In general, if doing less than 15k miles a year, you're better off going petrol rather than diesel - even more so if buying second-hand with a decent number of miles on the clock already.
With the fuel expense limit you're setting, assuming that fuel (of either type) is 110p per litre, and you're doing 1000 miles a month, that means the car MUST average 42mpg. Lot of cars will do that.
The 3 series might really not be that great for you (and I've got a 2013 estate 3 series, so not panning them out of hand), reading what you need from the back seats. Basically, the transmission tunnel eats into centre seat space, and you also want one proper child seat and a booster cushion AND a child in a 'normal' seatbelt. There's not going to be much space there - and you want to keep the car for 5 years, and there'll be even less spare space every year !
A Toyota Avensis (preferably manual and petrol) might cost a fraction more per month in fuel, but would probably be less problematic in the long term, and is a bit bigger too. Alternatively, a Skoda Superb (MUST be manual, and preferably petrol too) would have plenty of space, and are highly rated for comfort.
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