For many people, when it comes to property, bigger is better. Buying the biggest home that you can afford is living the dream, and is a signifier of being financially successful. It can also increase your levels of comfort, particularly if you are intending on growing your family.
However, it is a significant investment, so before you make a large financial commitment on a bigger property, it is important to take into consideration these financial and life factors, to make sure it is the right time for you to buy.
The most important thing to consider is whether you are financially secure enough to upgrade your house size. After all, the bigger the house, the more expensive it gets. It is all well and good wanting more space, even if you feel financially secure, but if you can only just about make the monthly payments, suddenly, you are a lot more vulnerable.
You need to make sure that you have enough to pay not only the increased mortgage payments, but homeowner insurance, interest and any property tax that you are liable for.
If you are adding to your family, or intending on doing so in the near future, you need to take into account any reduced income while you take maternity or paternity leave, and the increased costs of another child – many people underestimate the sheer expense of childcare and the general everyday costs of a child.
Of course, the best way to work out whether the mortgage on a new, bigger property is to use an online monthly mortgage calculator. This particular one gives you all sorts of options so that you can make an informed decision as to whether a new, bigger home is financially viable for you and your family. It is a must use tool when making that decision.
Not only have you got to think about the actual cost of the house, but the cost of the upkeep as well. Bigger houses cost more to run – maintenance, heating, cleaning, decorating, gardening, council tax, insurance and so on. Can you afford to replace the roof if there is a problem? Make sure that you factor all of these into your costs.
Does your current property have equity?
In general, the longer you own your current home, the more equity you build up. Once your equity reaches the 20% mark, it’s the optimal time to upgrade to a more spacious residence.
You can take the equity out of your current home and use it to put down a deposit on your new home. In fact, many mortgage providers will offer you more attractive rates and terms if you are able to make a 20% deposit on your new home.
Are the market considerations favourable?
Upgrading to a bigger home is a good idea if market conditions favour buyers. Reaping the benefits of a housing slump, where home prices are falling sharply, allows you to get more home for your money, assuming that you can get financing and compete with other eager buyers. You also have more potential to negotiate better prices with the sellers. Buying a larger house when interest rates are low is also a good idea, because lower rates mean lower monthly payments and more buying power. Just keep in mind that if you are planning to sell your current home before moving to a larger one, you are likely to face the same challenges of finding buyers at the right price.
In terms of the current UK market, Rightmove forecast a solid 4% rise in house prices in 2021, with many people having used the pandemic to reassess their homes and realise that they are a massive priority.
Your future family plans
Your family needs are a significant part of why you might need a bigger place. It is the right time to upgrade your space when your current home no longer meets your family’s daily needs. For example, you may need to move when the size of your family has increased to the point where additional bathrooms, bedrooms or relaxation areas are needed, or you anticipate that your family will need more room in the near future. This usually happens when you have children or when you have other adult relatives. Do not buy a house with just one additional bedroom if you are planning to have several more children, otherwise you will be looking to move again very soon.
What else do you need in your home?
Rather than buying a larger home simply on the basis of size, or because you can afford it, consider the features of your home to make sure it fits your needs. For example, a multi-level home with more square footage may not be a sensible choice if you are planning to move elderly and infirm parents in with you. The layout of the home may prove problematic and that can be expensive to sort out. On the other hand, if you already live in a multi-level home and invite elderly or disabled parents to move in with you, you might need to buy a larger home that is all on one level, as long as you find one that meets your budget expectations.
Do you buy or sell first?
This is a dilemma not just limited to those looking to buy a bigger house – it is a decision that every house buyer bar first time buyers need to make. They both come with their own pros and cons.
- You won’t have to make arrangements to live elsewhere
- You aren’t restricted by the need to sell your home first, so you can buy a house when the perfect one comes up
- You could end up paying mortgages on two homes if your first one does not sell before you complete
- You may feel pressured to take less than you hoped for your old house
- You know exactly how much you have to spend on your new home
- You do not run the risk of overextending your finances with paying two mortgages
- If you do not buy another house before the sale of your old one completes, you will need to look for accommodation very quickly – this can be unsettling, frustrating and expensive