AIBU to sell my house?

[coffeelover39]

DH and I took out a 25 year mortgage to buy our flat in London three years ago and have two years left on the current fixed term.

When we reach the end of the term in 2021, assuming the value of the flat is the same as when we bought it, we would make approximately £200k if we were to sell it and rent.

I know there are a lot of benefits to owning your own home and there's no way DH would let us do this anyway - but AIBU to fantasise about selling up and banking the £200k?

I can't help thinking of all the lovely holidays and treats we could have that we can't afford at the moment.

We both earn a decent wage and can cover the mortgage payments, but we can't afford big holidays or a car.

Downsizing isn't an option as we're at the lower end of the market as it is - and we don't want to leave London. Increasing the mortgage term isn't possible either due to our ages.

Any thoughts?

You didn't answer my earlier question either - when you bought this property why did you put down such a big deposit...?? Why didn't you keep back £20k for holidays etc..

@hadthesnip2 I put down such a big deposit because I wanted to ensure that the mortgage wasn't too much.

We did actually keep some money back as well (as much as we could without rendering the mortgage unaffordable) but we used that for home improvements including a new bathroom that was badly needed.

Interesting tip about overpaying, thank you. Just to double-check - if I were to overpay by say, £3k a year every year for 5 years, would that have exactly the same effect as making a one-off payment of £15k in year 5?

because that sentence absolutely could mean that you will have paid off the mortgage in 5 years.

We'll have to agree to disagree on that, but I hope my situation is now clear!

@coffeelover39.

I have never done the maths but I expect the effect of the interest reducing every month making monthly overpayments would probably reduce the mortgage quicker than by making yearly one off payments.......but I don't think it would make much of a difference, but I'm sure some spreadsheet whizzkid will come along and tell you by exactly how much.

I look at things in a more practical sense. Your current musings show that not everything is black & white.

Have a look at an overpayment calculator.

You can typically only overpay by 10% of the balance of the mortgage PA. so you’d need to check

a) if that’s a feature of your mortgage
b) the balance

The nearer you are to the beginning of your mortgage the more of the interest you are paying off.

The capital is lumped off more at the end. By overpaying you’re reaching the capital quicker (if that makes sense).

Oh also if you sell up and pocket £200k you’ll POSs be liable for capital gains, which currently sits at 18% o. The sale of a residential property.

I agree with other posters you are being very defensive and standoffish almost when it's YOU that is being unclear and yes it bloody DOES look like you meant you will pay it off in 5 years.
And if you don't see the point in it all why did you go for a mortgage anyway.
Is a good feeling to be mortgage free and a very fortunate one so I would aim for that and use the extra money on holidays etc. ..When you've paid off in 5 years

@coffeelover39 it's definitely way better to pay off the £15k in installments rather than all in year 5. I would suggest you use this tracker to see how quickly you can pay off your mortgage or even just reduce the interest payments.

www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/

Even extra payments of £100 a month can reduce your term by 2-3 years depending on other factors. Or you could take advantage of the lower payments in the later months to splash the cash you saved on interest.

I sometimes fantasise about doing this too! Sell up, cash up and travel the world for the next 30 years followed by a practical visit to dignitas when we reach our 70s.

Damn those pesky kids we have who make us make sensible rational decisions about our future

I occasionally google our potential itinerary when I am awake in the night.

When my youngest is a bit older we might take a year out, rent out the house and travel the world. I like the idea of travelling the world without flying.

OP it never hurts to dream

When you remortgage, make sure you have the option to overpay and reduce the term without penalty. Keep transferring money over regularly (bear in mind there may be a minimum amount) and you'll see months being knocked off the end date.

I agree with other posters you are being very defensive and standoffish almost when it's YOU that is being unclear and yes it bloody DOES look like you meant you will pay it off in 5 years.

Interesting then that judging by their replies, the vast majority of posters seem to understand exactly what I meant with no issues at all!

And thank you @strivingtosucceed for the helpful advice!

It seems a bit stupid to pay a mortgage and lock up £200k of capital when you could easily rent and grow your capital base much faster by investing in yield generating assets and reinvesting the yield income.

It seems a bit stupid to pay a mortgage and lock up £200k of capital when you could easily rent and grow your capital base much faster by investing in yield generating assets and reinvesting the yield income.

Interesting Boggles - what sort of yield generating assets?

Obviously property would have been a good place to park your money 5 or 10 years ago but things have changed. Besides, we bought this place as a home rather than an investment - we had planned to stay here for many years (and still do really, bar my silly thoughts!)

@Singlebutmarried. Sale of a residential property is exempt from CGT.