There are plenty of good reasons why you may need more space at home. Perhaps you’ve got a growing family, or you’d like to bring elderly family members to live with you. It might just be that you’re wondering about the benefits and pitfalls of moving into a bigger house and weighing up your options. There are also some important elements to consider whenever you’re thinking about upsizing your home.
Rent or Buy?
This is a question that will ultimately result in an answer personal to your individual circumstances, especially when buying a bigger home. It might be, for instance, that you could afford the deposit and mortgage repayments on a smaller home, yet you can’t afford them on a larger property. Your best option in this scenario might be to rent a home that’s more suited to your size, although the rent payments can often be larger than some mortgage payments for a comparable property. This issue may come down to your personal finances, although ‘Money’ has a great guide on the differences between renting and buying.
There are some people who will tell you that buying a house is the only way to go and that renting is “dead money”. The simple fact is, buying isn’t for everyone and the additional costs by way of deposits, stamp duty, repairs and renovations are beyond some people. If you’re moving into a bigger house with children, for example, the last thing you want is for a sudden plumbing problem to turn the water off. As a homeowner, you have to deal with that. As a tenant, that’s down to your landlord, and some people prefer that type of security.
Is Property the Best Investment for Your Money?
A bigger house represents a bigger investment pot, doesn’t it? The theory is that property is a secure form of investment, but the financial tumult of the last decade has left that idea up in the air. Yes, some places are seeing growth in house prices that may leave you with a tidy nest egg by the time your mortgage is paid off, but some areas have seen far less growth in real terms. Coupled with the need to pay for repairs and upkeep as mentioned above, you may not be getting as good a deal as you thought.
It’s also worth remembering that the size of a house is only one element of the puzzle – where that house is located will be a huge factor in how much of an investment it is. For instance, North Norfolk properties are highly sought after and, therefore, not only are bigger houses there more expensive, but they’re also more likely to maintain and grow their value. However, it’s worth remembering that there are no guarantees in property, anymore than there are in many other investment types. At least the benefit of a beautiful big home is that you get to live in it.
Mortgages and Savings – Things to Consider:
Remember that it’s not just the increased costs of deposits, mortgage payments and renovations to think about when you’re looking at upsizing. There are also all the associated costs of moving which can add quite a burden to any household finances and can really sap your savings. If you’re hoping to use those savings in the coming years, endangering them by upsizing may not be the right choice for you.
Another major consideration is the benefit of living mortgage free. Depending on how old you are, the prospect of another 30 years in debt may feel like a heavy weight whereas you could be mortgage free much more quickly if you stayed where you are. For some people, this brings forward the prospects of cutting down hours or opting for early retirement as there are no more mortgage payments to consider, just household bills and expenditure.
It’s also possible to overpay on your mortgage with your savings to clear it more quickly. Money Saving Expert have written a guide on the benefits and pitfalls of this, but it’s worth noting that it’s not the ideal option for everyone, especially if there are penalties built into your mortgage agreement and if you have other debts.
Conclusion:
Upsizing to a bigger home requires a thorough analysis of your personal circumstances and a realistic look at what you want out of the future. Don’t be tempted to rush into buying a bigger home now if you’re going to be struggling in a few years when the kids leave home and you’ve got more space than you need. As with every property decision, this is one that needs careful thought and, occasionally, advice from property experts.
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