Thinking of swapping your cosy starter home for a place with more room to grow? You’re not alone! But before you set your heart on that spacious family house, it’s crucial to understand the challenges facing upsizers right now. With house prices still climbing, that dream move could be much pricier than you expect.

The Upsizer’s Dilemma: Bigger Homes, Bigger Costs

It’s a familiar story: you’ve outgrown your first place and need more space for a growing family, or maybe that pay rise means you can finally afford your dream home. Whatever your reasons, upsizing comes with a hefty price tag.

While it’s true that your current property has probably gone up in value, the bigger homes you’re eyeing up are likely to have climbed even higher. This means finding extra cash for a larger deposit and potentially taking on a much bigger mortgage, just as interest rates make borrowing more expensive.

Let’s look at the numbers:

• House prices are still rising: The average UK house price jumped by 3.2% in the year to September.
• Detached homes are in demand: Over the last five years, the average price of a detached house has soared by 26%, from £352,000 to £443,000.
• Flats haven’t kept pace: In the same period, the average flat price only rose by 14%, from £207,000 to £236,000.

This difference in price growth means that even if you’ve built up some equity in your current home, you’ll probably need a much larger mortgage to trade up to a bigger property.

The Mortgage Mountain: Higher Rates Mean Higher Payments

If you’re like many homeowners, you might be on a very affordable mortgage deal right now, agreed before interest rates started to climb. But if you need a bigger mortgage to upsize, be prepared for a payment shock.

Here’s why:

• Rates have jumped: Back in 2019-2022, many borrowers secured mortgage rates between 1.5% and 2.5%. Today, those rates are more like 4% to 5%, especially if you can’t put down a large deposit.
• Monthly payments could double: Imagine you’re moving from a £200,000 mortgage at 2% to a £400,000 mortgage at 4.5%. Your monthly payments could jump from £848 to £2,223!

This rise in borrowing costs has led some would-be upsizers to put their plans on hold or consider properties in a similar price bracket to their current home.

Hidden Costs: Don’t Forget the Extras

It’s not just the bigger mortgage you need to worry about. Upsizing comes with a whole host of extra costs that first-time buyers don’t face:

• Stamp duty: Currently, you’ll pay stamp duty on properties over £250,000. But from March 2025, the threshold drops to £125,000, meaning a bigger tax bill for many upsizers.
• Estate agent fees: Selling your current home means paying estate agent fees, typically around 1.42% of the sale price. On a £250,000 property, that’s a £3,550 fee!
• Other expenses: Don’t forget legal fees, survey costs, removal charges and any repairs or renovations needed on your new place.

Expert Advice: Making Your Move Manageable

While upsizing in the current climate might seem daunting, it’s not impossible. Here’s what the experts recommend:

• Crunch the numbers carefully: Factor in ALL costs, including higher mortgage rates, stamp duty, and fees. Don’t overstretch yourself.
• Consider your long-term plans: Can you afford the repayments if rates rise further? What if one of you loses their job?
• Don’t wait for the “perfect” time: Mortgage rates might not drop anytime soon. Focus on finding the right property and mortgage for YOUR needs.
• Speak to a mortgage broker: They can help you navigate the complex world of mortgages and find the best deal for your circumstances.

Upsizing should be an exciting step, not a financial burden. By understanding the challenges and getting expert advice, you can make your dream move a reality.