To ask if this was actually a mistake? (House purchase)

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In 2021 I owned a home with a 100k mortgage. It was valued at 285 and I sold for exactly that. I was overpaying the mortgage massively (600 a month repayment and then 500 a month extra). I worked out that within 5 years I could have paid it off in full, alongside some savings I also had.

Instead… I bought a home in 2022 with a 300k mortgage. Even though I am in the best loan to value category with the bank, my repayments are now 1,300 over 25 years. Obviously if the rates still stay high in the next 5 years then I may struggle to repay at all and have to sell.

I was encouraged to make this move by family who have made a lot on climbing the ladder with their homes. I did want to move somewhere bigger and this house is twice the size of the first one but I can’t help thinking it would have been better to have stayed put?! I could almost have paid it all off now but instead I am lumbered with this huge mortgage and I don’t have much more equity to show for it, so I haven’t gained by buying a bigger house have I?

But how much is the house worth?

@maddening the new one is valued at 492.

Well you’ve gained a bigger house? Obviously if you didn’t particularly want the house itself and were just trying to make money, it was an error, but most people buy houses because they do want to live in them.

Do you like this house? Is it worth £1300 per month to you to live in it? If so, great. If not, downsize and pay your mortgage off.

Sorry I mean i haven’t gained anything by climbing the ladder where apparently that is what’s supposed to happen! But I would have been better off staying put wouldn’t I?

I think you need to let this go or you’ll drive yourself mad on what ifs.

Well looking at housing as an investment instead of a home in a financial crisis is part of the issue really. Sure lots of people have made money on property but that can't just carry on. Houses are homes, if you didn't want a bigger house you probably shouldn't have bought one.

You don't really gain by climbing the ladder these days. The ones who do are those who bought their "biggest" or top home when prices were fairly low and have seen the basis of their home increase dramatically so that when the time comes to downsize they will be able to release the cash.

If you think about it, while your smaller home increased in value, so did the larger home you wanted to buy so naturally the mortgage etc is bigger and you need to pay more towards it. Coupled with higher rates this makes your mortgage expensive.

Whether it is worth it or not depends on what you want from life. Staying put you could pay the mortgage off or save money and make investments. However, moving means a bigger house. For some the financial security means they feel happier in a smaller house and for others the big house makes them happy. There is no right or wrong answer.

The only thing you gain by buying a bigger house is the bigger house. You will be paying more in interest on the mortgage so you won’t build up equity any quicker.

It's also only been 1-2 years, you don't tend to make money on a house that quickly anyways

OP you have only had it a year ,these things go in cycles and we are in a dip at the moment .
This happened to me as I moved upwards just before the last recession ,few years of no movement on the value but it was where I wanted to live so didn't think about it .
When prices rose again I "made " £200k but actually it reality doesn't matter as I still want to live here .

Do you need the bigger house? Does add anything to your life (other than having a bigger mortgage)? Or is it just a burdon?

You said you wanted a bigger house and now you have one, so you have gained something.

What did you expect to gain? I’m not sure I understand the post.

You don't really gain by climbing the ladder these days. The ones who do are those who bought their "biggest" or top home when prices were fairly low and have seen the basis of their home increase dramatically so that when the time comes to downsize they will be able to release the cash.

This but many people don’t understand or realise the market isn’t the same as 15,20 etc yrs ago

The gain is in the space and the nicer area.
You can do the math to plot the increase in asset over the next 25 years compared to the old house and add the difference in the mortgage costs. Guess a bit on interest rates. It will probably come out as slightly better.
I ran the same sums when deciding whether to leave ex marital home after divorce or not. Could have stayed but would have been watching every penny. Downsized massively and it's lovely to have spare cash to live, holiday etc.
But I'm old. If you're young, if your kids will get use of a bigger garden, if you have access to better schools. These are all things that could be worth that mortgage.
It's never a bad question to raise, to reflect on where you are. Decide for yourself or set a deadline of 7 months before your mortgage term ends to decide.

You haven’t gained much more equity yet because you have only owned it since 2022. Give it a few more years and you will eventually have a lot more equity than if you had stayed in house 1.
It’s rare to make money on a property in less than 2 years. Try to just enjoy the considerable extra space, you wanted extra space and now you have it . The hardest part of paying a mortgage is generally at the beginning before inflation/salary increases have made the sums feel more manageable.

Did you expect to profit off of moving house within a year? I don't really understand what you expected or are surprised by. If you bought a bigger house just to try and game the property market, then sorry, looks like you lost. You do still have a big, expensive house so you're doing just fine.

I sometimes think about how if we'd stayed in our first flat we'd be mortgage free by now. But we moved to a small house, then a slightly bigger house and we now have a fairly big mortgage which isn't going to be paid off for another 20 years.

But I love my house and we needed it for the size of our family so overall it was the right decision for our family. We would have been cramped in the flat. But with the cost of living etc it's hard not to think about how much easier our finances would be with no mortgage! Even stuck in a little flat!

OP, with a mortgage of £100k on your old house there's no way you could have paid it off in 5 years by paying £600 repayment and £500 overpayment, even zero % you'd need to pay £1666 a month, so in that respect you have your numbers wrong for sure.

As for your current house, it's entirely how you see it - you have a bigger house but also a bigger, more expensive mortgage. It's not a matter of was it a mistake, it's just the maths.

If you don't want to live there, or you can't afford the payments, then move. Only you will know if this house is worth it.

You won’t gain much equity in a year if any! I think our house may have gone down in value over the past year! We bought years ago so it doesn’t matter to us.

Buy the house you need and it is a very long term investment. Once you pay off your mortgage, you have an investment and along the way, your asset will hopefully increase in value as well but never any point in overstretching yourself.

We bought a flat in 2000 and Moved to a 3 bed semi in 2002, we haven’t moved since. We have now paid off our mortgage and we are comfortable. It’s a small house for 3 people but it made financial sense for us.

its a long game. You’re not going to realised loads of equity in a year. But do the maths. In 20 years will you be better off based on the value / equity of this house compared to the £100k mortgage house