Should I move to a cheaper house or keep saving for the dream house?

[honeylife]

Hi, I am not really sure of which option is the best.

My DH and I are trying to get pregnant and we currently live in a very small 2 bed flat which is currently worth about 160k. If we sell we would probably get about 50k from the sale and we currently have 60k in savings.

This flat is in a cheap, slightly rough area and this is why we are able to save about 20k per year (the mortgage repayments are low and we don't have children).

However once we have children we plan to move to quite an expensive part of the of the region. We would probably need to save another 50-60k for a decent deposit to allow an affordable mortgage repayment rate on a house in this area.

What would you do?

Option 1: Stay in the small flat. Continue saving 20k per year for the next 3 years and after that move to the nice part of town. In 3 years we will probably have a toddler and possibly a new baby. With this option, would you turn the small room into a nursery or keep it for guest? My mum or MIL may spend some time with us when the baby is born so they would need somewhere to stay

Option 2: Move to a small 3 bed house with a small paved garden just down the road for 250k. Still in this slightly rough area and not a great looking house but gives us the space we would need whilst still allowing us to save a similar amount of 20k per year. As we would have 110k after selling the flat we would put half of this on the deposit for this house and the rest to get a small investment buy-to-let. We would probably stay there for 4-5 years (until the first child is old enough to start school) and then move to the nicer part of town.

Option 3: As we have a decent deposit after selling the flat (110k) we could move to a mid-range area in town and get a decent 3 bedroom house for 450k. We would not be able to save anywhere near 20k per year due to higher mortgage repayments (probably only 10k per year) but we would have a nicer house which we could stay in for 5-7 years.

I really cannot figure out what to do!

I would aim to move as little as possible. If you can move to the forever home in 3 years I would keep saving. Moving is so bloody expensive, stamp duty is eye watering when you get above £300,000k. We bought a mid move home and are moving just 3 years later. I really wish we'd been patient and saved for the forever home (hindsight is a wonderful thing!)

But then I suppose it's how much it hinders your lifestyle in the mean time. Work out all the moving costs and see if you're happy to pay that out twice in 7 years.

Stay where you are for now and keep saving for the dream home. You'd be fine for a year or so with one baby which really gets you most of your way towards your target. Baby sometimes don't always come along when you want them to (and vice versa).

Stay put and keep saving.

I'd also stay where you are. Little kids don't take up much space. I had a friend have two kids in a one bed place in London!

And a falling housing market, if it happens, will make it easier to trade up. Hold tight for now. Moving house is an expensive nightmare!

You will want baby in your room for 6-12 months probably. Stay put your saving is amazing. But time moving to make sure you are definitely living in the primary school catchment you want to apply for by the time you need to go to open days (it is sooner and more crucial than you think).

Can you really keep saving at the same rate as you are now when you have a baby? If so, stay put and move when the baby is 1ish, that's when they start needing more space.

Stay put and keep saving. Your life, aspirations, lifestyle, finances will change so much once you have children, it's hard to make such a long term decision now. Whatever you do, you'll need to apply for schools in the year your child is 4 and be living near the school/area you want to settle in then, so the mid size home for a short term move is probably not advisable. It's all very abstract until it's reality so I think keep saving where you are and make choices if/when you have a young baby. I wish we'd waited another year before we moved, even though we had a 12 month old when we viewed and offered on our current home, we would have made very different choices a year later when I had our second and we're looking to move again within 5 year of moving in as our priorities are very different now

@Blacksideupanddownagain yes excellent point, we are having to change our children's school now which I feel so guilty about and it's going to be so much harder getting them into a good school mid year rather than at 4.

Stay put for as long as you can and save for as long as you can. You could stay in a two bed even until you had a second DC. Guests could have a sofa bed in the living room?

You could keep second DC in your room until at least 6 months and even after that the DC could share.

You could save for another 4 years. You aren't pregnant yet are you? So perhaps almost 5 years?

Loads of options to help you stay put and keep saving.

Move to a long term home before school though.

Stay in the flat and keep saving

Thanks for all the replies and great advice.

