Pay off mortgage debt or go all out

[Reflections2021]

Hello,

Want to get the views of fellow Mumsnetters. I’ve always been a very conservative person relating to spend, and been a meticulous saver. I have good career in the eyes of others, albeit frustrated can’t seem to get to what will be probably my last step of progression, albeit always being told I’m ready for it and ‘just missed out’. Hence, feeling like I could be doing what I’m doing for many more years and to try and make the most of it from a lifestyle perspective.

DH and I have always made decisions based on worse case scenario eg if one person loses their job, or we no longer both high earners etc. Lived like this for 20 years, have acquired properties etc. Have a nice home, everyone has their own room etc. but not what I see as the final home. Lockdown has made me reevaluate a lot of things, and where I am in life. Could pay the mortgage off fully, and continue with nice holidays when we can finally go on them, afford private school options for both DC etc. However, I’m starting to debate is it not better to go all out, get the dream house with nothing left on the ‘wish list’, live within our means but maybe know it’s only one reasonably priced holiday etc. a year and have to be more considered about what we are spending when.

I appreciate I’m fortunate, albeit I have been without in the past to have what I have now, and personally have worked extremely hard professionally to achieve what I have, against many odds for many reasons. But can’t work out whether to continue as I have been as it’s worked, or take more risk and benefit from some of the sacrifices we’ve made over the years whilst I can enjoy it, hear and now versus on focusing on security in the future to have a good retirement, but unlikely to do what I’m thinking about now as it won’t be of as much use at that stage of my life, and would probably need to downsize etc. If we hit any sort of real financial pinch, could sell some of the investments put away for retirement so there is a suitable contingency - but will mean that we will have to balance the books each month and be more prudent, something we have never had to do as such due to current lifestyle choices, other than to track savings and make considered investment choices.

In my situation would you focus on paying off any mortgage debt and live debt free. Or would you increase your mortgage debt considerably around 4 x in a premium location of the country, but live within your means?

TIA

We currently have 14 years left on our mortgage. Our plan is to make maximum overpayments over the next 4 years, sell up, move to Scotland, buy a cheaper house and live mortgage free. This will then enable my husband to quit his stressfull job (deputy head teacher) and do something more enjoyable. Being mortgage free will mean we can keep up the lifestyle we currently enjoy (business/first class flights, luxury hotels, fancy restaurants etc) and not have to worry about debt.

@CliftonGreenYork thanks for your reply, and great that you’ve got a plan. At the moment, if we move it’s probably likely to be no more than a few miles away. Where we are based offers the best of easy access to major city, and we can get anywhere relatively easily including to more rural areas. Will take quite a lot for me to convenience DH to move much further away, albeit if we did it would probably enable us to do similar.

It depends the older you are or the less secure your work is to last until retirement / mortgage paid off or if most of your investments are on property, the more cautious I would be and vice versa. That is purely because if it goes wrong, do you have time to rebuild if property prices hugely reduced? Equally if you are financially secure so could afford to lose the house and take a few extra unexpected financial hits and still be ok, go for it.

As you are frugal and can cope with losing it, you would be better placed than most to cope if it went wrong.

Sometimes it is ok to go for it.

One of the best feelings is to be mortgage free
I recommend it
Spend money on holidays
Holidays don't have to be expensive

Wanted to add I borrowed more in my mid 40s to move house and will only pay off mortgage at 58. The house still needs quite a lot of work, so have somewhat ended up serving a mortgage and a house rather than living my actual life.

@GOODCAT thanks. Most of it is in property. I’m usually inclined to be risk adverse with money, and at the moment we have plenty of equity to cover if anything went wrong with the property market, or if it adjusted. However, if we went for the dream home this would probably not be the case and in many ways the market is overheated where we are so there is a chance if we maxed out buying the dream forever home, (we are 40+) and the market adjusted, there is a much greater risk of our main home being in a negative equity situation than if we remained as is.

Already starting to feel like going all out, is probably not the way to go, unless I have a plan similar to @CliftonGreenYork.

Usually I’m very content with my lot, but at the moment I’ve been thinking about this more and more and feel quite indecisive, which is not like me.

OP, we faced a similar scenario recently.

Choices were-

A) Be mortgage-free in the next 3 years (I’d be 41) while continuing to save a lot and have lots of disposable income, amazing holidays etc.
But property is smaller than we’d like, albeit in a great location that’s convenient for work.

B) Buy a new, much larger house in a different area which would mean a complete lifestyle change. Also, we’d have to keep our current property due to needing to be in the area for work several times a month. This would mean taking on a 20 year mortgage, and depleting our significant savings to cover a good deposit.

My head said A), my heart said B).

We’ve gone with B).

Not sure if it’s a direct reaction to Covid/lockdown etc but I realised that I spend my life killing myself to save and invest and service my future, while completely neglecting the now.

Life is short. And I want to spend it in a nice house with a beautiful garden.

@GOODCAT thanks for sharing about borrowing more in your 40’s, and what that has meant. Had not thought of that as such. I’ve been thinking lifestyle, and not what that may mean practically for the years ahead of us.

@Name0ftheGamesnap made me think about a time when I was mortgage free in my early 30’s before kids and needing a ‘family home’. It was a great feeling, and in many ways changed my outlook towards work. The day it was paid off, and the feeling I was going to work because I wanted to, and not because I needed to, I must admit was amazing. If we stick to our current plan think we can be mortgage debt free in the next 3-5 years.

