Bigger house or mortgage free

[Wakeywakey86]

This is definitely down to individual opinion but I'm just curious on other people's thoughts and opinions.

Would you rather pay your mortgage off early (by age 40 in my case) or move into a more luxurious/bigger house and start another 25 year mortgage? (Taking me to 60 years old ish)

So me and DH have 2 kids (2 year old, 9 month old - we are definitely not planning any more) and live in a 3 bed semi. We have the option of converting the loft to a 4th bedroom with dorma/en-suite (a few on the street have done the same). We are overpaying the mortgage and are confident we can pay this off by the time I am 40.

I've been getting a bit of house buyer envy as a lot of my friends are moving into their second homes which are just lovely, detached, 4 bedroom, utility etc. But, it would mean a new 25 year mortgage and high payments so no wiggle room for overpayments.

My DH loves our home and sees it as our forever home, he thinks we should pay the mortgage off and think about retiring early.

I change my mind frequently. I do like our house but wonder if I should try achieve more?

We overpay and usually save £500-1000 a month so we could afford a bigger mortgage.

Also, I have to consider mortgage rates are at such a low and how affordable would a mortgage be if there were some big changes to rates.

Thoughts, opinions, experiences?

Thanks!

If there's enough space in your current house I'd stay put. It frees up a lot of extra money for pensions, travel, school fees even. More security and more freedom.

Its great to be mortgage free. I felt such a relief when mine was paid off. (When i was 55) we spent money on improving the house but have never regretted staying put

If you like your house and area, then stay. We didn't so have moved with the new big mortgage. As we get older the chance to actually get a mortgage starts to reduce so it's important that you like your home as you may not be able to move to something more expensive later. I wouldn't have moved for the sake of keeping up with the Jonses though.

I was made redundant a few years back and we paid off our mortgage, when I was 41. Like you, we had been overpaying as much as we could for years. The number of people who told me how freeing it would be were totally correct. We moved house this spring and were able to buy again without a mortgage (so just from the capital of our sale) but we could have got a small one if we wanted to get an even bigger house.

Not having that expense going out every month is fantastic, it really does help with savings, expenses, fun things such as holidays etc. Paying off your mortgage should be your number 1 priority - think of the next 25 years, university fees, wanting to support your DC etc etc.

I'd take the mortgage free option in a heart beat.
Less stress, more cash available? No brainer.

We are in same situation but a tad older.
We've decided to stay put and enjoy life. I'd rather have this house, really nicely done up and money to spare than up my mortgage by £650 a month and not be able to replace items easily or be worried about money.

Starting to pile money into overpayment of mortgage and investments instead. It's given us a sense of security which is priceless IMO

Sorry I meant to say that the redundancy payment helped us to pay that last bit of the mortgage off.

In your situation, I'd definitely pick mortgage free and retiring early. You can't buy back time!

I find your use of "achieve" a bit odd, although I kind of see what you mean. I know there's a lot of pressure to have things, demonstrations of wealth, success etc. I definitely get this from family, colleagues. But the only true "achievement" to be chased is being happy. So if the big house (and attached financial commitment) makes you and the rest of your family happier, get on and do it! But if it won't make you happier, don't do it. It won't be worth it.

100% I’d be mortgage free unless I hated the house/area.

I would definitely stay put , think of all the opportunities for travel when the kids are older 😀

@someonelockthefridgealready

In your situation, I'd definitely pick mortgage free and retiring early. You can't buy back time!

I find your use of "achieve" a bit odd, although I kind of see what you mean. I know there's a lot of pressure to have things, demonstrations of wealth, success etc. I definitely get this from family, colleagues. But the only true "achievement" to be chased is being happy. So if the big house (and attached financial commitment) makes you and the rest of your family happier, get on and do it! But if it won't make you happier, don't do it. It won't be worth it.

Yes I get what you mean. It's only an achievement in the sense of material possessions, and ultimately your right, we should strive to achieve happiness (we are fortunate to have). I suppose as a society we often judge that someone has 'done well for themselves' by the home, car, lifestyle. Maybe it's my perspective that needs to change 🤣

We are in the same position and have chosen the bigger house. We can always downsize in 10/15 years if we want to, but it gives us more space and a better location for now.

Could you not overpay the new mortgage too?

Didn't expect such a clear cut response 🤣 I am slightly embarrassed to admit I'm worried about keeping up with the Jones's. I've never been a material kind of person. Perhaps an early midlife crisis 🤣🤣 and I suppose one never judged anyone's home on size, but more the feeling and atmosphere it generates. And I'd like to think it does feel homely and our children are very happy here (not that they know any different).
I'm a massive money worrier, grew up very poor which probably impacts on my keen need to be savvy and save, so realistically the security being mortgage free would bring me would be ideal. So no idea why I'd even consider taking on a huge mortgage 🤷🏼‍♀️🤦‍♀️
We definitely enjoy travel, holidays and I'd love nothing more than to retire before the ever increasing government retirement age!!

