What to do for the best?

labradorlove

Upsize now or wait 5-7 years? What would you do?

£81k left on my mortgage in a small 3 bed semi valued at £200k, we bought for £135k 7 years ago. 

Mortgage is £580 a month and we over pay an extra £200 every month. 

We have a 3 year old and a 4 month old, we know we will want more space when they’re older, it’s sort of cramped now but while they’re young and don’t take up much room its manageable, we will probably be ok for another 5-7 years.

Monthly joint income totals £5k a month. Bills, Childcare and a £750 monthly car loan eat a lot of this so once all is paid currently we have £1.2k left as disposable income for savings, the car loan drops to only £310 a month next month until June 2025 when it’s all paid off. 

Would you sell and move into the dream home and stretch ourselves for a few years (maternity leave, going back to work part time will see a drop in shared income drop to £4.7k 2 lots of childcare etc)

Or 

Would you spend the next 5-7 years appreciating the disposable income, saving and overpaying a bit more for a more sizeable deposit for the dream house in 5-7 years time?

El_Torro

It's up to you to decide of course, some thoughts from me though:

The house you want to move to will (probably) be worth more in 5-7 years time than it is today. Buying it now gives you more time to manage the mortgage (which will probably be bigger if you buy later).

If you save money to put towards a property purchase the interest you get from the savings may not keep up with house prices. One way to earn more on your savings is to invest in Stocks & Shares ISAs. However you don't know how funds will perform over the coming years. Also 5-7 years is a bit short term when looking at investments.


Based on the information you have given I would say move now, assuming you can afford the new mortgage payments. That's just my opinion though, you know the pros and cons better than I do. Also only you and your family can weigh up the benefit of having more space now rather than in the future.

Slinky

Based on my experience when I was trying to save for a deposit for my first home in the 1980s, I'd go for upgrading now. I kept thinking next year, next year, next year I'll be able to afford it, but house price inflation was way more than savings interest and the target got further and further away. In the end it was only the early-mid 1990s crash and an inheritance that meant I could buy.

Martico

From a financial point of view, I'd say (from experience) that it's better to go sooner, so long as you're able to afford the commitment.
And from a personal point of view, for your kids to have one house that contains all of their remembered childhood memories can be very special indeed. 
So on both fronts, I'd go for it now, as long as you can afford to as a family

SarahB16

Martico said:

From a financial point of view, I'd say (from experience) that it's better to go sooner, so long as you're able to afford the commitment.
And from a personal point of view, for your kids to have one house that contains all of their remembered childhood memories can be very special indeed. 
So on both fronts, I'd go for it now, as long as you can afford to as a family

I agree entirely with this and just to add regarding your children it would be better to move now as otherwise you run the risk that they have to start at a new school which could be unsettling for them.   

badmemory

The timing of any moves may need to take the childrens schools into account.  Not a problem it the intended move is just down the road.

theoretica

Is the dream home a single house for sale now?  Or are there lots of places you would like to live? 

If you are confident you can afford to move now, I think moving has a lot going for it.  Seems reasonable to enjoy the larger place while paying for it, rather than live in the smaller one while saving for somewhere else. 

EssexHebridean

Get the car loan gone and don’t take a new one - instead budget to save an amount each month to replace the car when it needs it. Then look to get your move made while your current home is still somewhere you enjoy living. If it’s a bit cramped now, imagine it with both children 7 years older…! 

ShinyStarlight1

Lack of space can put pressure on relationships. But so can money worries.

the_lunatic_is_in_my_head

labradorlove said:

we know we will want more space when they’re older, it’s sort of cramped now but while they’re young and don’t take up much room its manageable

I tend to find the more space you have, the more stuff you manage to fill it with.

Not moving the kids during school is a positive, if the kids are happy the might not be fussed about moving to a different home (might even find it an adventure, depends on the person I guess). 

Main consideration from me would be whether moving meant more time working and less with the kids, from your point of view they are only young for a short time and it's best to make the most of it, from their point of view the more time they spend with 2 loving parents the happier they'll be when they are older