When do we move?

onlyroz

We would like to move to a bigger house at some point in the future, but there are a number of factors to consider which would affect whether it would be a good idea to move sooner or later. I would appreciate any opinions.

- Our age. I am 31 but hubby is 48. Therefore, any mortgage would have to either have a short term (15-17 years depending on when we moved) or would have to be based just on my salary

- Financial circumstances. Our daughter is currently in a private nursery at a cost of £1000 a month. When she starts school in 2 years our outgoings will drop considerably, because we will only have to pay for after school and holiday care. Therefore, from a financial perspective we would be in a much better position to afford a larger mortgage in 2 years, but I don't know if a lender would take nursery fees into account when assessing how much to lend

- Our current mortgage rate. We currently have a fantastic deal, which is base + 0.5%. I don't know if this mortgage could be transferred to another property, but I doubt we would get anything like as good a deal on a new mortgage, so I would expect a new mortgage to cost us quite a bit more per month than this one, due to the larger interest rate

- House prices. Our current house is probably worth about the same, or possibly a bit less than when we bought it in 2007. We have approx 1/3 equity in the property and so would have a decent sized deposit for a new mortgage

So if we are going to move, should we do it ASAP (because of hubby's looming retirement age) or should we wait a few years (until both kids are at school)?

And what is the current lending criteria? We were originally advised that this would be about 2.5 times our joint salary. Does this still apply?

Thanks...

getmore4less

Idealy you want to port the existing deal with as large amount as possible.

So options for that.

check it is portable.

No overpayments, should not be doing that anyway because savings rates are higher.

extend the term to the max you can

Look at going interest only.

Next save up as much as you can to reduce future additional borrowing

check your lenders additional borrowing terms against the others.

It will then be a proper check once you know how much you need, is port + extra cheaper than new.


Age makes little difference,, you need to pretend you have moved now and just save as if you were paying a bigger mortgage then when you do move you will be in th same possition as if you moved now.


I would start looking for the perfect home, get yours near ready to sell but hold back putting it on the market, if you find a bargain then you can jump on it if not then one will come along eventualy.


You need to cough up the numbers if you want more detailed info.

the key will be affordability over the term of the mortgage rather than multiples, decent occupational pensions will change the picture on max term as well.

onlyroz

Thanks for the info. If you want numbers then I will try.

I earn £38k + £2k bonus. Hubby earns around £32k. We bought our house for £250k in 2007 - the original mortgage was for £165k, but it's now down to about £148k. Between us we have around £35k in savings, which we *could* put towards a new house, but the original intention was to save for the kids' future education (university etc).

Ideally we would like to be looking at properties in the £350k+ range, but I don't know if that's feasible or not based on our circumstances. I don't want to completely overstretch ourselves with a huge mortgage - we'd still like to be able to take a foreign holiday each year and have a decent savings float (I know new houses can come with unexpected expenses - e.g. we had to unexpectedly replace the boiler within weeks of moving into this house).

The house is in decent shape - we've sorted out the garden (it was previously a jungle) and we're in the process of doing up the conservatory (in particular to fix the leaking roof, and to fix the rear doors which wouldn't open properly). It is also in good decorative order, and the central heating/electrics have all been modernised.

My preference would be to move in about 2 years, once my daughter is settled in primary school - partly because the best school is on this side of the village, whereas the best houses are on the *other* side - and so if we moved now to the other side then we would have less chance of getting her into the better school. But if we needed to move sooner, due to financial limitations (potential rising house-prices, hubby's looming retirement age etc) then I guess we'd do it...

getmore4less

OK say house is still worth £250 due to the stamp duty barrier

extra borrowing is £100k total £248k thats about 3.5 * income so okish.

£248k over 17y(oh 65) @ 4% is £1677pm
http://www.whatsthecost.com/mortgage.aspx

(Current is 148 @ 1% say over 17y is £790)

So after all your current expences/saving commitments/holidays etc can you save £800-£900pm thats the target.

The longer and the more you save the smaller the amount needed.

current income is about £4400 so even with the mortgage and child care there should be plenty left.


Why not do a rough 17 year budget with all the major commitments laid out new house, childcare, education savings, general spending, holidays, cars etc. and see if it adds up.

onlyroz

Thanks for the advice. I also like your point about living now as if we were already paying for a higher mortgage. The only factor that would negate such an approach would be if the housing market started to rise in the next few years, reducing the affordability of our future home. I don't think our house will shift much from £250k for a long time, due to the stamp duty threshold.

Another factor I forgot to mention is that £45k of our mortgage is interest only. This is meant to be covered by an endowment policy (due to mature in around 2020) which will almost certainly fall short of the required £45k figure. However, once the endowment matures, there is probably enough time to invest whatever we get (I'm estimating that we'll have around a £10k shortfall) to make up the difference.

Anyway, in a future mortgage we could either go entirely repayment, or continue to offset part of it against this endowment.