Mortgage free?

[Cautiontothewind]

Family of 4, 2 adults and 2 kids. We currently live in a 3 bed semi in a very nice road in our area. House isn't huge but has been extended so there's a kitchen/diner, the extension and a separate lounge. It's a nice house but only reason it's the price it is is due to the road it's on.
Lately I've been wondering whether we could sell this house and buy a house mortgage free. The house would still be in the sinilar area and a 3 bed. More likely a terrace over a semi and realistically wouldn't be as big downstairs but each child would still have their own bedroom.
I like our current house a lot but wondering if it's worth it when we could be mortgage free? It's equally not my dream house but houses like that are ridiculous prices down here (South East) and I'm not willing to increase our current mortgage.
Guess I'm asking what people would do in this situation? I think what holds me back is what people may think or say. Or that I'll regret it when I see nice big houses my family or friends have but then the logical side of me says that means nothing!

How much longer do you have on your current mortgage and what is the repayment each month?

I look at my mortgage payment as a bit “rent” (the interest payment, I’ll never see again) and “savings” (the principal payment, which I’ll get back and will also increase as house prices rise).

A smaller/less expensive house also means less of an asset, and less increase in your investment as house prices rise.

So I don’t mind having a mortgage for these reasons.

However if you are looking at the money you pay each month and want it to invest/save, or you want to downsize for other good reasons (empty nest etc), I Can see the other side.

We took on a bigger mortgage when we could have been mortgage free sooner than later. But we found the house we want to stay in, so it was worth it. How old are he children? You could always wait and downsize later.

Are you struggling each month or paying the mortgage comfortably? If it’s the latter option I would stay and keep paying, you are ultimately paying off an asset that will be yours one day. If you are comfortable, why don’t you focus on over paying, really Chuck everything at it for a few years and be mortgage free that way? You can shave years off your term just with a few hundred extra a month.

How old are the kids? Are they close to leaving home or are they going to get bigger and be with you a long time?

If my kids were 17 and 19 I'd crack on.

Otherwise there is no way I would do this until I was at or close to retirement age. We specifically took a large mortgage knowing we could and would "cash out" later. (No rattling around in a large house in retirement for us)

I think as children become older teens/ young adults it is nice to have more living space so that you can all be within the living areas together but with your own space. I have been grateful for a second living space where the kids can watch ‘their’ tv programmes or have friends over- with no need to be locked in their bedrooms.
Don’t underestimate more living space as children get older- it makes family life less stressful.

We upsized to get this when we could have been mortgage free on our smaller house- I am so glad we did- especially during the last year. As long as you can afford the mortgage I would stay- you can always downsize at a later date.

How much are the moving costs? That's money down the pan that could go to pay off the current mortgage.

Forget about what other people might think or say. Think about what suits you.

What practical difference would being mortgage free make to your lifestyle and future?

If you're currently struggling financially, would like more disposable income, or freedom to retire early or work shorter hours, being mortgage free can help with that.

However, if your income is secure and you can easily afford the mortgage, you like working and aren't itching to work less, it might not make a lot of difference. Plus moving costs to consider, and a house in a cheaper area or one that is smaller may not hold/increse value as well. Or more expensive houses might lose value quicker in a recession as there's more forced sales and/or fewer people can afford higher prices. It's a gamble.

Is your mortgage affordable at the moment? Is the interest rate low so in effect you are mostly paying off the capital each month and therefore increasing the amount of house you "own".

If its affordable now I'd keep the house and keep paying the mortgage.

If you are thinking about changing to a lower paid job or have another reason that income might drop, it may be better to extend term and reduce your monthly payments but still keep paying of capital, then go mortgage free when kids start to leave and you need less space.

Thank you everyone.
The mortgage is affordable for us and we pay more so the mortgage term is less. We do still have savings and were potentially looking at buying a second property to rent out however unsure if that's the best investment right now.
The kids are 4 and 6 so young still and I have thought about how much I'd miss the second living room to be honest, which is why I'm so torn. Financially great to be mortgage free and have a fair bit of money in the bank still but I don't want to regret that or end up thinking urgh wish we had another room!

I think if you can afford it stay where you are. We are in a similar position but I love our current house. It’s nice to have the knowledge that if my dh was to lose his job we could downsize, still live in a decent area but be mortgage free which will take financial pressure off. Until then we will just stay where we are.

Definitely don't do it. Kids need more space as they grow, might need to live at home as adults, loads of their mates trooping through the house etc.

One of the reasons we bought the house was because I was determined to have the extra room to be fair. Had images of kids having friends round and us being able to leave them to it. Plus Christmases etc we could host the whole family.
Maybe it's something to put on the back burner a bit in this case. We can still buy a second property to rent out and my husband did suggest picking one we'd perhaps be happy to live in one day so that might be an option

I would stay. You'll want more space, not less, as the kids get older.

Don't make decisions that could impact you for a decade or more based on the anomaly that's been the last year.

You might currently be thinking you've more space than you need, but hopefully we're going to be able to have big extended family Christmas gatherings, birthday parties, summer barbecues, friends round etc etc sometime soon, and then you might be relieved about having plenty of space.

Our house is 'enough' for us, with a largish kitchen and living room due to downstairs extension, big garden and a spare bedroom but barely leaving it in the last year, and having to use the spare room as an office which also doubles up as space for foster kittens has made it feel quite small.

@BarbaraofSeville you make a very good point. We actually viewed a house yesterday which is bigger but financially it probably isn’t the right thing to do. Your comment about making decisions on the past year is excellent. I do feel a bit hemmed in as our upstairs is pretty small but you’re right, this year has seen all of us at home much more which has impacted everything. Thank you!

@Cautiontothewind if I was you you I'd stay put and enjoy the space that you have. You are probably just about past the worst of giant toddler toys like kitchens etc. But more space is definitely useful as the kids get physically bigger and so do all their friends I've never owned a second property but love homes under the hammer etc but as I understand it's much harder to make additional money that way these days. Have you checked out the topping up you pension challenge thread on this board it makes for very interesting reading.