Is it wise to increase our mortgage?

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Looking for a little outside perspective here please as I don’t really discuss our finances with friends/family.
We have just had our house valued at £480k and we have a mortgage of £85k on it and a loan of £8.5k. We pay £837 a month on a fixed rate mortgage that ends in jan and have 10 yrs left. The loan is £137 a month with 5 yrs remaining.
My husband earns £38k a year basic but has benefits and guaranteed overtime which brings it up to between £46-50k a year.
My husband is 55yrs old and I’m 43.
We have £3k in savings.

I left my part time job in May and plan to start job hunting in September. I’ve only ever earned around £6k a year in minimum wage, part time jobs since having children.
Our kids are now teenagers.

We are thinking of moving to a bigger house just up the road.
It is just outside school catchment so you get a lot more house for your money. Catchment doesn’t affect us anymore now the kids are both in their high school.
We live in a good house that meets our needs but the new place is the sort of place we thought we’d never achieve.
It would entail borrowing an extra £28k -most of this is stamp duty. We would probably live there until the kids left home then downsize to supplement our retirement.
Are we silly to increase our mortgage in this situation? I’m worried that I’m not earning and my husband is running out of earning years.
I have no pension ( I earned decent money before kids, bought a house at 22yrs that gave us the good start. But I’ve lost confidence in my earning potential since being out of the game for so long)
My husbands pension pays £42k lump sum and £1600 a month at 60yrs.
Are we mad to do this? Should we just sit tight and live a bit more comfortably here once I start earning?
Any thoughts appreciated. My mum died a few years ago and I miss her advice!

My initial thoughts that your repayments are high. My mortgage is £130k and I pay £695 per month. Are you overpaying?

Your mortgage seems high so think you can make savings there.

I also agree payments seem high on that loan to value. Your fixed rate percentage must be extremely high. Have you looked on some providers websites to check what new repayments would be as you might find they will be the same or even less.

Hi, thanks for your replies, we are fixed at 1.86% until January.
I was looking at rates last night and realised we are paying quite a high rate but we are tied in.

Mortgage seems ok to me tbh- 85k over 10 years is 8.5k in payments a year even with no interest at all!

I'd be tempted to say go for it would new mortgage be over same term as current one or would you be looking to extend it? Either way affordability/ lending into retirement not an issue although I am assuming you have or will have adequate insurances in place to cover the additional sum

1.86% is an excellent interest rate, not high at all.

Is your current house too small for your needs? You also mention downsizing in future, so another potential lump of stamp duty to pay.

Is there any scope to extend or improve your current house? Might be a less disruptive and better value way of changing things? The £28k you are talking about spending (plus any further stamp duty you would pay if you moved again once the DCs had left home) would go a long way towards financing an extension?

Do you need a bigger house?
I’d be getting rid of my mortgage ASAP

Hi,
Thanks again for your replies.
Our house does meet our needs, we have already extended out the back and on the side.
It’s a large 4 bed semi with 3 receptions, 2 bathrooms, integral garage, off road parking and a 100 ft south facing garden. It’s in a little cul de sac and in catchment for really good schools. The School catchment is what pushes the price up.
We got new neighbours last year in the semi we’re attached to. They’re not especially noisy but we’ve never lived next to a young family before (we were always the young family!) but we do hear them and the street has a lot more cars in it than 13 yrs ago when we arrived and it feels quite built up.
This prompted a little look around.

We realised that if we moved out of catchment we could get a detached house with en suites, more off road parking, quieter street and a more manageable garden etc for roughly the same price as ours.
We looked at a few, some were £80k less than ours ( detached, but only 2 receptions and parking for 2 cars) and we could almost wipe out the mortgage.
However, I like to think that all the mortgage payments we make are like saving cash for retirement when we downsize.

