Should you upsize to a larger home with more space and convenience, or would you be better off staying put and maybe even clearing your mortgage sooner?
You need more space. You like the idea of a sprawling lounge, more bedrooms and a bigger garden. You’re not alone in your desire for more space. The pandemic caused a ‘race for space’ rush after people were cooped up indoors for months. Understandably, many homeowners in smaller properties decided they needed more space to stretch, roam and just be relaxed indoors.
During the peak of the pandemic, there were numerous media articles about houses with gardens being a more attractive prospect, along with a trend of people moving to the country for more space.
Whether to choose a bigger home with the possibility of growth in value or to stick with a smaller property and perhaps pay off your mortgage sooner is a common question. Both options have their pros and cons.
There are more costs and responsibilities that come with a bigger house. More rooms means more space for furniture and other household accessories. Energy costs will be higher, along with general maintenance. So, while a bigger house may result in a higher resale value, it also comes with higher expenses.
If you stick with a smaller property and work towards paying off your mortgage, it could give you more financial stability. With a smaller house, you can manage the upkeep better and avoid the high costs of a bigger home. A smaller home will be more manageable for your budget, and you’re less likely to end up in debt. On the other hand, you may have outgrown your current home, especially if you’ve started a family.
Look at the costs
‘If you’re looking to upsize from your current home to something larger, the first step is to look at what the costs will be,’ says MB Associates’ Sales Manager, Phil Leivesley. ‘It may be that you took out your current mortgage at a time when the cost of borrowing was a little bit lower than it is today, so not only will you be borrowing more but doing so at a higher rate.’
Clearly, it’s not a decision to take lightly. ‘First and foremost, the best thing to do is to get some advice,’ adds Phil. ‘Get a sense check and see what the market is doing at the moment and what that will cost you each month. Not only will that inform you what you can purchase, but it will tell you exactly what the costs will be.
‘Sit down and work through your current costs,’ adds Phil. ‘Set a budget that is affordable and comfortable and that won’t cause you any problems. Once you’ve done that and know how much you can go to, everything else comes from that decision. It might be that your new budget might not be achievable. You might be prepared to increase your budget, or you might not, but you will know where you stand. Speak to a mortgage broker, and they will be able to help you.’