To sell my house because I want security at this age?

Fine if you think it will make you happier but it’s not necessarily the best long-term financial option. The amount owing on the mortgage is basically irrelevant if you can afford it because you can downsize later in the way you are considering now if you want to. Of course if it would give you more money to spend day to day and that would improve your life that’s a consideration.

I’m fairly open to taking financial risks though and have a £350k mortgage as a single parent. I’ve no real intention of ever paying it off and at the moment wouldn’t overpay because I can beat the interest rate on the mortgage on the stock market. I’ve done well with this financial strategy in that the equity in my house has increased more than it would have done in a smaller house but it’s obviously not for everyone.

I'd definitely do this. When I got divorced I chose to buy a house outright as I didn't know how much money I'd need living on my own. I got a smaller house rather than take on a loan for a bigger one, but now that I'm retired it suits me perfectly.

What kind of space / new house do you want to live in?
what price bracket?

you could get a smaller mortgage once you’ve pulled out equity from current larger house.

can you get somewhere with an annexe or room that you could let out and use that money to pay down mortgage?

id absolutely downsize in your shoes - and just enjoy your life!

Why do you need 4 bedrooms?

A mortgage isn’t ‘owing money’ in the same way that owing money on a credit card is owing money because the collateral is there in the form of the house.

Can you afford the mortgage money each month? Do you enjoy your home as it is?

Once you are older you will really appreciate the downstairs loo, garden and parking. I would certainly keep going until you can get those things in a smaller house.

I'm just shocked that at age 38 you say most people you know have no mortgage now. Are your friends much older? Or very rich? I'm in my late 40s and my mortgage won't be paid off till I'm at least 65 - and that's with a fair wind behind me.

You're my age, and everyone I know has a mortgage (or renting). Even the people I know who bought in their early 20s. It's very usual to have paid off your mortgage before the age of 40! But I can see the appeal 😃

I would downsize and put the savings made into a pension. As well as have some fun.

We moved for reduced travel time and so upsized and took on a scary sized mortgage at an older age, but will need to and want to downsize for retirement. A pension and having time gets a lot more important as you get older.

Most people I know don’t have a mortgage by now

You must move in very wealthy circles as this definitely isn't the norm!

Go with your heart ❤️ We are currently upsizing in our early 50s and I'm not very happy about it but have agreed to. To be mortgage free in a smaller home with all we need, fantastic neighbours, I would much rather stay than get out another mortgage. If I was single I would do what I wanted and best for me so you do this! Xx

You are very young to put a finite financial cap on your home and house.

Would you be able to downsize to something that you could see yourself retiring and growing old in? Would it be of a price to enable you to sell in the future and buy somewhere in an area where you would like to retire? And have space for friends to stay etc?

@burnth I would do some viewings of some places in your budget and take it from there. Personally I'd want a garden, at least 2 beds (agree there's no need for you to have such a big house). The money you are saving on mortgage payments could be paid into a pension. What a bonus to be mortgage free.

If you were 55 I would say do it, but you are only 38 - practically a child . If you continue to overpay your existing mortgage, and throw in the £50k you are due to receive, the amount you owe will go down noticeably. You clearly don't have problems with the existing payments if you can overpay £300 a month, so there is no pressure to downsize. I would stay put and look on the equity you are building as savings.

I don’t know anyone at 38 who has paid off their mortgage?! I know a 44 and 52yr old who have just taken out a mortgage!

I’ve just reduced my mortgage term for a bit each time it’s renewed. We have about 10yrs to go, but we are looking to buy our forever house (need to consider schools as have a 2yr old). In our late 30s/40s, and our new mortgage will probably be around the £700k mark!!

If you can find a house you like, do it now. It would be fantastic to be mortgage free at such a young age. And no doubt whatever house you buy will increase in value whilst you live in it too. Go for it.

At that age and LTV ratio and ability to over pay I think YABU

more important factors are - do you love the property you are in? Is it near your friends and family and the life you love?

Could you make money from your property eg rent a room or rent whole property and travel/live somewhere else?

Could you buy a property you like in an area you like for equity/cash?

what is your earning potential/career plan in next few years - could you repay more? Do you want to change to lower paying job so having no mortgage would be good thing.

38 and having paid off mortgage is quite unusual in my view. Much more likely to have no mortgage because can’t afford to buy in the first place. I’m SE in UK.

If you can, and can find properties you are happy with, then it's a great idea. More money for travel, hobbies etc. But I'm amazed you know people who at 38 don't have a mortgage. I'm 54 and still do!

If I were you I would do this! I wrote a post recently about how our mortgage feels like a weight around our necks! (Nearly 350k, late 30’s). We live in an expensive area and have a lot of equity in the house so could downsize and go mortgage free but the children love the house and I can’t do it just yet. The thought of paying off the whole mortgage eventually and for so long does make me feel a bit ill when you see how much you are paying overall (the mortgage overpayment calculator on money saving expert website will tell you how much you will pay and how much is interest over the term)

Is there a compromise - a slightly smaller mortgage to stretch to something better - we deliberately didn’t overstretch ourselves when we bought and I’m very grateful for it now!

Being mortgage free is truly liberating, and as a PP said, it opens lots of opportunities you would not have considered with a mortgage. Plus lower maintenance costs for a smaller house usually. I would do it.

Depends what you can buy! I'm older than you (49) and sold my 570k house, cleared 230k mortgage, bought £330k outright. New house is smaller and further out, but didn't need the size I had. I do love the new house which I think is important- buying something that felt like a huge compromise would have been depressing.

For me it's been great- the freedom of no mortgage is enormous and I feel like a weight is lifted. I've reduced working hours, but I didn't have to, but it's more the freedom- if I wanted to work full time and save a lot I could, or I can trade for time. Depends on your other circumstances. It's not a panacea but I feel more secure that I can cope with what life throws at me.

We could have had a much bigger house if we’d had a longer mortgage, as it was we paid it off sooner and ploughed the saved mortgage payments into our pensions.

zero regrets, the peace I felt owning outright couldn’t be beaten and it’s enabled us to have very healthy pensions and be in a house that is a comfortable size that we never need to downsize from.

Moving now isn’t an issue for OP who would be buying with the equity and not a mortgage.

I’m 52 with a mortgage your size! Now is not a great time to move - I’d wait until after the election and then downsize when things are a little more stable 😊