Then we spotted this house and it’s really big with off road parking for 6 cars, 3 bathrooms upstairs etc (great as kids get older) but it’s on for £5k more than ours plus all that stamp etc
It’s a great house but we would probably want to update the kitchen and bathrooms in time and I wonder whether it would be more sensible to stay put and have holidays etc
I really appreciate your comments, thank you :)

It sounds to me like you have some doubts and anxieties about increasing your mortgage at this stage because you're here asking. Everyone is different, some like risk and others (like me) are risk averse and hate having any debt (including mortgage).

I was going to ask the same questions as a PP - do you need a bigger house? Could you invest in improving your current home rather than spending on removal costs, fees and stamp duty?

Don't think you said how old your teens are, late or early teens? Do they have/need uni funds/support if going on to higher education? Would this impact on what you could afford on a mortgage in the future?

Personally I would focus on paying off the loan and mortgage asap rather than increasing how much I owe if not really necessary. Like I said though I am risk averse (boring) and don't like having any debt - looking forward to being mortgage free in hopefully 7 years by the time I'm 45 by overpaying each month with my DH.

All that said - on the flip side my parents were managed to achieve mortgage free status then when they were at your stage in life decided to upsize and take out a mortgage again when they didn't need to but just fancied a change. However, they planned that they knew they could pay it off in around 5 years because they had guaranteed lump sums coming in over those few years and at the time both had full time incomes.

Do what you feel you're most comfortable with and won't stress about affordability.

Personally I wouldn't bother. Your kids are well in the way to adulthood and you will have to move and downsize again . Is it worth the.hassle ? Only you can answer that one .

You only have 3k in savings and no pension and you want to increase your mortgage with not that many years left until your husband retires? Plus pay a big amount of stamp duty?? I am by no means a finance person but seems a bit risky.

Firstly - your ages make make the mortgage a little more expensive, we had a mortgage for a short while in our mid to late forties and there were some companies that were not interested!

Secondly - will you downsize eventually, because you seem to be doing the opposite now. Admittedly you still have the teens with you ATM, but it's another move and another stamp duty, legal fees, all the various costs that you run up when moving ...

Would you go for another fixed-rate, because I wouldn't have thought the rate is likely to drop tbh?!

I wouldn’t do it while you are out of work.

There is quite a lot of pressure for your husband to continue working already given the mortgage amount and his age. Do you have income protection insurance? The extra might not make a huge difference to the payments but would add to the pressure to carry on.

I don’t think do it unless you were working and building up income but some of that depends on how to want to use the pension and your husband’s plans for retirement . Would you expect your husband to retire at 60 and pay the mortgage from pension? If you increased monthly payments, would that give you enough to live off? Also would you be happy to use the lump sum to pay off some of the mortgage or would you want to use it for other things? Do you think you’d work more when he retires to make up the difference in income or would you want to be able to spend time with him?

I would focus my attention on future downsizing plans and retirement planning. I understand the desire to have your dream home but wouldn’t a more comfortable retirement and financial wiggle room make you happier in the long run?

Thanks everyone, you have all make a lot of valid points and have been enormously helpful in achieving some clarity.

Something we honestly hadn’t thought about (and I’m embarrassed that we hadn’t considered) was the fact that when we downsize after the kids leave we would be paying stamp duty and all the fees associated with moving all over again. Doh !

I am quite risk averse and I hate debt, my husband hates the thought of all that stamp duty.

We’re thinking it’s better to stay put for now.
There is probably more to life than a fancier house and a bigger mortgage!

After the summer holidays I’ll start job hunting and put a bit more money in the bank.

My husband is planning to work until 65yrs to help get the kids through uni (if that’s what they choose to do) or help them get started in life.

We will move eventually, when the kids leave we want to cash in and move out of the catchment, not necessarily to a smaller house but even this place would be £100k cheaper 1 mile out. We have considered doing this now but because I don’t have a pension we think it’s better to keep paying the mortgage for the next 10 yrs and then sell up.