What extra would the 4x mortgage give you,seeing as how you already live in a nice house? I'm late 40s in a nice house but somehow feel I should be one rung up further ie detached, 4 bed rather than 3 bed semi. However almost paid mortgage off and at his age am starting to see friends and acquaintances get various health problems. I think security and knowledge that no matter what your house is paid for, and in your case have additional sources of income if reqd, start to matter a lot more than having a "nicer home". The market is beyond crazy at the moment anyway.

@TheMaven that is my exact dilemma! and how I’m feeling day to day, and the head and heart, and the hear and now, versus future debate.

Having gone with B, what are your thoughts and experience now?

@cozycat1

What extra would the 4x mortgage give you,seeing as how you already live in a nice house? I'm late 40s in a nice house but somehow feel I should be one rung up further ie detached, 4 bed rather than 3 bed semi. However almost paid mortgage off and at his age am starting to see friends and acquaintances get various health problems. I think security and knowledge that no matter what your house is paid for, and in your case have additional sources of income if reqd, start to matter a lot more than having a "nicer home". The market is beyond crazy at the moment anyway.

Completely agree. Take quality of life.

[quote Reflections2021]@TheMaven that is my exact dilemma! and how I’m feeling day to day, and the head and heart, and the hear and now, versus future debate.

Having gone with B, what are your thoughts and experience now?[/quote]
The plan hasn’t been fully executed just yet. We’re in the purchase process with the new house and hope to be in in early August.

So far, I’ve had a few “oh my god, what am I doing?!” wobbles but I do think we’re doing the right thing and we’re happy with our choice.

I look at the new house and my heart soars. I know you should never get attached to a property, but I utterly love it. There’s a pond and a big garden and lovely hill walks.

My husband and I both work long hours in stressful jobs and are high earners (I know it’s a MN cliche!, but didn’t have the quality of life we needed to get balance. We were on a constant hamster wheel but lockdown gave us a chance to move away from the city for a year and just cemented that it’s no longer for us.

I’m in a similarish position but a little behind you. By the end of this year our joint savings will be the same as our outstanding mortgage. We’ve had an initial discussion with an IFA who’s advised not to pay it off as it’s affordable to us and some very low risk investments could work better.

However the temptation to move is there. I love my house but the next move which would be to a detached, period house with a drive would mean borrowing around £500k. I’m a little younger than you but it would mean never taking the foot off at work. Yes I’d love to have a bigger garden and being able to park outside my house when I’ve got loads of shopping would be amazing. But having been so risk averse and frugal my whole life I think the stress of borrowing so much would actually take the shine off having the dream house.

@cozycat1we looked at a property recently to test our thinking. It wasn’t the right one for us due to layout but certainly made us think. Detached with neighbouring properties being a good distance, 5 beds (at the price point would have preferred another room to give flex for an office etc.). Think typically you can 6 or a 7 bed for the price but they are rarely available in our area. Stunning master with huge bathroom dressing area. Stunning kitchen think 40+ ft and really wide. Nice garden both for entertaining and the DC to play. No sense of being overlooked. More than enough off street parking when DC are older have cars etc. Or for several visiting friends. Not on the road with the train station but in a position where the station is 100 yards walk away and the line does not run behind the house. Really quiet leafy road on the edge of a major city. You stand in the front and feel like no one else is around and feels like a solid stately house. Very secure; cameras, electric gates high end refurb done several years ago all technology fitted throughout. Lovely character and original features but ultra modern in many ways. Over 45000 square ft. Albeit only 2 main bathrooms, which means 4 rooms on the main floor share one, which again for the price we would expect more bathrooms. No dedicated office etc. And layout downstairs means you’d have to use one of the bedrooms which is fine or have it in part of another room as the rooms are huge but no way of dividing up with out having a room off a room etc. Versus our current Edwardian house. Lots of character, traditional 3 bed plus extended into the loft for a 4th large bedroom with en-suite. 3 bathrooms albeit none of them overly spacious but new and perfectly fine, 2 separate living areas etc. big kitchen for the style of house all modern, island etc. House refurbed when we brought it. Off street parking and a large garage which includes utility room. Potential to extend over the garage. Know it’s nice by the number of compliments we get sometimes people literally stand at the foot of the drive and stare, and when you open the door pass nice comment. But the DC means despite being a good layout each room is well utilised and we just have too much stuff everywhere. Albeit I think once the DC get bigger this will significantly improve as it all seems to be driven by the younger members of the family. Semi detached, neighbour is a bit dysfunctional, smallish garden albeit not done any work to it since we moved in and have looked into landscaping but still feel this means it would be perfect when we’re older less so now with your DC.

New house would mean far less trips to the park, with active children. It’s a lovely home, and would be great in the summer and has some special features which means you’d probably never have to hire another party venue again so think we could have some great times there entertaining. It’s definitely over priced in this market so won’t be making an offer. If it came down to what it should be commanding then might be interested if I can workout and afford to resolve the bathroom scenario, and a few other minor considerations. In terms of our current home, I would try to stretch ourselves to keep it - and in a weird way if we need to downsize when we’re older, I see us moving back in to it.

We stretched to buy our current house, little comes on in the area we were moving to so ended up with something over budget (it is gorgeous though!).
However, we are mortgaged til 70, I’m going to need to increase my work hours and there is very little spare cash for outings/ takeaways/ holidays. I wish we could afford to experience more with the DC.

I went for a third option, moved to the North, got a 95% there dream home and was mortgage free. DH and I both work for a company that lets you work in different offices or from home and it worked for us.

Could you potentially stay put for now and buy the dream home cheaper elsewhere later?

Nothing particularly useful to add, but I think this thread should win an award for the most 'albeits' I've ever seen on one page

We're mortgage free, I'd go for that every time, it's a great feeling.