Would you take the leap in my situation?

SMeister1997

So I am fortunate enough to of inherited a large sum of money (£160k). Me and my partner have lived in our first home for just over 4 years now and a second house opportunity has come up in the same village we want to stay in. The house is quite a jump up from what we have now with it being on the market for £425k, we have checked and we can get a mortgage however we would need to put quite a big chunk of money down as a deposit (approx £100k).

I would be putting the most down, around £80k which is quite a scary thought however i know its going into a solid asset for the future. I do have £40k invested in a stocks & shares ISA and around £92k in a savings account which is what i'd use towards the deposit.

Part of me thinks it's the right thing to do because we'd be buying a house we could stay in for many years and hopefully raise a family in, but another part of me wonders whether I'd be better off keeping more of the money invested or available for other goals such as retiring early. I'm interested to hear how others have approached a similar decision. Many thanks!

El_Torro

The decision is up to you, I guess you already know that though 😄

Assuming you plan to live in this house for a long time (10 years or more) and assuming that you see your relationship as long term then buying a bigger house is not necessarily a bad idea. I wouldn't stretch to buy what you can afford, just buy what you will want / need for the future. As you say there are plenty of other places to put your money other than property. Like investing for retirement.

I was looking quite seriously at buying last year, in the end I decided to focus on my pension and S&S ISA investments to achieve my goal of early retirement. Still got 10 years or so to go til I can hand my notice in, but I think I made the right decision. Of course that's just me, your decision might be the opposite and also correct.

SMeister1997

It would be 10 plus years for sure, i'm 28 years old so retirement is a long time away but i do like the idea of retiring early, i dont necessarily think investing in property will hinder that but its just a psychological hurdle. We would need to upsize at some point so I would probably need to use a good chunk of my inheritance regardless and its a popular location where the house is so long term my money should be fine (i hope).

Brie

If you choose to move I would suggest that if you are not married to your partner that you ensure that your large contribution to the deposit is documented. It may make it easier if unfortunately you split in the future. This might be achieved by buying as tenants in common rather than joint so you can define what % each of you own in the house. You then would also need to ensure you have wills as there's no automatic shift of ownership to the survivor if one of you dies. Sorry - this all sounds dreadfully gloomy but you both need to look out for your interests.

If you don't decide to move then you might see what you can overpay on your current mortgage (again with some of the protections as above where possible). Net result should be saving you both lots of interest in the coming years.

Albermarle

You do not mention your employment situations/salaries. Being in relatively secure employment can be a big factor in these decisions. Also a well funded workplace pension is a good starting point for any early retiring plans, although depends what you mean by early.

If you are going to start a family, then really it would be better to have a house with enough bedrooms, a garden etc. near a decent school if possible.

Myci85

If you were already in a family home, it would probably make sense to save for retirement instead of upsizing, but if you want children, and your current home is not big enough to meet that need, to my mind you may as well go for the bigger home now whilst you can afford it, and importantly whilst there is one in the location you want to stay in.

Obviously just do the sums to ensure that you could still live comfortably in the bigger house on one salary/maternity pay when the time comes.

RelievedSheff

We have earlier this year made the move to a bigger house. It was a scary thought at first but we are now four months in and absolutely loving it.

We both have workplace pensions in place which we have paid into for 25+ years and have healthy balances so we decided that what was more important for us was right now was where we were living. We can always downsize again if we felt that this house was becoming unmanageable for us.

You are young and obviously have a sensible head. But life is for living. Planning for a comfortable retirement is very sensible but don't let it get in the way of making the most of your younger years.

TroubledTarts

House buying is generally a good investment over time but you don't really get that money until you do the final downsize later in life and normally it gets left to children.

It depends what your life ambitions are for family, what space you envisage you will need and location.

Good final salary pensions and tax free AVC contributions are good if you can get that at work. As well as the tax free allowances each year. They are outpacing what house prices are doing right now.

If your family plans are loose then you have the option to wait and keep building your savings and pension pots up until ready.

SMeister1997

@Brie Thanks for the comment. We have been together for 8 years and are engaged, we hopefully plan to marry in the next 3-4 years. For sure I would do a declaration of trust document as I would be putting down the higher percentage.

SMeister1997

@Albermarle Thanks for the comment. Our total income is around £65k, i'm a Director of a company and my partner is a sales manager. We both have workplace pensions and i also contribute every month in a private pension.

SMeister1997

@Myci85 Thanks for the comment. Our house now is a 3 bedroom but it is on the small side, the third room would be suitable for a child but not for long, it would be a bit cramped and yes it's quite rare that a house like this comes available so thats why we're keen to go for it, even though we aren't looking to move.