Should we downsize to save money?

LeanneR79

Hi all. This is my first time posting on this site but need some advice. My Husband recently lost his well paid sales job, mainly due to the effects of the recession. He is now working again but his basic wage is 12k less than his last job! I currently work p/t so while i am earning it's not a huge amount.

We currently live in a reasonably well sized detached 4 bed home with our 3 children but we are beginning to consider downsizing as our large mortgage, of nearly £1000pm, is crippling us! We have seen a 3 bed semi in our area with similar size rooms to ours that would save us around £600pm. It does need a lot of work doing to it but i actually prefer the ide of a project.

My question is is it more sensible to think about the short term and move to make us more comfortable now or to look long term, assume my husband will eventually get a better job, and stick it out for the long term benefits?

My heart doesn't want to leave our home but my head is telling me it's the best thing we can do in the situation. We've always seen our home as an investment and i therefore don't want to look back and regret this decision financially.

Any thoughts would be greatly appreciated.
Thank you.

getmore4less

Moving is expensive so make it long term choice not a short term one.


Look at reducing spends, cut out stuff you can put back later if income increases
no holidays
cheaper cars
no sky/sat
no mobiles
etc.
live in 3 beds and get a lodger(mid week one would not impact as much)

extend term
interest only
both temp solutions.

Thrugelmir

Personally I would take the downsizing route. What might happen in the future is unpredictable.

Why not have a less stressful life? If your husband eventually finds a better paid job then you can choose what to do with the extra money. Pay down the mortgage quicker, increase your savings into ISa's , pensions etc.

Don't look on your home as an investment. There's more to life than owning a bigger and bigger property in the hope its going to give you a comfortable retirement fund.

Niv

Personally, I prefer the extend the term of the mortgage route. I hate all the hasstle of moving, not to mention the cost. You could end up moving to save money then end up hating the house down the line becasue you were 'forced' to move to this smaller house.

How long you have left on the mortgage does have a baring on your options and the realistic chances of your husband finding a better paid job. Cheaper house that needs alot of work does not sound too much like saving money to me either, you never know what problems you may find down the line.

Costs of moving - EA, Solicitors, moving company, mortgage fee, surveys etc etc etc

Costs of extending the loan - in some cases initial £0 (but obviously paying interest for longer so there is a cost there)

lincroft1710

Although one cannot put a lot of faith in "economic forecasts", it does seem the UK faces tough times which no doubt will affect the job market and your husband's new job may not be secure or there will be little chance of a better paid one for a year or two.

The ages of your children could affect your decision, if university is on the horizon then they would only be home for half the year and then they will use the place as a hotel.

You will have to do a lot of calculations and there will obviously be resistance to any move, but make sure the sums do add up. Houses which need work doing can be a money pit even if you try to do a lot of the work yourself.

It is nice to find a newcomer to the board who is sensibly pro actively thinking about their future life, financial position and happiness.

wherediditallgothen

Thrugelmir wrote: »

Personally I would take the downsizing route. What might happen in the future is unpredictable.

Why not have a less stressful life? If your husband eventually finds a better paid job then you can choose what to do with the extra money. Pay down the mortgage quicker, increase your savings into ISa's , pensions etc.

Don't look on your home as an investment. There's more to life than owning a bigger and bigger property in the hope its going to give you a comfortable retirement fund.

This would be my preferred option if I was in your situation. But I'm not, and might think differently if I actually was.

[Deleted User]

Yes downsize. We did just that after we lived in our first home for a short time. There was just nothing left in the kitty every month and we were way out of our comfort zone, that was 38 years ago. We moved from a lovely 4 bed detached, in a close, to a 3 bed semi and boy it made a big difference to our peace of mind and we were much better able to weather the oncoming financial storms

mspoppins

In two years time the housing market will be back on track and you will regret downsizing. When family is involved always think long-term. A 4-bedroom house is an asset. A 3-bedroom project? I dunno... if it needs a lot of work you might be in for a nasty surprise. I've seen people having budgeted £5000 for a refurbishment project having ended up spending £50,000 and replacing the roof.

You would be amazed by how much you can actually save on electricity and heating bills and by changing your shopping habits.

LeanneR79

Thank you for your replies it really helps to hear other opinions, especially from someone who's been in this situation, Kittie.

We have 27 years left on the mortgage so don't really want to increase the term. Our children are still small too 5, 3 and 1 so we're having to think really long term in terms of our family. I think that they will actually get more expensive before they get any cheaper.

We have cut down on everything we possibly can already. Shopping what's that? and we're still falling short every month. Thinking of downsizing really is a last resort and is something we've been toying with for over a year now.

I think (fingers crossed) my husband will stay in work but like someone else said it will probably be in lower paid, insecure jobs for the next few years.

The house we like is priced according to the work that needs doing. We could get something similar that's already done but i'd rather have it how i want it if you know what i mean? I can cope with the idea of moving into something smaller but i don't think i'd be happy putting up with something i'm not comfortable in. It's obviously a consideration though.

There's obviously also the added stress that with the way the market is we might decide to move and ours won't actually sell!

Thanks for your opinions

RAS

Do factor in the cost of the refurbishment. Are you happy to do it up over two or three years, rather than in one splurge.

Because otherwise you will have a small mortgage and a massive credit card and loan bill - and have down-sized.

loobylou232

Also, does the semi have the prospect to become 4 bedroom easily ie an attached garage which could accomodate a double storey extension in the future? this would have a big impact on my decision. I have 3 children and live in a 3 bed terrace and desperately want to upsize to a four bedroom. I would therefore do everything possible to hang on to the house you have now!
Plus moving costs, stamp duty etc etc make moving less attractive.