To go from a £500/m mortgage to a £2800/m mortgage?

[badatdecisions]

My partner and I have been looking at buying a bigger house for years, but we're so picky about the area and what we want that there's literally been about 3 properties that we've been interested in enough to go and look at.

Recently one has come up that we both love - it's not quite perfect, but it's the closest we'll ever get to what we want in our budget I think, and there's lots to love.

However, I'm very nervous now about such a huge mortgage jump, as we're currently on a low interest rate on a very small house, lived there years, will have fully paid it off in the next 3 years and would be "free" to travel or do whatever we want as we're self-employed and can work from anywhere. We are mid/late 30s, no kids or plans for kids.

We were considering keeping our current house as it's nearly paid off (I know there's stamp duty to think about with 2 properties), as when I was growing up my parents lost our lovely family home and it's made me really paranoid about losing another home by taking on a huge mortgage, so at least we'd have a house we love to go back to if needed?

Mortgage broker says we're eligible for a bigger mortgage than the house we're looking at buying, but to be honest the thought of that much more debt terrifies me. Our business is profitable every month (touch wood), but we have a team of staff and salaries to pay, and that's our priority - plus having enough of a nest egg in the business to cover several months of them and anything else that may come up without needing to worry.

We also love our current house, it's near lots of our friends, it's not overlooked, it's very convenient, we have lots of great memories of our pets there, it's just feeling too small for us really, plus the area isn't as good as it once was and one of our neighbours is annoyingly nosy/intrusive.

Our life at the moment is very chilled, we're lucky to not have to worry about money because our costs are low (no debt) and very easy to reduce outgoings if we wanted (e.g. not eating out as much).

Would you go for the lovely unique forever home or opt for an easy life and travel/wait to move until house is paid off?

AIBU - buy it
Not - don't buy it

We've thought about this from time to time however we have no mortgage now and would need one for approx £500k based on areas where we would want to move to. For us, it's not worth doing, we'll tick along as we are and have the financial freedom.

We are overpaying now and were planning to pay the last bit when our low interest rate expires, so about 3 years of payments I think.

We do have a knackered wooden conservatory we need to get shot of altogether (was planning to turn into a proper small room brick extension but the fact it's so close to the canal and there's no back access to the property mean the few people we could get to quote have come back with ridiculous prices, £70k+).

Other than that the house is probably a bit overspecced, engineered wood flooring downstairs and original wooden floors upstairs, air con in most of the rooms, triple glazed windows, oversized bath and expensive shower, etc. We've also had the doors replaced, ceilings replastered, kitchen and bathroom fully replaced in the past few years. No downstairs bathroom or dishwasher though - not enough space! Roof has been checked & improved recently too. It's a 1990s house so not super old. 3 small double bedrooms.

But this is making me think it probably would upset me a lot if tenants ruined it. It's a student area so I'm not worried about evicting people if needed, they are usually only there 9 months at a time (some want to pay extra to stay the summer) and we would get more for it compared to regular tenants.

It might also possibly work as an Airbnb as there are businesses nearby that have a lot of visiting staff, and it's very close to a local tourist attraction.

We're probably in a similar position. We've got about 30k left on the mortgage and will be in a position to pay off in full once our current fix ends in 3 years. No kids and good incomes but to improve on what we've got is a huge step up. Currently we're in a semi on a busy road and I'd really like a detached on a quieter street. But it's a huge amount to pay to essentially get rid of some road and neighbour noise.

Keeping an entire house because of memories sounds like an astonishingly poor financial decision. You don't want tenants, as they won't treat the place nicely. You don't have the room to do the hobbies you want. You can afford to move.

What would be the point in mothballing it to visit and remember pets? You have your own memories and photos. Move on and enjoy your life without all the expense it would entail.

I actually agree with this - if you want or need to move, then move, and remember cherished pets in other ways.

Home owners with a strong emotional attachment to a property make terrible landlords.

We went from mortgage free to a £800 month 25 year mortgage (though we overpay), but it meant we could move to a house nearly twice the size, with a garden. We have kids and the space is amazing, but the upkeep is a PITA. If it was just me and DH I would rather have stayed where we were I think.

I was thinking Airbnb because of its uniqueness. My DIL had two babies close together, high flying career maybe, unique flat iof her own n a tourism area, think castles etc. she's doing so well for the last eight years renting it out. BUT she does do all the cleaning, washing herself. She's earning much more than colleagues she left behind.

My son and partner both did degrees at Leeds university, they've settled in a flat in a Yorkshire town, he walks to work, she catches the train into Leeds. He's going back to do his masters. His landlord once again hasn't increased his rent. Young professional renters are valued he said.

Ah they have to go through your home with every component of a new conservatory is that right? @badatdecisions

I'd sell the current house and take a smaller mortgage - you might be able to rent it out, but equally could encounter void periods, nightmare tenants, non-payers, and there will be costs associated with a rented property - plus income tax will be due on the profits from the rental.
Is it really worth the hassle?

It would definitely upset you if tenants wrecked it.

I have a house that is rented out. It was my very first house that I bought alone but when I met my now husband he also had a house already so we decided to live in his and rent mine. We had the same tenants in for a good few years but they’ve recently moved out and it’s absolutely wrecked, I’m absolutely gutted as I loved that house 😢 (my house was no where near the high spec that yours is either).

We’ve decided to sell it now as it’s not worth the hassle of doing it up to re-rent it. We worked it all out and as I’ve moved into the higher tax bracket in the last few years, plus higher interest rates and all the other requirements for renting we’d be making maybe £20 a month in ‘profit’ so as soon as we had any big repairs it would be coming out of our personal finances, up to now we’ve managed to pay any repairs out of the ‘profit’ so it hasn’t really cost us anything.

Yes, or ideally extension materials (we aren't big fans of conservatories and were hoping an extension would be less work and add a bit of value) - basically just a lean to type area though, it wouldn't create enough space to make it a forever home or anything.

No I wouldn't if you don't need the space. £2800 mortgage is huge if you are used to paying £500 and being mortgage free in your 30s will give you so many options of either travelling, early retirement and a comfortable lifestyle. Especially if you love your current house. I certainly wouldn't buy both.

to me the obvious thing is to sell the small house, then get a smaller mortgage for the forever house 🤷‍♀️

My mortgage is 2800 euro.

It's hell.

It's more about whether a larger house is a better use of money, as opposed to something else, like luxury holidays. Or not working!
Without sounding like a reverse snob, larger house = larger expenses + effort. Not just the mortgage. Bills, council tax, maintenance, cleaning.
Also, while people tend to think large house = larger house price increase, they can actually be more difficult to get rid of, because of the smaller pool of buyers. In the recent price drops, 4+ bed houses actually suffered the biggest proportionate losses.
Especially ones described as erm 'unique' as per the OP.

OP I don't know the specs of the other house, but I'd go for it if it's a saleable family home. In a nice family area, not a period property or anything else that could scream expensive maintenance.

If the price is for 'luxury/uniqueness'? No, unless you grab a bargain. You're successful businesspeople, so presumably you're somewhat financially savvy, and can consider whether something is a good investment. In your shoes I'd rather invest the extra so I could semi-retire and travel.

FWIW, I'm like you, but DH would prefer a bigger house even without kids. Given that he spends most of his time in one room, in our current house, it's a ridiculous desire.