To ask should I downsize or not in these circumstances?

[freedomflyer]

Any advice or perspectives gratefully received.

We have an outstanding mortgage of £187k and about £50k of equity in our house. We have 20 years remaining on our mortgage and our payments are about £1115 per month.

We have been talking a lot together about our longer-term goals and would both like to semi-retire in 10 years time. We want to spend part of the year abroad and do more of the voluntary week we are currently involved in. We have one DC who will have finished school by then and we are separately paying into a savings account to help them with education costs should they go to uni. To be able to semi-retire we really want to try to be mortgage-free in 10 years. I currently take home about £2600 per month and DH takes home about £1500 per month so to pay off the whole mortgage in that time would be challenging.

One thing I am considering is whether we would be better off downsizing at this stage. To pay off our current mortgage in 10 years, presuming no change in interest rates, we would have to pay £1890 per month to include an overpayment. If we downsize to a house that is £50k cheaper, we would have to pay £1487 per month to be mortgage free in 10 years.

Does anyone have any experience of downsizing and have you regretted it or benefited from it? Our house is larger than we need it to be but it is a nice house. On the other hand, we are working hard to pay into something that might prevent us from achieving a longer-term goal. I can't see the woods for the trees at this stage so would appreciate any input.

Can't you downsize to a much cheaper and smaller house - and become semi retired - in 10 years?

Do you think you'd have enough equity in 10 years to buy something mortgage free?

What direction are house prices going in your area? Because if they go up by more than you're paying in interest, would you be better downsizing later? (I mean, if they go up by 10%, that's more on a house worth 200k than on a house worth 150k.)

Would your utilities/council tax etc go down significantly if you downsized?

We wonder about the same thing too. Have decided to stay put. For now.

We are not in an area where house prices can be relied upon to go up. I suppose the fact of it is that nobody really knows and prices could go down at some stage. I'm not sure about waiting out the 10 years and then downsizing, we had thought more about downsizing now and having less to pay off. Gibbous all of our other bills would go down if we downsized as we are in a bigger house now.

Could you rent out some of your house. A couple I know have converted the upstairs of their house into a flat and they rent it out. And they live in the downstairs part

We have discussed taking in a lodger gabsdot and its something we might look into. We could rent out a bedroom with an ensuite but couldn't really convert part of the house into a flat. A lodger might bring up other issues though as we have a DC in the house and I'm not sure about having someone we don't know very well living with us.

Bear in mind how much it will cost you to move - anywhere between 10k and 20K when you make any calculations. That's potentially 18months worth of mortgage payments that you could have made on your existing mortgage. Also allow for the fact that a small property will not increase in value necessarily at the same rate as a larger one. Large family homes tend to increase in value at a slightly higher rate than smaller ones as there are usually fewer of them.

Add into the mix that you don't know how your circumstances might change in ten years. That's a long time.

So my advice would be stay where you are. Pay down your mortgage as you can afford to without going short or making yourselves miserable and downsize in ten years if you still want to. I'd also second getting a lodger. We got one to help pay the school fees. Best thing we ever did. He is still a friend now. And now that the youngest is going to uni we are getting another lodger to help pay for that.

oldestmumintheworld thanks that's an interesting take on it. I would love to hear more about your experience with a lodger, how did you go about finding him? How did he fit in with the family? Did it bring in a significant amount of money? I guess I'm just wary about having someone I don't know living with us although I did it myself so many times years ago in flatshares.

Downsize. It's daft to be paying that much for a mortgage you don't need!

I would downsize but in 10 years time, as others have said bigger houses tend to go up more in value. Also stamp duty, estate agents fees and moving costs.
In 10 years reassess, for now overpay if you can or save with tax free saving or similar.

Saying all that if your current house is a massive drain in other costs like heating and council tax, factor in the savings over 10 years into your decision, if this in itself is a lot of difference, it may be worth downsizing now.

If a long term lodger isn't for you what about taking in foreign students. They normally only stay for a week or 2 and it a Rather well paid.

Moving costs are high. Stamp duty, movers, tarting up the current house for sale, new furniture to fit the new house, re-decoration etc.

Stay where you are. In 10 years time, sell the big house, pay off the rest of your mortgage and buy a small place mortgage free.

When you don't have a child living at home you might choose an even smaller place than you would get now. What you want from a house in ten years time will likely be different to now, so if you moved now you might want to move again later, thus doubling your moving costs.

In your mind, treat overpayments to your mortgage as savings, that will be released when you sell.

We had a young man who came to stay for two to three days through a friend from church. He stayed three years! And as I said is still a friend. We had intended to get a lodger, he came along and we thought we could do a trial run and see how it turned out. He was no trouble at all. Had our ex-nanny's room and en-suite bathroom. Used the kitchen for his meals and the washing machine for his washing. He was at work all day and out most evenings. We hardly saw him. His room had a tv and comfortable chair and desk as well as bed etc. So didn't use our sitting room. If he was at home on Sunday he would have Sunday dinner with us, but that was because we asked him and the children liked him and got on well with him. He would occasionally babysit which was lovely.

All in all it was a great success.

If I were to give any advice it would be: Be clear about what you are offering right from the beginning; what the rules are; can they use the sitting room or not. Make sure Wifi is included in the rent. Do you clean their room, or do they. Our cleaner did all the rooms and the bed linen, but she'd always done that. When can they use the kitchen? What about weekends?

I would also say, and I know its a broad generalisation, that I would always have men over women. We had far more worries over our live-in nannies than we ever did with the lodger. And young men go out. Young women tend not to so much.

I grew up in a large family and so did my husband. We come from households that were always full of people, siblings etc. When our children came along we always had a cleaner and a nanny so did not have a problem with people in the house. We are also positive, sociable people, so having a lodger was just one more person to add to the mix. It was good for the children too.

Wouldn't suit everyone, but think of the money! We charged the 'rent a room' rate so didn't have to pay tax. This time I'm planning on approaching the local university to get either a postgrad, or a lecturer who wants Monday to Friday.

I've just downsized , moved in last November and now have 5 years until I'm mortgage free . It's the best thing ever , I love our smaller house and now if I was given the option to have a bigger one I would turn it down !

I really really wouldn't advise lodgers - I had them for 15 years and it was hell. Getting rid of them was the deciding factor for me selling up

I'd be inclined to downsize in 10 years time. You won't have paid off your mortgage but hopefully your house will have increased in value. Our house has increased from £260k in 2010 to around £400k now.

Lodgers

One wrecked a room by putting up a shelf using cement !

One downloaded porn onto my computer

One broke my printer

Numerous ones have kept me awake shagging

One dug up the whole of my garden including the lawn !

One ran up a massive bill on my home phone calling sex chat lines

One stank the whole house out every time he used the loo .

Seriously don't do it !

Gosh doinmummy that's horrendous! There's an interesting mix of replies on here. I am veering more towards downsizing and generally being lighter in terms of the size of mortgage debt and other things that go with a bigger house, as well as the prospect of paying most of it off sooner. My feelings on it do change from day to day though! DH is more in favour of staying in the bigger house but I can't help feeling its just more than we need and wonder what we are paying all this money for.