Mortgage free or bigger house

WobblyJelly14

We’re currently mortgage-free but considering moving to a bigger house as our current home is getting too small for our growing children (1&3). To do this, we’d need to borrow £275,000 over 35 years.  This mortgage payment would work out at £1235 a month. 

Once the mortgage and all bills/food are paid, we’d have around £400/£500 left each month for savings and emergencies. However, as a buffer we will have around £18k saved.
Right now, we’re on one income as I’m a stay-at-home mum, but I plan to return to work part-time in 3-5 years, which would ease things financially. We would also shorten our mortgage term then. That said, it’s hard to ignore how comfortable it is being mortgage-free—we don’t have to worry about unexpected expenses or big financial shocks.
Would it be crazy to sacrifice that security for more space? I keep going back and forth between thinking it’s worth it for our children’s sake and worrying that we’ll feel too stretched. However, I don’t know if the top of our budget is wise.
Has anyone been in a similar position? Any advice would be really appreciated!
We are both 37.

ps: just to add, we don’t live like we are mortgage free currently. All money is saved - however, it’s nice knowing we have the option to go on fancy holidays as the kids get older and can appreciate it more.

housebuyer143

Bigger house

At this time of your life I would go bigger house, in fact I did this exact thing 3 years ago. We were mortgage free for a few years and decided to buy a new house from 2 to 4 bed. 
I do not regret it at all. It's great being mortgage free, but not in a house you feel is too small. If you don't do it now, then when??

No19v87

Bigger house

The cost of housing is only going to increase. At the moment the gap between wages and housing is only getting bigger.

Even with interest rates as they are, it’d likely be cheaper to buy a bigger house now than it will in 5 or 10 years. 

If you think your house is too small with a 1 and 3 year old, it’ll feel even smaller with a 8 and 10 year old.

£400-£500 ‘leftover’ every month is considerably more than most other family households. 

BrilliantButScary

There are a lot of things to consider, and none of us have a crystal ball to see what might happen in the future. Being mortgage free gives you freedom to make other choices. It enabled me to go to university and change careers in my forties and we both were able to
'retire' at 60.
I'm sure your children's memories of their childhood will not be about how big their house was, but of time spent with their parents. 

BikingBud

I feel that there are insufficient indicators about what you feel is important and if you still have those covered in:

Once the mortgage and all bills/food are paid, we’d have around £400/£500 left each month for savings and emergencies.

Is that covering all expenses or do you still have holidays etc to fund within that?

35 years is a long time and the perceived wisdom is always about house price increases and debt inflating away but the burden of the debt needs to fully understood. If we extrapolate £1235 over 35 years @4.1% you will pay back nearly £520k. Interest rate variability will change that. Deferring very rarely sees costs dropping although waiting a few years to see how your finances change coupled with a larger savings pot to reduce the initial mortgage figure might enable the mortgage to be paid off sooner and total paid to be driven down.

But it does seem that at some point you will need to move as family needs change. 

If this move is THE move and you see staying there til children depart and no further changes or costs then I feel it would be all about the house. Right house and right place, location, neighbourhood, access to schools, proximity to work, ease of travel, eg rail would all tip it to being a sound long term investment rather than just another step on this often quoted and aspirational property ladder.