If anything crops up, illness or tragedy or we just think it’s a good time we always have the option of moving further out and cashing in.

I want to make sure we have a reasonable standard of living along the way.

When I was growing up my mum looked after the pennies so carefully ( she used to only buy second hand clothes and cut her own hair) but we did live in a nice house.
However she died not really having enjoyed herself much, saving had become such a habit. She left everything to my dad (who just after her death won £76k on the lottery and then inherited £500k from a relative he’d never met)
My dad promptly married a lady (same age) who was penniless and living in a caravan. She’s enjoyed a life of 5* luxury ever since, brand new cars x 3, new house, holidays, private health care, jewellery, clothes, made to measure everything, M&S food shopping etc
She literally laughs in my face and says she’s spending my inheritance. ( I just laugh along and say “good for you!! too right!” ) all the while I’m feeling ever so sad for my mum.

So in her absence I’ve been very grateful for all your sound advice, thanks you lovely lot 😊

OP, I think you've made the wise decision consdering the age of your husband, not that he is old, just that he is getting closer to an age he might want or need to retire. OH and I have just paid our mortgage turning 50 and I cannot tell what a deliverance it is. We overpaid for years to do so and at times, I too was tempted to ease off, enjoy the money and just extend the length, but OH was adamant he wanted the mortgage paid asap and he was absolutely right. We now have some freedom and choices, and of course the extra disposable income, this is priceless.

Throwing all this money in tax just to have a massive house you don't need seems a massive luxury.

Stamp duty is a significant factor in moving house
its one of the reasons the market is grinding to a halt
BUT
I'll go against the grain here

if you can move to the bigger house and still be mortgage free in ten years, go for it

Just to say that my DF did something similar (except didn't have a big lottery win). I am protecting my DCs with my will - as lovely as my DH is, financial savvyness or wariness not being his forte.

You sound like you are in a great housing position - big enough, popular area, good amount of equity. So definitely time to start building up your pension and household savings. You've got a long way to go to receive your state pension and I would never like to rely on spouses pension (you never know what might happen).

I appreciate you see your mortgage payments as like saving for future, but who know what will happen with property prices? The cheaper areas might rise in value then your plans to downsize might not leave you with the option of the kind of house you want that would release enough cash for you. And your kids might be with your for years and years and years - although at least they could contribute then to your household income

Hi, just an update to say that the big house we were looking at is now under offer.
We don’t feel particularly disappointed as it’s made our decision for us.

We’re on a lovely holiday in Spain atm and it reminds us that it’s important to us to have a reasonable amount of disposable income.

I am doing a little online job hunting In quieter moments and I will up my search efforts when we get home.

Thank you for coming back with an update. It’s interesting that your husband is 12 years older than you and this contributes to you not being able to have a long term mortgage. You are younger and you might find that any income you can bring in, hopefully from a job you really enjoy, carries you well into hubby’s retirement. Also your confidence can be restored and at some point you might be the only one working in the household!

Your mum’s life story of always being careful with money, and the comfortable financial situation for your dad is now in, is a heartbreaker. If only your mum had enjoyed those golden years! Maybe, however, your mum’s idea of being careful with the purse strings was just the way she was. They say money doesnt make you happy.

Your Dad’s second wife sounds gauche and inappropriate, and possibly unkind. Your Mum probably would have disliked her. I bet the new wife can’t believe her luck and is making the most of it. Money doesn’t make you happy but if she makes your Dad happy I guess you have to suck it up - like you do. That said, you could say to her that it sounds hurtful that she talks of her spends in relation to your inheritance and that she should stop that. Then maybe you could talk to your dad to see if you could get him to ring fence the inheritance your mother left so it descends to your family. You know how hard your mum scrimped and saved and perhaps your mum would know that in your hands, the cash would be put properly into supporting you and the grandchildren, and not just frittered on disposable items.

