be 1y3m to cover 2 items.

On the flip side having made the move from a suburban semi to a more rural detached I wouldn't have regretted pushing ourselves to get it, as long as it wasn't to the point that I need to keep my full time salary. The change in lifestyle and peace has been worth every penny!

You said that if you were to move, you would have £2,000 after bills are paid, increasing to £2,500.

How much do you currently have left over at the end of the month? is this enough? What would you need to cut back on (if anything) to make the figures work with the new property?

would the move mean you needing to use more or less fuel (for example, would the move bring you closer or further away from work, kids schools/ hobbies etc)

I also believe they’ll be going up. Combined with the unemployment rate being high (and predicted to rise) I would stay put. Even if you go for it how long would it take you to accrue a decent sized savings pot, with bills going up and renovation and maintenance costs to pay? I get the attraction of a detached house but in this awful economic climate I think it’s best in your circumstances to err on the side of caution.

Also - the property market is flat, generally. Are you confident of your house selling at the price you need?

Rather than wonder about your theoretical future life with that budget, think about how you spend now and why, with presumably lower outgoings, your savings are low?

What will change in the new place if you’re currently unable to put much aside? What can you do differently and do you want to?

On paper it sounds fine.

How much is your mortgage / bills now? You have very little in the way of savings. Why is that? If you are spending everything right now then increasing your mortgage is. It ideal.

I’d do it but go for a long term fix for peace of mind. Don’t forget that you’ll get the value out of living in a bigger house too.

I’d want to be reasonably confident that jobs are secure and you’re not planning any new monthly commitments/maternity leave or nursery bills.

We did much the same 7 years ago albeit on slightly less salary but were through the childcare years. We fixed for 10 years at 2.69% and although rates obviously kept dropping initially I’m glad we did in light of the Liz Truss debacle.
Similar age property , we did put in GCH and a new boiler plus general decoration which came out of the 10K we’d kept aside.
I think as long as your jobs are fairly secure or you’d be prepared to get another job doing pretty much anything to tide you over should the unthinkable happen I’d go for it.
There’s still lots we’d like to do ie new kitchen / bathroom. But it’s all decorated to a reasonable standard and works - we’ll just gradually do it .

Will your childcare costs go down soon?

For me the only thing that would put me off is the 30 year term. I'd be looking to overpay as quickly as I can, purely because I really wouldn't want to work until 65.

I would/ it sounds like you’ve got a good sum left over and can start rebuilding a safety net. I remember putting everything we had into our current house when we first bought it. We were sitting on camping chairs for a fair few months as we couldn’t afford to pay for a sofa straight away.

How much more per month will your fixed costs be from current costs?