Upsizing vs. Rising costs

[MaybeMoving2025]

Is anyone else undecided on upsizing at the moment due to rising costs?
We were due to move just before Covid, but the sale fell through. We decided to put off moving after that, due to how up in the air things were at the time. Since then, things have obviously changed quite drastically!
We would now have around £150k to put towards our next house. The style we’d been looking at before Covid has gone up in price and would now be around £400k. So we’d need to take on a mortgage of around £250k. With rates the way they are at the moment, that would mean monthly mortgage payments of around £1400.
We have a healthy household income, pre-tax around £90k per year (around £5.5k per month after tax). Technically we can still afford the bigger house. I may just be too comfortable with our current small mortgage (around £115k currently). But, the numbers look much more daunting now, especially with the increased CoL. We’re trying to decide if we’re better off sticking with a smaller house.
Is anyone else in the same boat?

Is you house large enough to accommodate your family? Can you extend your current house? Yes we are in the same boat. We tried to move last year but it fell through and there aren’t many houses that come up round here that aren’t massively expensive and a stretch financially. So we’ve decided to stay put for now. However our house is big enough for us to live in, just not as big as we would want in an ideal world.

Hi @Mumlaplomb, nice to hear I’m not the only one feeling this way! We can manage too, but we’re starting to feel cramped. If we extend we’d likely exceed the ceiling price for our area, so we’d rather not do that.
This house was meant to be our starter home. But since moving in, we’ve had 2 children. Moving was always supposed to be on the cards, it just feels much more risky now.

We had to make a similar decision, with similar circumstances, the considerations that helped us take the leap were:

1. our incomes were increasing (we are no longer on £90k)
2. a more expensive house means a more expensive asset, it's effectively a bigger investment with a bigger (hopefully!) reward
3. if it went tits up, we would downsize, the priority was having a comfortable size home for our family whilst we needed it. Now our income has increased less of a consideration.

Thanks @ihith, all very good points. I would expect our income will increase too. And the point about it being a bigger asset is a very good one that I hadn’t really considered.
It sounds like it was the right decision for you.

We were in this situation, unsure what to do. In the end we bit the bullet and moved and are glad we did so far. Our numbers were slightly different to yours… combined income of around £110k and approx £220k equity but house prices are high where we are so we bought at £620k and used a bit of equity for stamp duty etc so we now have a v big mortgage of over £400k with payments around £2k per month. Our take home is £6400 though so we decided we were ok with this as a %. We could tolerate a bit of an increase in interest rates in the future and like a pp said, if it all goes tits up then you just move again. I’d go for it in your shoes.

Also because we are mid 30s we have a 30 year mortgage, but that doesn't mean you can’t downsize again in future once kids are grown etc. In some ways you can view it as temporarily choosing to live in a bigger house and building equity in that asset, not that you are necessarily going to live there forever.

We would probably get a 30 year mortgage too (early 30s).
That’s a good way of looking at it. As I’d mentioned above, I hadn’t really been thinking of a bigger house being an investment.

Just to add we also got a longer term, with the intention to overpay when the kids are grown (or plan B downsize if absolutely necessary). Longer term enables more affordable payments whilst we need them.

We are in the process of moving at the moment and it is scary as going from a relatively small mortgage to kind of starting again with a huge one! At the end of the day we have outgrown our house though. It was our starter home when we were a couple and now we are a family. As we have been here a long time and have a lot of equity I would say we are jumping a step and moving to our forever home so it seems worth the risk.

Also to add that if you feel you have outgrown your current house then it is now generally more affordable to move than to extend. Building work is so so expensive now and you have to be careful that you don’t overspend/overextend and go over the ceiling price for your road or type of house.

Our previous was a 3 bed semi worth 500k and to get an extra reception room, bathroom and bedroom we’d need a double storey extension costing around 150k. However the house would only be worth max 600k because that is the ceiling price for houses of that sort in that area. Whereas now we have a 4 bed for 620k.