Moving up the property ladder on one income?

[fluffygreentail]

We are running out of space with two preschoolers in a house with smallish rooms. Since the summer, we have been starting to think about buying a larger house but only have one income.

Looking at finances, we would be increasing our mortgage to net income percentage from 22% to around 33-37% depending on how much we borrow and the price of house we end up buying. We'd still be able to save a few hundred after bills/higher council tax+ estimated increase on utilities/food/having a few days out but that seems tight. We seem to get a run of quite months when we have to drop money on unexpected things (things which cost several hundred) and then nothing for months after. Children get more expensive as they get older too.

It seems like the right time to make our next and final move but not sure if we are cutting it too close to the wrong side of manageable. If we don't do it now, we'd never do it.

Or, being naturally quite frugal, we continue to save to add to the rear of our house but due to space constraints, it wouldn't be a huge extension or just start overpaying our mortgage.

Any experience of this situation?

Thank you.

I think when op is talking in terms of being able to save a few hundred in a month and not a few thousand then unless the mortgage is relatively small then IO may be dangerously risky.

if you know that some months you can pay 4k in overpayments (or 3.5k) it means you have in some months at least a very comfortable income...and that is vastly different to living v frugally and some months being able to pay an extra 200£ or 300£ and some months having that eaten up by new tyres for the car etc.

it does depend on the actual figures, where the house is, house values etc

I disagree.

The whole point is that IO is a good option if you can afford the repayments.

If you can't afford the repayments then you can't have a repayment mortgage anyway

I think you're being blinded by my figures. My figures are irrelevant to the point and were merely illustrative.

The fact that I'm a high earner means I'm less likely to need the flexibility the IO mortgage offers.

When the OP talks about overpayment she was talking about overpaying on a repayment mortgage.

ah ok - so you work out what repayment mortgage you can afford; then opt for a IO and have the flexibility...that makes sense.

(the issue pre 2008 was we were encouraged to take out max IO we could afford in order to buy a reasonable home to live in....and worry about the repayment later...)

I remember it well!