@idontlikealdi

Could you not overpay the new mortgage too?

Unlikely. We would need some savings in reserve for unexpected expenditure, updating cars, any renovations. General savings for holidays, Christmas, ever growing children's clothes. I doubt we would comfortably afford to overpay on a substantially bigger mortgage.

I was in the same position as you (but I don't think we'd have been able to extend into loft).
We decided to move and the mortgage is now more than twice what I paid before despite me previously overpaying. We cannot afford to overpay on the new one yet as it's £1300 a month.
We have a 25yr mortgage now as opposed to one I could have paid off within a few years.

The only reason we considered moving was because I hated my neighbour (semi detached). We preferred where we lived before and we have neighbour issues here too (just a different type of annoyance). The house we bought will cost us a fortune to do up to sell on so we're stuck here.

Our other thoughts on moving were what the hell we would do with our money when we became mortgage free. The house wouldn't have gained much in value by doing it up so it would have been dead money. We're not spenders so other than expensive holidays, we'd just be saving it. That seemed a waste when we could have a much nicer property.

I think in your position I'd stay put and do the 4th bedroom conversion if you think it's worth the spend.

@OneRingToRuleThemAll

We are in the same position and have chosen the bigger house. We can always downsize in 10/15 years if we want to, but it gives us more space and a better location for now.

That's always a good idea. To downsize once the kids have flown the nest. It could be difficult to say goodbye to a home you love though. I do like your thinking though - My BIL sees the house as a long term investment that he could always sell to release capital.

@PissedOffNeighbour22

I was in the same position as you (but I don't think we'd have been able to extend into loft). We decided to move and the mortgage is now more than twice what I paid before despite me previously overpaying. We cannot afford to overpay on the new one yet as it's £1300 a month. We have a 25yr mortgage now as opposed to one I could have paid off within a few years.

The only reason we considered moving was because I hated my neighbour (semi detached). We preferred where we lived before and we have neighbour issues here too (just a different type of annoyance). The house we bought will cost us a fortune to do up to sell on so we're stuck here.

Our other thoughts on moving were what the hell we would do with our money when we became mortgage free. The house wouldn't have gained much in value by doing it up so it would have been dead money. We're not spenders so other than expensive holidays, we'd just be saving it. That seemed a waste when we could have a much nicer property.

I think in your position I'd stay put and do the 4th bedroom conversion if you think it's worth the spend.

Ah what a shame you have moved and it wasn't as you expected! That's something to consider I suppose, we have no issues with the neighbours. That's exactly what I said to my DH... once we have paid off the mortgage we will likely have a lot of money building over the years as we aren't big spenders so why not enjoy a bigger home 🤔 The loft conversion definitely wouldn't add value to the costs of the works, but it would be valuable space meaning we can give our DS a more liveable bedroom. But again my DH says it's not a necessity as he grew up in a box took and it never did him any harm 🤦‍♀️ but he's definitely up for the loft conversion if it means I'm happy here

I'd 100% move to the bigger house, depending on how much extra that house would cost. Loft conversions aren't cheap and that would be a big chunk towards a bigger property, plus having had a loft conversion in our current house I am getting desperate to move because we now have such limited storage space plus the rooms still have some restricted headheight so won't be suitable for our children forever. If you won't get the money back from doing the conversion I wouldn't do it.
Are you both working currently? Do you have childcare costs? Even if you can't overpay at all now, maybe you could start doing so in a few years and still pay it off early

Speaking from my perspective (we moved the year before Covid) if your house, neighbourhood/area, schools etc meet your needs, I'd personally stay. If you're ultimately happy there, stay. But there are some things you can't control - local neighbours, crime rates, schools, size of your garden etc - and if you need to move to make those things work better for you, then do it.

We paid off our first house mortgage early, then moved to our current house. But crucially our current house came with a big garden (which we wanted) in a semi-rural area (which we wanted) with great schools (the schools in our previous location weren't brilliant, which is why the houses were cheaper there and we could pay off the mortgage). Yes we've had to get a mortgage to afford our current house, but they were important deal-breaker points for us. Maybe in the future we'll downsize again, perhaps once school years are over.

But I don't regret or resent having to pay a mortgage currently because we're getting what we want for that money. If our previous mortgage-free house had given us what we wanted in terms of area, garden, schools etc we'd have stayed put. If we had stayed where we were we'd have considered private schools....so the way we see it, we're spending that money on a mortgage instead.

