To get a new mortgage at slightly older ages?

[Cranberry2020]

We paid off our mortgage in our late 30s/early 40s. We have lived mortgage free for about 6 years. It’s been lucky as one of us were made redundant during Covid. However we’re both in jobs now. We would like to extend as we need a bit more space for us as we now work from home and our growing child. We have a detached bungalow and the extension of choice is around £75k. It will give us a lot more space. We are now 45 and 50 years old, are we mad to consider taking this on? We’d plan to have it paid by 65 for the oldest one. Our mortgage would be around £575 per month so much less than we paid whilst overpaying to pay it off.

How short of space are you really? How old is your child? I find they need less space as they get older. DS room used to be crammed with toys, schoolwork. Now it’s just his desk and PC, few books for his studies.

I would consider what age you are planning to retire and factor it in to any future plans.

People can have a mortgage at any age, it’s just the terms I mean they just want to make money from you.

We were sort of like you, mortgage paid off late thirties. We chose not to expand or go for a bigger house so we could retire early. Will both be retired by 58, buying time was our priority.

I would do it if you need the space.

But at £575 only a month, if your higher tax rate payers is there not wiggle room for paying off quicker?

If it’s £75k total, can you save between now and extension, so you maybe can pay off £10k straight away and just get £65k mortgage. Then keep the £65k mortgage at £600 a month so it’s paid off in say 15 not 20 years. Then if you have option to overpay, do that straight away. So it’s fixed at £600 but you pay £750 a month. Then it will probably be gone in 12 years etc

We got an advance on our mortgage when DH (the higher earner out of the two of us) was late 50s. We explained to the bank that his work is his passion and that he intends to never retire 😂

They were also interested in other assets, life insurance etc.

it's not a huge amount of debt it's £75k!

And that in a nutshell shows how bonkers our society has become in our attitude to debt.

We did pretty similar recently went from paid off on the old place to a forever home. Took out a modest mortgage for a 15 year term a few years ago. We are overpaying so hope to get it paid off in the next couple of years, around half way through.

We are trying to be good, no big toys or expensive holidays until it is paid off as that worked well with paying down the last house.

There's a massive difference between £75k of unsecured debt - credit card, car loans etc and secured debt for a reason that has manageable payments. That is also likely to add value to the house.

Debt in itself isn't a bad thing, it's a rare business or country that could get by without debt - but managed debt isn't in itself an issue.

If you're both higher tax payers, I'd assume that 75k is less than one years joint salary?

Unless you have outgoings beyond the normal, I can't see any reason why you couldn't easily afford the £575 and then a bit more in either overpayment or in savings so you've got the option to pay it off sooner if that fits your circumstances.

I'm pretty risk averse and don't have unsecured debt but I don't consider 75k in your circs a concern at all - it sounds like it would be a very small amount of your circs. Hopefully you'll get the benefit of the extra space and it will add value to your home.

Slightly off topic. Have you considered a loft conversion? Not saying don't get an extension if that's what you want, just asking if you had thought about a loft conversion. We live in a bungalow with a loft conversion and DS likes his bedroom upstairs, out of the way, so that freed up space downstairs.

I'm risk adverse when it comes to debt too and I have worked in finance my whole life. Only debt I ever hold aside from mortgage is 0% credit cards used only for added protection
Like others have said, £75k of mortgage debt which will create a bigger more comfortable home and likely add value is very different to unsecured debt for lifestyle, cars etc.
It also sounds very affordable but if both are higher rate tax payers I'd be looking to overpay as much as possible and get it paid off as fast as possible

I don't see a problem, you are investing in your house and your family so not "stupid debt". I would see about paying off early (check what is allowed on your mortgage before you sign but the system I often advise as it really doesn't cost you a lot but saves you a lot:

Advantages of Biweekly Mortgages - paying 1/2 the repayment amount every two weeks.
Borrowers can pay off the mortgage sooner by making one extra payment per year. For example, let's say a borrower has a £200,000 mortgage with a rate of 5% and a 30-year term. If the borrower does the biweekly mortgage, the loan would be paid off in 25 years or five years earlier versus the traditional mortgage with monthly payments. The extra payment per year adds up over time and allows the borrower to own the home sooner.
The interest saved as a result of a biweekly mortgage is also a significant benefit. Using the financial details from the above example, the total interest for the traditional mortgage would be £187,000, while the biweekly mortgage would cost £151,000 over the life of the loan. Not only does a biweekly mortgage pay off the mortgage sooner, but it also saves the borrower £36,000 in interest over the life of the loan.

I would in your position. Yes, you could probably manage on what you already have, but you are way to young to "make do". Enjoy your life, invest your money on things that will give you and your family happiness longer term.

I don't think it's mad if it's affordable for you and I'm sure you'll really enjoy the extension. Most people are still paying off their first mortgage into their 60s so it sounds like you're in a great position.