To ask about life with no rent or mortgage....

[broadstairs14]

I'm in the fortunate position of being a "homeowner". If I look a little more closely, the bank owns much more of my home than we do. DH and I have had a lot of discussions recently about trying to get our mortgage paid off early and being mortgage free really appeals.

I know two people in real life who inherited/ were gifted money at a young age and owning a house outright seems to have given them a huge amount of freedom and choice.

If you are mortgage free and still on the youngish side, how does this affect your life? Is it worth making sacrifices in other areas and really pushing for this? I'm looking for some inspiration to spur me on but also worry that I might be building it up and maybe it doesn't have such a huge impact all of the time.

We were mortgage free at 39.
The freedom meant we could be comfortable,save and set up a child ISA for dd for her future(and I set up my running away fund which I never dreamed I'd need)
We are now divorced but it meant the house sale and savings funded two smaller houses for us both.I had a small mortgage on a 10 year term but with the low interest rates and working lots of overtime I have payed it off.
I am using the money I'm saving to sort my little house out.
As people say it is nice not having to worry,I don't have to budget to the limit anymore and can save a bit.
Also my job is not one I will be able to do until I'm 67 so being able to go part time when I need to is reassuring.
If you can pay it off in a few years then go for it so you can enjoy the freedom while you're still youngish.

We haven't been exactly gifted our house but my parents own it and we live here rent free. I'm grateful for it and it helps us a lot as we are a low income family so most of our income still goes out on bills like most people but I guess we have the blessing of knowing we will always have somewhere to stay. It does however root us to one spot as the house is not in our name (although we probably will inherit it) so perhaps if we haven't been offered this accommodation we would have moved to a different area as we wouldn't have been able to afford here. Life is good but we do feel the difference between us and our peers around here as although we have the house we are relatively poor in a middle class town.

I think it depends on how much your mortgage is/was.
If it’s £300 per month it may be swallowed in other things without much thought.
£5000 per month you would feel the freedom of the payment more.

I think it's more about what % of your income it is. £300/month is a lot if your monthly income is around the £1k mark. (You'd have to be a footballer or something for £5k not to be a big % though!)

The security of having somewhere to stay is still compatible with having a mortgage. So long as you have a lot of equity in the house, you would be able to sell it if you lost a job or could not work and use the equity to buy a smaller house. Sure there is disruption but that does not mean it is strictly necessary to be mortgage free for peace of mind.

Someone who sensibly upsizes within their means and constantly has a mortgage will end up with more equity and financial security both at the end and during the mortgage than someone who pays off their small mortgage early on.

So long as you have a lot of equity in the house, you would be able to sell it if you lost a job or could not work and use the equity to buy a smaller house.

This only works if you can downsize, if you’re already on the bottom rung this isn’t an option.

Someone who sensibly upsizes within their means and constantly has a mortgage will end up with more equity and financial security both at the end and during the mortgage than someone who pays off their small mortgage early on.

House prices don’t always go up. My house is only just back to 2003 prices now.

It's also about whether you just want to spend that extra disposable income or invest it. Spending it if you have been scrimping and living frugally for years must be appealing.
However if you can easily afford the lifestyle and the mortgage it can be tempting to some to do both.
As we still had enough to go on several holidays, buy what we wanted, plus savings to go part time and soon retire early, it made sense to us to move up to somewhere bigger in a nicer location for the long term gain.

This only works if you can downsize, if you’re already on the bottom rung this isn’t an option.

Well, that is the whole point. If you don't ever upsize ((because you want to pay off your mortgage at an early age), you will stay on the bottom rung and have fewer options. Most people tend to buy starter homes and then upgrade to intermediate and then forever homes. Obviously, if the first rung is all someone is able to afford, then there is no issue with that. But some posters on this thread is about paying off mortgages early to go on holidays etc

I agree with Annabelle point about the temptation is spend rather than save.

If you pay off your mortgage in your 40s, that also happens to be prime promotion time at work. So your expenses go down and your income goes up. That is double-increase to disposable income. Granted a lot of it will be sucked up by the cost of a young family, you could be talking about 2-3 staycations/camping a year with a cheap European trip rather than 3-4 overseas trips a year.

We took the former holiday option and continue to climb the property ladder and stay mortgaged. The careers ladder is catching up and we can start to have a taste of the latter as well. In the meantime, property (in London) has exploded and we can no longer afford the house we are in at current prices. We will no doubt have to retire later, but there are studies that retiring early is not always the best for mental health and staving off dementia.

It is a question of priorities. It is great to be mortgage-free but having a mortgage is not that bad a thing either and could actually be quite good in the long term.

Really interesting thread. We inherited mostly, and saved the rest. But early 30s we really need to think about investments. So we're thinking of remortgaging 50% of the house, buying a rental in cash, and saving the difference into pensions/isas. As we have no plans to move (small bit perfectly adequate house), we're going to climb the property ladder at a tangent iyswim, while saving the profits.

We're in mid-late 30s and are mortgage free for the last 2 years. It means one of us can be a SAHP, and we're still very comfortable, and have a nice safety net. We managed to get here with a very lucky property investment in an expensive city that hugely increased in value in the 7 years we owned it - that along with a lot of our own savings allowed us to buy a house outright in a much much cheaper area when we moved out of the city.

We could never have done it this early in our lives if we had wanted to stay living in an expensive area, that was the one big factor that made it possible for us

I have not read all comments.

But my exerience as a home owner ist that you always have to pay. Mortgage in the beginning, years later maintenance expences.

But you are a bit freer. Mortgage is fixed and if you do not pay you are always afraid of reposession Maintenance is easier to decide- not everything has to be done immediately, sometimes Things can be postponed or be done in an easier- cheaper- way.

So my experience- you will Always have expenses but it is mch easier one the house is completely homeowned and not any more bank owned

I was mortgage free until I was 30. Inheritance and a large salary etc meant I had a large London home mortgage free. I then downsized and moved to Norfolk and then decided to buy somewhere else and extend it so remortgaged (small amount) to do that.... for me yes there is a lot of freedom in either being mortgage free or not having the huge mortgages others my age have. I do know I’m lucky in that regard.

For us it’s meant that I have been able to stop work as we can manage on dhs very low wage, we don’t have to worry if dh ever lost his job as the mortgage payments are so tiny we could manage on benefit payments if we absolutely had to. (We aren’t a high income family anymore at all- we also have a disabled son).

However, houses cost a lot to keep even if you don’t have a mortgage. There’s always repairs, maintenance, general upkeep etc. A mortgage is just another bill really. I think unfortunately house prices are so high people overstretch themselves and end up with mortgages they can’t afford if circumstances change.