I personally prefer option 1 but DH prefers option 2.
Option 2 would probably cost about 10k in total for stamp duty and fees etc. Need to convince him we can have 2 babies in a flat.

@SciFiScream - Sadly my mum and MIL would not be happy with a sofa bed if they came to stay as they would probably stay for weeks rather than days. Lol!

@Ohhgreat - once we have a baby, we could probably manage to save about 12k per year due to maternity pay and then childcare costs. We also wont go on many nice holidays!

Get one of those fancy triple beds - a single on top, double underneath. You could have that in your room.

Saving money by staying put and saving money on moving - is a no brainier!

Option 3. Don’t live somewhere small in a slightly rough area for years when you don’t have to.

Option 2 seems like the least sensible. I can’t see the rationale behind the buy-to-let. You need to spend your available money on your home not on a potentially risky and troublesome ‘investment’ property.

I’d go with option 1 for a year or two, then weigh up your options again.

I would wait for the property market to hit rock bottom post brexit/covid19 and then upsize as the jump up would be smaller.

I would buy the shittiest house in the nicest area. One that could be made beautiful and bigger with attention. So a nicely situated but run down house that could be made bigger either through loft extension or ground level extension. A 1970s kitchen, carpets and bathroom suite Are perfectly livable as long as the electrics, roof and gas can be made safe.

I’d then save. Either getting the work done gradually while living in the property or in one big foul swoop (moving out for 6 months or a year).

Either way finances will be much much tighter when babies come along. Also moving house while pregnant isn't ideal. I’ve done that twice and almost gave birth with removal vans on tow

Buying the shittiest house in the nicest area means you can have access to nice schools and be there longer term

@Porridgeoat what's a "nice" school? A school with only a certain section of society's children you mean? The town I'm moving to that Mumsnet hates has excellent schools, but are they not capable of being "nice"? I thought we were looking for good schools, not nice ones!

Id go for option 3 if you can buy an near half million pound house and still save 10k a year ,that seems a good option. Although why would this only be okay for 5-7 years ?

Option one for certain

North - you’re putting words in my mouth that aren’t there.

Haven't read the full thread but bear in mind you will be allowed to borrow more before you have the baby, and the application process will be much easier. Once you've had the baby you will automatically go down a few ranks in the affordability checks and lenders will not want to lend as much or as readily. So it could make sense to apply for your big mortgage sooner rather than later (making sure you can actually still afford the repayments once baby comes obvs).

Also I would say bear in mind baby may take a good couple of years to make his or her appearance.

And calculate stamp duty, moving costs and solicitors fees..... not to be underestimated!

OP having read your post again, I would say this. The first 5 or so years of having your baby are so full of meeting new mums, having them round for tea etc. I was actually in a very similar position to you - house a bit cramped and in crappy area. I really hated it that I couldn't have my new friends round for a coffee or a playdate as our house was small (and I was a bit embarrassed!). They had all mostly moved into nicer homes in the nicer neighbouring area before having their babies and I must admit I felt jealous. Also, the kids all went to the nursery together and then moved on to the pre school together (in the neighbouring area too) so the mums and the kids all bonded and moved through the years together. I felt like a bit of an outsider if I'm honest.

Plus it can be difficult if a new kid joins Reception with a class full of kids who all know eachother from village life and pre school. Not a big problem perhaps but you might just want to consider it if you'd be moving to a new area when child is about age 5, if it was far enough away that you'd have to "start again". Kids can make quite good friends in pre school and if you move away at that point when LO starts school, it could be hard.

I suppose what I'm saying is think about what childcare you will use and what nursery and preschool they will go to.
HTH

We personally trumped with option 3...which was lucky as I had already fallen pregnant but didn't know when we put the offer in 😬 do you really want to move with two kids under 5? Babies are small but they come with quite bulky things I.e. do you have space for a buggy? What's the access to your flat like? Imagine two young children, in a flat, in lockdown...lord forbid this ever happens again!

I would say look for 3 beds with 'scope'...we could double the size of our house if we really wanted to or we could move on albeit we'll be stung with the moving costs but we've giving ourselves breathing room. We still have a few options on the table without stressing that we 'have' to move because of lack of space.