I assume you had a frugal upbringing. Maybe your dad could secure some of his new found wealth in inheritance planning. It’s possibly he simply hasn’t thought of doing that. You could broach a conversation. You sound a kind and considerate daughter - it would be good to talk to your father about all the changes that have happened since mum passed away.

Happify what a lovely, kind post, thank you.

I have always joked with my husband that I’ll carry the financial torch when he gets too old! He has always been really supportive of my work choices. We’re a team.

As far as my Dad is concerned, I am pleased for him that he is enjoying himself.

I’ve written off any prospect of inheritance.
Dad did tell me a few years ago that he and his wife had made wills leaving everything to each other, but when the other had died it would all be left to me.

I don’t see it as my money though and I’m not expecting to see any of it. I’ve had to just let that thought go.

If Dad’s wife died first then there might be a glimmer of hope if it didn’t all get spent on nursing home fees.
If Dad goes first (more likely given the wife has never lived so well ) then, assuming it didn’t all go on 5* nursing home fees or she married again, there might be the property left.
This would go a long way in helping my children get their own properties.

I wouldn’t be surprised though if Dad’s wife changed her will in the event of Dad’s death and left it to one of her friends or charity.

My Dad’s wife doesn’t have any children, which from an inheritance perspective is a good thing but she doesn’t really have any sense of family.
I sense that she sees me as a threat of some sort to her influence on my Dad.

I haven’t had a private conversation with my Dad since he got with his wife.
If I call him, he puts me on speaker phone.
If I go to their house she follows me everywhere.
They come to ours for Sunday lunch and Dad likes to stroll around our garden, giving me little tips on the plants but we’re never alone.
I’ve decided not to address this as I don’t want to cause any upset. Dad’s wife is someone who blows up with temper and cuts people off.

My husband shakes his head at all this.
As they reverse out of our drive when visiting, he stands waving them off with a fixed grin muttering “don’t hit any trees at high speed because that would make me very sad - wealthy - but sad !”

Sorry if this has turned more from a post about finances to a relationship post!

It’s such a shame you don’t get a private conversation with your dad. You don’t have to tolerate that. Engineer some time one to one! Your husband has to help - he has to support you in making this happen.

Regarding investing or moving - I’m not sure you will find it too easy to downsize. I have friends who find it hardly worth it and too much of a wrench.

The house you liked has now sold anyway.

What you should start building now is YOUR pension. The government add tax relief to contributions even if you’re not a taxpayer. Pay in £2000 and the pension administrator/government add 20% (£400). There is a cap to it but start now and when you are over 55 you can take the whole lot out as a lump sum or you can add to it when working and build a bigger pot. Nowhere else will you get 20% on your savings. You don’t need to pay in a lump sum, you can pay it per month. I realise it’s not easy to find these amounts for saving, but if you can you will be very glad you did it.

Seriously - see if you can smooth out some of the power your father’s wife has over family interactions. It’s not right that she dominates proceedings and your children see that you (as a peace keeper) are being sidelined.

Nice to hear your story! Lives are interesting. I should write a book. And so should you! X

Happify I am so grateful for your excellent advice. I so appreciate the time you have taken to reply.

Your advice on my pension situation has sparked a determination to sort this out. I’m so unprepared it’s quite worrying.
I had no idea about the government pension top up scheme.

Once I’ve sorted my job situation out, it will be my priority.

I like to think we will move eventually. I know I have referred to the move as downsizing but really it’s more about getting out of this expensive area.
I remember chatting to an estate agent about downsizing in retirement and he smiled and said “people find it very difficult to leave the family home”
But I don’t think either of us are particularly emotionally attached to the house and would trade it eventually for financial freedom.

As far as Dad is concerned, well you are right on that too.
However, Dad has always looked out for No. 1 and his wife does have more bearing on his happiness than me. It’s not worth the risk of my children not having contact with their grandfather.

I definitely want to read your book.

People are interesting 😊