Buy now or wait?

patchyX2

I've come into some money which means we might be able to move house sooner than we had planned.

The problem is that it's not quite enough to allow us to move into our 'forever' home. It would be a nice upgrade on our current home, but we'd be compromising somewhere.

Before we came into this money, we agreed that we'd stay where we are and save until we could move to our forever home, skipping the 'in-between' home. This is still our preferred route as it avoids the stress, hassle and cost associated with an additional house move, BUT having the money just sat there doing nothing bugs me as it's not going to be worth as much in 2-3 years. It's ~100k so not an insignificant sum. It's just sat in premium bonds for now. I'm not willing to put it into stocks and shares due to the short timescale so the returns are easily going to be eaten up for inflation at the current rate.

What would you do in this situation? Would you buy now, or keep saving for that forever home?

I guess the other thing about buying now is that although our cash would be tied up in the house, we'd effectively be 'wasting' a chunk of the cash on stamp duty, solicitor fees etc that would be avoided if we just stay put for now.

Ramouth

This is very difficult to answer without a crystal ball.  If house prices in your area increase rapidly (23% in my postcode area last year!), then the gap between the house you have and the house you want may increase faster than you save.  Buying an intermediate house closes this gap a bit and therefore reduces the impact.  On the other hand, if prices stay the same or fall, you would be wasting money on stamp duty and moving costs. Personally, I would move and enjoy the benefits of the better house while you keep saving.

dimbo61

We know nothing about you and your family and current living arrangements !
Kids, bedrooms, location, local house prices, ages, employment and pensions.
Current mortgage and Interest rate, LTV and savings.
Long term plans ???
£100K in parts of Cheshire could mean the difference between a 2 bed terraced and 3/4 bed detached 🤔

ProDave

A compromise might be to move to a small house on a big plot in a nice area.  It might not be your forever home as it is, but by choosing a house in a nice area on a decent plot means that later you can extend it to make it into your forever home.  Extending comes with it's own challenges, but I would prefer it to moving a second time.

Snookie12cat

I personally would wait. We have stayed put in our house but have now managed to jump from our 2 bed house to a 4 bed detached which is our forever home. 
We didn't plan to wait but that's just what happened and I am glad we didn't move to a 3 bed semi a few years earlier. Stamp duty etc is a killer and so it's probably best to wait if you are not far off.

HampshireH

Personally I'd wait. But that depends on your circumstances

If your in a 1 bed flat or house, planning a family and will run out of space I'd move.

However if your current set up suits your needs and you didn't plan to have the middle house (which your post says) then I'd wait and do it the same as I planned to, it just may happen a bit sooner as a result.

Why pay so much out in fees and stamp duty when you don't have to.

patchyX2

dimbo61 said:

We know nothing about you and your family and current living arrangements !
Kids, bedrooms, location, local house prices, ages, employment and pensions.
Current mortgage and Interest rate, LTV and savings.
Long term plans ???
£100K in parts of Cheshire could mean the difference between a 2 bed terraced and 3/4 bed detached 🤔

We're mid-thirties, 2 young kids with no plans to have more. We have average (well, in my mind at least) savings and pension pots. Our current mortgage is 90k @ 1.5% on a house worth around 380k. My wife is only working part time currently and will likely return to full time in a couple of years time (possibly increasing hours closer to fulltime along the way). My salary is a bit above the national average, hers is below it.

We currently live in a small 3 bed semi. We could stay here for another 5 years fairly comfortably, but after that it might get a little too cozy.

If we were to move now, we could move into a medium to large 3 bed or small 4 bed detached with a reasonable garden in a nice area. 

Our forever home would be the same area/garden but with 4.5 beds and a double garage.

patchyX2

ProDave said:

A compromise might be to move to a small house on a big plot in a nice area.  It might not be your forever home as it is, but by choosing a house in a nice area on a decent plot means that later you can extend it to make it into your forever home.  Extending comes with it's own challenges, but I would prefer it to moving a second time.

We've floated this idea before, but I'm wary about buying a house that I know we'd need to extend. If we were refused planning then that would really screw things up

julicorn

PledgeX2 said:

Before we came into this money, we agreed that we'd stay where we are and save until we could move to our forever home, skipping the 'in-between' home. 

I think this bit is key. What really has changed, apart from having just cut a few years off your saving / waiting time? Is it just that having access to the money now is burning a hole in your pocket? Really, you would have been in the same position in a few years time either way. 

Based on your additional info, I'd personally wait. You could think about sticking some of that money into a fixed-term savings account or overpay some of your mortgage if you want a potentially better return than your premium bonds without the investment risk, although of course you lose flexibility that way. 

anotheruser

I wonder if you didn't touch your savings at all but use that 100k as a deposit on a stepping home.

Then when you're in, you can still be adding to your existing savings pot but when you come to move, you may be close to being mortgage free with that house so would allow you to have a small mortgage on your forever home.

But then you are right about it costing a lot to move.

Overpay current mortgage maybe?

patchyX2

julicorn said:

PledgeX2 said:

Before we came into this money, we agreed that we'd stay where we are and save until we could move to our forever home, skipping the 'in-between' home. 

I think this bit is key. What really has changed, apart from having just cut a few years off your saving / waiting time? Is it just that having access to the money now is burning a hole in your pocket? Really, you would have been in the same position in a few years time either way. 

Based on your additional info, I'd personally wait. You could think about sticking some of that money into a fixed-term savings account or overpay some of your mortgage if you want a potentially better return than your premium bonds without the investment risk, although of course you lose flexibility that way. 

It's not so much that it's burning a hole in my pocket, it's more that while it's burning a big hole in my pocket now, if inflation carries on at current levels it's only going to be burning a small hole in my pocket in a few years time, hence me feeling like I should do something sooner rather than later

We are already overpaying our mortgage by the maximum possible amount each year without incurring penalty charges, but with our mortgage rate being so low (1.5%), it's still not close to out performing inflation.