Wwyd - mortgage free or bigger house?

[cheeseismydownfall]

We will be moving shortly having already sold our last house. We've realised we have enough cash to buy a perfectly decent albeit thoroughly unexciting and unimpressive house that's big enough for us all in a perfectly okay area without needing a mortgage. This seems hugely appealing! On the other hand, DH is a relatively high earner and we could take out a mortgage big enough to buy something close to a "dream home" (although I hate that phrase). Schools would be the same in either scenario.

What appeals to me about being mortgage free (apart from the obvious) is the idea of it focusing us on actually living the lives We want, rather than getting sucked in to the whole country house Aga lifestyle nonsense. But I'm weak and I feel it calling to me, like I should want those things (we live in a pretty well off area I guess, lots of private schooling and aspirational lifestyles). Also, if interest rates stay low and house prices rise then we would be better off long term to stretch ourselves now with another mortgage.

What would you do?

BTW I am very, very appreciative of the fact we are in the position to have this choice at all.

Our plan is modest house mortgage free. It's not just the repayments but, as you say, the lifestyle that goes with the whole big house fantasy that we just don't want. Yes the aga and grounds are a nice idea but it's your time to maintain them, and the bigger the house the more the hassle. You'll be working off the mortgage and coming home to the maintenance list. Honestly just spend the money on hotels and let someone else worry about the windowsills.

100% bigger house. Make your money work for you. If your husband is a big earner then a £250k mortgage is very affordable on current interest rates. In the long run you’ll have a far more comfortable retirement

Mortgage free and save for the dream house , university fees , having a good quality of life . Time is so much more precious than money .

We recently had a similar choice to make and went for the 'dream home'.
Although we are in our 20s and probably wouldn't have made the same choice in our 40s.

You know best what your own priorities are. When you picture the future; which house do you see yourself in?

Being mortgage free has lots of perks but your home is YOUR space so depends what that means for you.

Mortgage free, without a doubt.

We were in exact same dilemma and we went for dream house, so 20 year mortgage at 45, we are looking at it like investment so will probably downsize in 20 years. I am risk averse so was nervous about it but it's so worth it, the house is fab and gives me joy every day.

Mortgage free

Whatever happens...I can afford to live in my lovely house

Enjoy your money
Life is too short not too.plus I was quids in when we divorced...if we’d gone for a bigger house..he definitely would have demanded half.

Obviously that’s not going to happen to you

You’ll have extra heating costs, extra council tax
It’ll cost more to decorate.

I just think the mortgage free one maybe isn’t the one you should go for...maybe there’s a better one waiting for you.
Been mortgage free since age 50 ...16 years

Depends on the term of the mortgage, 20 years would be too long when in your 40's

Mortgage free.

Save the money so you can retire early while you are healthy, help your kids though university.

I've seen too many people retire mid 60s and have no fun because of their health, or get unlucky and be diagnosed with life limiting illness in their late 50s when an aga won't be much consolation.

Agreed. I've known several people who passed away shortly before retirement. I would hope to be mortgage free by the time I'm 50, earlier if possible.

It really depends if you will genuinely be happy with the mortgage free house. Or whether in 2-5 years you are still hankering after the dream house, buy it anyway, and end up paying stamp duty and moving costs twice. If in your heart you know this it’s probably better to buy the dream house now!

Well unlike everyone else we (in our late 40s) have moved to a bigger dream house with the big mortgage (same as OPs). We didn't have enough room where we were (3 bed house, 3 primary age kids) and we are loving having a big garden (so fab this summer), spare room, big kitchen-diner (we can fit a 12 seater table), garage, utility room, multiple bedrooms and playroom. It has transformed our lives. We are hosting 12 people for Christmas which we could never have done before. We plan to be here until we retire at ~70, downsize and free up cash for retirement.In theory we have a 20 year mortgage but we'll be overpaying and half the term. I have no desire to retire at 55, I'll have a 14 year old at that point. It's as much an investment as any other form of savings.

@CountFosco actually contrary to the widespread belief, property is not an investment like any other. It involves injections of cash in the form of maintenance costs, prices go up as well as down, and is very illiquid as an asset. Its purpose is to provide shelter rather than as an investment vehicle.
If we are talking purely in investment terms, it is far better to buy mortgage free and invest extra income in stocks and shares. Historically, they have outperformed property by quite a large margin.

Facing the same dilemma, almost exactly same age & mortgage amount!

Our house is on the market but not selling.....

We have looked at houses that would be mortgage free and others not and tbh there is no comparison.

Because our house is unsold it is still only an option and we plan to press on with the house but only if we find one we REALLY want

We are facing same choice! We are mid/late 30s and have chosen to go for bigger house. It has more space and a much bigger garden which we think will have a positive impact on our day to day living.

It doesn't sound as if it's your dream house but rather what you feel you should be seen to have. There's more to life than a big house.

You put it better than I did tiddle

Also, because I'm a bit of a cow I know myself, I know I don't actually want to host big family gatherings, parties or longer term guests. I don't want a guest suite! There are quite a few middle-ish aged people in my life with houses too big for them, kidding themselves about how hospitable they are /how many guests they have-the three spare bedrooms, bathrooms etc get used about once a year. They could have bought a nice sofa bed and five more years off work.

If we are talking purely in investment terms, it is far better to buy mortgage free and invest extra income in stocks and shares. Historically, they have outperformed property by quite a large margin.

Well, luckily for us it's not an either/or situation, we invest as much in stocks and shares each month as we spend on the mortgage and we have not overstretched ourselves on the mortgage (mortgage advisor said they would have lent us double !). And since most people here are saying they'd spend it on holidays I do think our bricks and mortar are a better investment.

And since most people here are saying they'd spend it on holidays I do think our bricks and mortar are a better investment.

Spending money on holidays is just for the fun of it... in an ideal world we'd all invest wisely, have loads of holidays, have hobbies and spare time, live in lovely houses...
Each of us has different priorities about how much we're willing to sacrifice for each of those things

I'd be mortgage free. What's the point in paying more money out in interest if you don't have to?

Mortgage free and get some savings.

Mortgage free. It leaves you with flexibility and freedom.

Mortgage free.

What scope is there for changing the ok house into something you really love?

Me and DH are older than you but he plans to work for another 10 years or so. Hence we have just moved house and increased our mortgage by a similar amount to what you would potentially be doing.

Reasoning is that a) we wanted to move out of that particular house and b) property is an investment - borrowing money is cheap (at the moment , i know the future is risky but we'll take that chance).

It all depends on what you want to do - will you have enough to retire on? Can you boost your pensions with (some of) the cash you'd save on paying off a mortgage?

I think buy the dream house and live in it for the next ten years then downsize/retire at the same time if that's what you want.

Interest rates are very low right now. Percentage wise a larger house will increase more versus what you have now over time if house prices rise. If you're mortgage free now what are your plans for the money? Invest? Retire? Otherwise that money will be sitting in the bank not earning much interest. I think I read you're 40s now so do you really want to retire now or carry on working? If you have plans for the money being mortgage free now that's different but if not then over ten years the property should rise (or you hang on a bit until you make money on it). A lot to weigh up. Depends if you have other plans now for work that interests you more that's part time so you can enjoy life. If kids still at school you're limited with the travel so perhaps working another ten years is a good idea. It's not straightforward to work out but I think a bigger house will earn you more percentage wise over the next ten years so it's sort of like an investment plus you get to live in a lovely house. When the kids have flown the next you can downsize to something else to free up money.