Bigger mortage or save?

kasperblue

Myself and my other half have lived in a mid-terrace, 2 bedroom house for the last 5 years (worth about £120k). This was our first home and we currently have about 84% LTV and a mortgage running at base +2%. We really like living there, although at times we feel its a bit small especially when entertaining etc. We have got to that time in our lives (we are both 32) when we feel (and slightly pressured by society) to move to a bigger house. We dont need extra space, dont plan to have children and can easily afford our current mortgage.

I was wondering what peoples thoughts were on owning bigger homes as a form of saving for the future. We dont have much in the bank for a deposit i.e £10k or so, so we're not sitting on a fortune. We could use some of our disposal income to upgrade our home and thus a bigger mortgage OR to put in savings? This is the choice really. I guess having a larger home would be the more fun of the two but ultimately a larger mortgage would cost us £1000s in interest. Are other people in a similar situation?

We did think about renting out our home (which would cover the mortgage) and trial renting somewhere (at a similar cost to our mortgage) which we've always fancied living i.e. city centre. It after a year we're not bothered, we can feel content in a decision to stay.

amnblog

Have you thought about extending and avoiding moving costs.