FTB with family - cheaper smaller house or bigger more expensive?

lindsaygalaxy

We are in a bit of a debate at the moment, and hopefully someone with some wise words can help us! With 2 kids, we are still FTB's in a pretty expensive part of the country. 1 is at school so don't really want to move schools or away from families.

We are unsure to buy a cheaper end house that we will probably grow out of in the next 3-5 years, or a bigger more expensive house that will stretching us (not to starvation or anything but leave us a lot less money) which we won't need to move from due to size.

Any advice please?

BitterAndTwisted

If you can afford a larger more expensive property now I would consider buying that rather than a smaller less expensive one. Selling up and moving will cost you estate agents fees, plus two lots of conveyancing and a survey on the next one which could prove more expensive than buying a larger property now and staying there for a decent amount of time.

pinkshoes

Depends how much the larger house will stretch you. Will the mortgage required be more than 3X your joint salaries?

I'd go for the larger house, but not at the expense of holidays, family activities etc...

motherofstudents

yes, I agree with the above. As long as you can afford the bigger mortgage I think you will be able to live more comfortably in the bigger house. If you go for the smaller, cheaper one I think you might regret it and any saving on the smaller mortgage would probably just get spent on something else anyway. It would not really make economic sense to move again in 3 -5 years with the associated costs.

HAMISH_MCTAVISH

lindsaygalaxy wrote: »

Any advice please?

Stretch to the bigger house.

It'll require sacrifices now, but as the years go by and your income increases, it'll become more and more affordable.

Just plan for interest rates returning to a more normal level over the next few years, and take advantage of the current once-in-a-lifetime opportunity to overpay while you can.

moesasji

Silly suggestion....why not consider renting? Where we live I can rent a house close to good schools, while I'm simply priced out in this area of the city where the good schools are (and yes we rent with three small children)

lindsaygalaxy

We already rent, have done for nearly 9 years. For the amount we rent we could get the cheaper house, for a couple of hundred more a month could get a really big house in a better street.

moesasji

lindsaygalaxy wrote: »

We already rent, have done for nearly 9 years. For the amount we rent we could get the cheaper house, for a couple of hundred more a month could get a really big house in a better street.

You are aware that this does not actually answer the question why renting is not an option? Do you have to move at the current point in time and how do these houses compare to what your currently rent?

ps) It could be that you compare your current rental to mortgages based on current interest rates. Keep in mind that the current levels of inflation will force rents up at some point....so remember to do your numbers based on a "reasonable" interest rate to prevent major problems later on.

BitterAndTwisted

Please ensure that the mortgage on the larger house can still be afforded when (and not if) interest-rates go up.