Pay off mortgage or move to bigger house?

[SleepysaurusRex]

We have been intending to move from our very small 2 bedroomed house for some time now, but due to various reasons it has only recently become achievable. We have two dc, aged 5 and 2, and our current house is in a very desirable location. We would like to gain an extra bedroom plus more living space and a larger/nicer garden (we have a reasonably sized one but it is very overlooked).

With our budget it is likely we would have to move to a slightly less nice area and would be at the very top of our budget to tick all of the boxes. The alternative is that we stay put, potentially add an additional bedroom by extending into the loft or dividing one of the 2 (decent sized) bedrooms, and pay off our mortgage in around 10 years (by which time we'll be mid/late 40s). There is no scope to extend outwards to increase living space.

So my question is...what would you do?

If the bedrooms are big enough to have two windows each then it can't be a small house?

I would rather live in a nice area without putting myself under financial pressure.

It is small, believe me. A typical two up two down Victorian terrace with no hallway and an open plan living/dining room and kitchen. Total floorspace is 62 square meters. We would be adding a window to divide a room.

The idea of financial freedom is definitely swaying us though!

I would move - in my experience, as kids get bigger, they need more space.

How much would it cost to extend upwards? It might be financially worth doing the work if it will mean your house sells for a better price, so you'd be less maxed out when moving.

I would move too. Your dc are little now but one day they'll be adult sized.

DH and I paid off our mortgage mid thirties, less than a year later we moved to a bigger house and had a mortgage again. Financial freedom was great but a more spacious house is even better for us.

We were within a year of paying off our mortgage and we opted to buy a bigger house last year (we're already in our early forties). No regrets - we have a loft room that's a den for our children (and expect to be used even more when life goes back to normal). Plenty of living space and a separate office. We are really pleased with the decision as the kids are pre teens and are already needed their own space. If you can afford it do it.

Yikes, that is tiny. Our 800 sq ft 2 up 2 down began to feel cramped once the boys became tweens. If your less good area is still OK, I would definitely consider moving, eventually. If you have to make too many compromises, now, maybe reassess in a couple of years.

Nothing wrong with keeping a mortgage. Cheapest money you'll ever borrow. Some would say it's a financial mistake not to have one your whole life.
I'd move. Space changes everything.

You say it's the 'top of your budget', which sounds fine. I would move.

If 'top of your budget' means serious financial pressure and concerns, and only just being able to pay bills, then no, it's too much. But if it's affordably expensive, then go for it. Without a doubt.

What are the schools like in the other area (both primary and secondary) and would the younger one get a place still in the older dc's school or would you need to move schools? Having more space is great but depends what the other area would be like. No point in moving if the other area would be awful.

You don't need to pay off your mortgage so early, you could take a slightly larger mortgage perhaps with a plan to downsize in late 50s when dc older. The increase in value of a slightly larger house would be more in 20yrs. Having said that I would consider waiting until the youngest starts school, childcare costs diminish and your earning potential increases.

@ThePurpleOctopus

You say it's the 'top of your budget', which sounds fine. I would move.

If 'top of your budget' means serious financial pressure and concerns, and only just being able to pay bills, then no, it's too much. But if it's affordably expensive, then go for it. Without a doubt.

Completely agree with this. Our two are a bit older and we are thinking of one last house move as it feels too small for when they become teens.

We had 7 years left on my mortgage in a 3 bed semi house with 3 kids. We had to move to a 4 bed semi house very huge footprint and garden. We're very happy with the move last year as our kids have a huge room each to themselves.

I also built a 5m x4m garden room at the end of the garden which gives me space to work while kids are at home this lockdown.

We did pay off that smaller house, BTW. Cheap area so easily done. Took out another mortgage in our mid-late 40s. Not a huge one but enough for both a bigger house and a better area as wee also had savings towards the new deposit. We're in the North East, mind, so house prices are less eye watering, I suspect.

One of the compromises for the better area was garden size, mind. A 5m by 4m shed would take up most of our garden as our originally 35' square garden has both a garage and rear extension cut out of it.

We move from three bed semi to four room semi because when dc were 8&10 the house felt too small.

I would move

Another vote for move. The house you're in is too small for four people long term.

Depends if not so nice area is actually perfectly fine , do you live in the most expensive part of your area and can't see past that. I think if you are sqeezing into a house that doesn't work for you because of the postcode then be more open minded about the other areas. If you become mortgage free what will you do with the extra cash?

Move. Hands down.
You need more space, kids need more independence when they are growing up.
Over a year quite quickly our 3 bed flat (though 100sq m) feels too small. Kids are 12,10 and 3

Definitely move! It's not just about the m2 but also the layout. You will have time to pay the new mortgage off when the kids get a little older.

I was on here this time last year asking a very similar question. Our house was a lovely house - mid terrace, but small garden, the neighbours were noisy in the garden, no driveway and parking was getting difficult. It also needed a new kitchen and bathroom.

I really wanted a garden and husband wanted a drive.

We were mortgage free at 50 and now we've taken on a project, a mortgage that will take us 10 years to pay off. Mortgages have never been cheaper, I'm so glad we moved.

We've got a dog now, a garden, no hassles about parking.

It's worth the mortgage.

If your children are State educated I’d look at what the performance of the schools were like in the less nice area before doing anything else. You can check out and compare data and performance on the gov compare schools site and usually the Admissions section on school websites tell you how far they have historically gone out on offers. I wouldn’t move to a big house in an area with poor schools so that personally would be a key driver.

Also - how less desirable is the less desirable area?! Living somewhere really grotty might get you down, it would me. If it’s a case of just not so nice but perfectly safe I’d consider it.

As others have said - when DC get older, space is a really good thing to have though! From experience, DD1 like many teenagers was a pack animal and we had groups of teenagers descending on us. DD2 has quite a few sleepovers at ours. It’s nice to have the ability to let them have friends over but still have your own private space. Also teenage DC can be pretty hormonal with swings of emotion which living in a small house could make for some tension!

Thanks for all the responses. I must admit to being slightly surprised that so many of you are in favour of moving, but realise that everyone's priorities are different. While our current house is objectively tiny, it's what we're used to and does feel manageable at the moment (I appreciate this may change as the DC grow). We have also experienced job insecurity in the past which I think has made the prospect of being mortgage free appealing to us.

Ultimately I think we will move, but as one wise poster suggested we will probably wait until youngest is in school to give our finances an extra boost, and to ensure he gets into our current (outstanding rated) catchment school.