God OP, I'm pleased that you can take the full maternity leave you want - but what a price you're having to pay to do so, both literally and metaphorically.
So, this is now going to be funded with savings - which you'd planned to use towards a deposit for a bigger place. And, you say you'll have to be really frugal. Furthermore, if those savings aren't enough, you say your DH will take out another loan so you can delay your return to work. This suggests that potentially all of your savings are going to be used up to afford ML - and that potentially, if he takes out a loan, there will be another outgoing for you to service.
This is madness.
How long will it take you to replenish those savings once you return to work ? How long will it be before you can move somewhere larger ? Will you have gone stir crazy by then ? Maybe a year in a less than ideal property is bearable if you can see light at the end of the tunnel, but if the answer is you don't know, then there's a huge risk you will, as you say, become "bitter and twisted" if you and your family go without while your MIL remains rattling round a huge house without a care in the world towards repaying what she owes.
As others have said I can't begin to imagine - completely - how hard this must be for you. How you must be seething at the injustice of it all, and at the betrayal MIL has shown by reneging on her promise - and perhaps more than anything, the lack of loyalty your husband is showing towards you. I understand, of course I do, that you don't want your marriage to break down .... but on the other hand, what sort of marriage will you have if this continues and nothing's resolved ? What your H has suggested, (which is ridiculous when, for a start you own 2 classic cars which could be sold to raise some cash - why on earth can't they be sold ?!?) and is only a stop-gap "solution" to the immediate issue of maternity leave. It does NOT address the issue of MIL coming good on her agreement, and it pushes you further away from moving. That's a hell of a big thing to impose upon you. Has he actually discussed what happens NEXT ? ...... or is he hoping you'll be effectively "shut up" for the next few months and that by the time you return to work, at which point the household income will presumably increase, you'll have "forgotten" all about MIL ?
IF he had a concrete plan regarding getting MIL to pay up then maybe I'd "buy" what he's suggested. IF he'd said he was going to go up there and commandeer her antiques and art so this was sorted once and for all then okay, maybe I'd countenance borrowing some of the savings in the short term while those sales were arranged. And failing that, IF, he believed there was some extenuating circumstance which meant he couldn't enforce MIL's agreement right now, then I'd feel a lot happier if he explored all possible other avenues of raising cash first, and before he started talking about further loans - and the 2 cars are quite obviously the next thing to use if MIL can't/won't play ball at the moment ....
.... but that possibility doesn't even seem to have entered his head at all. The more I read the more I think that he's his mother's son alright. SHE doesn't want to sell her "precious" things. HE doesn't want to sell his "precious" things. SHE'D prefer to live on credit/loans rather than face up to her situation and utilise the assets she does actually have (equity, antiques). HE'D prefer to live on credit/loans (potentially) rather than face up to his situation and utilise the assets he does actually have (cars). SHE makes promises and doesn't honour them. HE also makes promises and doesn't honour them .... it's all very well him saying that YOU agreed to MIL's loan and that the current impasse is now between you and her, but YOU, as a couple must have talked about the loan, and YOU, as a couple must have agreed to do it on the terms originally suggested. Would you have agreed otherwise had you known that she'd be avoiding all talk of repayment over a year later ? - of course you bloody well wouldn't. I think it's disgraceful that he's lumping this on you now - he's more or less implying that if you don't like the current situation you only have yourself to blame !
It seems you now have little choice but to confront her yourself as your H refuses to do so. But I have no idea what you can do next if she still makes excuses ...... I don't know if you'd be able to take legal action to recover this for example, but even if you could, I'm sure that given everything you've already told us your H would be furious and any such action by yourself would spell the end of your marriage. I think he's washed his hands of this - he obviously won't object if his mother repays the money, but doesn't seem that bothered if she won't. I think in his head, he's already written off this "loan" - which makes a mockery of the whole thing. You certainly don't have anything to reproach yourself for as you undertook all this in good faith - but he has let you down big style. Of course, him applying some pressure to MIL may not have the desired effect either but he could at least try and chances are she may be more moved by her son's pleadings than yours. Him not even trying though must feel like a kick in the guts.
I'd like him to explain, totally clearly, no silly platitudes, what he intends to do NEXT if you appealing to MIL's better nature has no effect ? What does HE suggest then ? What will HE do if YOUR efforts come to nothing ? This was a joint agreement and he should also be doing all he can to resolve it. You know, it's even occurred to me whether or not he's gone behind your back and made a different sort of agreement with MIL entirely - in other words he's gifted her this money, told her not to bother repaying it or whatever - but is keeping up some sort of pretence about there being a loan to avoid you going apeshit. It just doesn't add up otherwise and I'm afraid I have to agree with the poster upthread who said he's being a prick. I know that sounds hard but right now he's pouring your hopes of moving down the drain and has no sensible or fair suggestions for sorting this out. He'd rather his wife and child lived in a too small property than risk "upsetting" his precious spoilt brat of a mother.
Do you really really think you can live with this forever more ? I should imagine that unless MIL pays up in the very near future, with heartfelt apologies for having been so selfish, that you'll soon get to a point where, even if she does eventually pay up some years down the line, that your marriage will have been irretrievably damaged anyway. And what if she doesn't ever repay the loan ? ..... how will you be able to live with the knowledge that your own husband was so utterly disloyal, caring only that his mother kept things and a property that was unquestionably vastly too large for a single person, while you're stuck in a small flat ?
OP - I wish you every success for attempting to get through to this selfish bag in November, but if you don't, and your husband still just, in effect, shrugs, what will you do next ? I don't know how anyone could live with that level of betrayal. If he was as concerned and as worried and upset as you are, it'd make all the difference - if he was prepared to bring pressure to bear, it would be different again. If he was 100% on your side, as he should be and unfortunately, his mother point blank refused to pay back - then at least you could move forward knowing that your husband had done all he could. Right now though, it seems like you're down £15K (plus interest) AND, are having to face up to the awful, gut wrenching realisation that you and your child are beneath his appallingly entitled mother in the pecking order. I'm just not sure any marriage could survive and prosper in those circumstances, you would never be able to trust him again or feel secure that he has your best interests at heart. I think even if you do succeed with MIL - and obviously I hope you do - that this whole business will have struck a body blow to your marriage .... because there is no justification for his attitude. He will have one hell of a lot to make up to you - and I don't really know how he can do that TBH. I'm very very sorry he's behaving so appallingly towards you.