A (Theoretical) House Buying Question

[EllieQ]

Short version: Would it be ridiculous to move to a more expensive house that has the same number of bedrooms, only slightly more floor space, but is in a nicer area and in catchment for a well-regarded secondary school, when we really need an extra bedroom for a home office?

Longer version: DH, DD (age 7) and I live in a small two-bedroom terraced house, and since we both WFH part of the week, would like to move to a house with a third bedroom - just a box room would be fine. It really is a small terraced house - two up two down, front door opens into the living room, small extension at the back for the kitchen. It’s probably worth about £200-220k and we have £130k left on the mortgage. We’re near the city centre, and the area is mainly young couples in their first homes, plus some student houses. The area is fine - not rough, could be described as up and coming. We are in a northern city which is generally thought of a desirable place to live, with high house prices.

I have seen a house for sale for £300k, which is also two bedrooms, has larger rooms, an actual hallway and landing, and a larger kitchen and bathroom. It’s in a nicer area, closer to DD’s school (we are just outside catchment at the moment), and also within the catchment for a top-rated secondary school. Hence the price!

Our household income is £50k and we are fairly comfortable on that - small mortgage of £750 (though it’s gone up since the summer) and don’t have to count the pennies or worry about putting the heating on (though we have a generally frugal lifestyle - no expensive hobbies, designer clothes, big holidays etc). No inheritance expected, both in fairly secure (but public sector) jobs.

This is all theoretical as there is no way we could get a mortgage approved and our current house on the market before the house I’ve seen sells, and I know it seems stupid to increase our mortgage by £80-100k and not have an extra bedroom!
But we are unlikely to be able to afford a larger house in the area we want to be in, so it’s likely to come up again if we do decide to move before secondary school applications.

So, is it worth doing, or am I just being swayed by the thought of a house with slightly more storage space, a hallway where we could hang coats, and the original doors and fireplaces of this particular Victorian terrace?

That depends, does the increased size downstairs mean you'll have space for working? If not, you'll end up feeling like you've outgrown the place very quickly.

Sounds a bit like you are not sure what your priorities really are.

If it's the particular school then you may need move to a place that does not give you the additional space you would really like, even though it is more expensive.

If the space is more important then maybe look at schools a bit farther afield and then houses you might be able to afford local to those to see if there is some 'happy middle'.

Also, if you have not already, you might want to use some online mortgage calculators to check what recent rate raises might mean you would have to find to service higher borrowing of various amounts.

Also, if you are in an area where secondary entry is from age 11, you have a couple of years to make sure the next step is the right one for you.

Lastly, almost everyone is now expecting a downturn in the property market over the next year or two, so that could change things as well e.g. making the price gap between what you have and what you would like lower.

It’s not much of a change downstairs - currently I work at the table in the dining room, as does DH (we alternate days at home ), and in this house I’ve seen, it would be at the table in a slightly larger dining room! However, there could be space for a cupboard to store work laptops etc, which we struggle with now. The other option would be setting up a desk on the landing area - there’s a chest of drawers on there in the Rightmove photos, so should be space for a desk.

£70k equity give or take.
£230k mortgage on new house give or take

£750 current mortgage
Would it be unreasonable to suggest new mortgage would be double at about £1500? Just checked, more like £1300 but they werent keen to go much above £180k borrowing so deposit will be a battle.

Household income of £50k before tax or after tax?

£50k is about £3-3250 per month after deductions

Are you happy to have 40-45% of your income on mortgage for a better area but not much more house?

@JohnnyM A very good point about priorities! For me, I think it’s the school and still living fairly close to the city centre so we can walk/ cycle most places, which means we’d have to accept spending more money but not getting more space.

@Tessasanderson I hasn’t thought about mortgage payments being such a high percentage of our income, which is about £3k per month. That’s higher than I’d be comfortable with, really. We’d also need a shorter term mortgage as we’re both mid-40s (20 years max), which would make monthly payments higher. Something to think about.

I appreciate all the comments, thank you!

If you aren't needing to move soon, I might be tempted to watch the market for a month or two to see what it is doing where you are- and also keep an eye on interest rates. Or if you don't want to hang about, look at Zoopla for prices actually paid recently compared to aksing prices, the info is there if you dig for it enough.
If- and I emphasise if- prices are falling where you are and where you want to buy, that's good for people like you wanting to trade up, because if yours drops in value by the same percentage as the one you would buy, the actual gap narrows, so it might be worth waiting. But OTOH, you still need to keep an eye on mortgage rates as well, if they are going up you may need to consider moving sooner rather than later.
This is all very tricky, because despite the claims of some on here to clairvoyance, only the gods actually know how long any interest rate rises or price falls will go on for.🙄