But going from mortgage free to paying a mortgage again was a shock to the system for sure. And it did take us time to get used to it - you can financially plan and prepare as much as you want, but watching your bank balance reduce by a certain amount each month that it previously wasn't does still come as a bit of a shock for the first few months. We got used to it though.

Incidentally on paper it does look like we've 'upgraded' where we've lived but it didn't feel like we had a choice, if that makes sense. I certainly didn't do it to keep up with the joneses but reading your post OP I wonder if our friends might have thought something similar about our move.

I'd go for something of a half way option. Could you get something significantly better by having a very small mortgage of, say £100,000? your repayments would only be about £400 ish then. Around here, a £100,000 would mean a much nicer house but if your repayments remained small could still give you freedom and you should still be able to overpay/could look at reducing the term in a few years

We're both 39 and last year became mortgage free so know exactly the conundrum. We were very lucky to buy in 2013 when the market was low and have basically just overpaid as much as we were allowed for 7 years (which was the equivilent of my entire salary after tax and both of our bonuses) and managed to pay off the balance when our mortgage reached the end of it's last 5 year fixed term.

I do like our house but the kitchen is the size of some peoples utility rooms and the entire house is about 700sq foot if you don't include the conservatory (where we keep the fridge freezer as theres no room for a freezer in the kitchen, just an undercounter fridge). It suited us fine when we were a childless couple but we now have a 15month old baby and the house has exploded with baby stuff and it is feeling very cramped, also little things like we have to walk sideways around the bottom of our bed to get past it as it's a kingsize, it's a 3 bed semi but a small 3 bed.

Other positives is that it has a nice garden with patio and a bit of lawn with mature plants. And I built a home office in the garden 3 years ago (must have been psychic) which has been a godsend for working from home.

I have also been able to hand in my notice last month (I brought home about £36k a year inc bonus before tax) as I am trying to start my own business and we can afford to send my 1 yr old to nursery twice a week. My husband brings home about £50k inc bonus before tax.

Other positives are that it is in the catchment for an outstanding primary which is a feeder into a good over subscribed secondary school (which we are also in the catchment for) and my 76 year old Mum is moving across the country to be near her grandson (so we can't move out of the area somewhere cheaper)

The main negative apart from size is that our attached next door neighbour can sometimes (he plays hot and cold) be a bit of a nightmare and sometimes aggressive (he recently thought we had grassed him up to the council for doing mechanic work on his drive, we didn't) which is a real shame as its a really friendly cul de sac. He would also try to make our lives shit if we extended (which would solve my tiny kitchen problem)

The size (especially the kitchen) and the shit neighbour does make me want to move, but house prices are nuts in my town so whilst I'm trying to get my business off the ground (which might not see me earning for a year since I can only work on it part time) just staying put and living within our means (and saving a bit) seems the most sensible.

I hope you find the right balance for you OP. I am with you on the green eyed monster envy though, my SIL has a humongous house, massive living kitchen diner, utility, seperate living room, playroom and office downstairs, its in a cheaper part of the country 50mins drive away but I drool at the space.

We made the mortgage-free choice. It’s about your own priorities, but having had a massively disrupted education myself, I just needed to know that even if we get hit by redundancy (which is fairly likely to happen at some point), we won’t need to move and the children will be able to stay in their schools.

I would move now if you can afford it. Your house feels ok because your children are small. Teenagers take up a lot of space, especially boys. Your household will be more harmonius with more space.
We are about to go into a period of inflation, increasing your mortgage to an affordable level will mean your debt gets eroded. Interest rates are unlikely to increase dramatically due to the level of government debt from covid.
Property prices will peak 2026 then start a new 18 year cycle. You could sell and buy then but there is unlikely to be much on the market, and it will be harder to get a mortgage for a few years hence. Better to buy what you want now and ride out the bumps in a long term home. If you wait you may find you are stuck. Either way I'd make sure you are in a house that works for you long term within the next three years.
But most importantly do what you are comfortable with not what a random on the internet says. The above is only my opinion, I don't have a crystal ball!

@anotherwayout yes we are both working (well I'm on maternity currently). Should have probably mentioned in the OP that our outgoings are about to increase a fair bit with two in nursery but should ease a little next September when DD gets some free hours. So right now isn't the time to be making any big financial decisions but I'd like to have reached a decision before she starts school ideally.
The loft conversion won't be cheap, but it is significantly cheaper than any 4 bed that would tick boxes for the same money. We've a few on the street done the same, and with the dorma it's actually become the master bedroom with en-suite. We'd look to do the same as the others. If we did do the conversion it would be with a view to this being our home for the long haul over resale value.
I suppose we could overpay on a bigger mortgage once we were over the major nursery bills, but I'd love to do some really nice holidays with the kids, Lapland to see Santa, Disney as my DD is a huge Minnie fan. Weighing it up is hard 🙈