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!

@pisspants that's my husbands argument. The houses for 100k are not really any better than our house other than the additional bedroom. Whereas the loft conversion wouldn't cost that. House prices at the moment are just crazy. You don't get a lot for your money at all 🤦‍♀️

How much more would you need to borrow to move? Seems like a massive jump.

I love space. I need space, and for me, whilst I could be mortgage free now, I'd rather feel that I'm not making any compromises now.

Mortgage free, without a doubt.
Once paid off, Invest what you were paying towards mortgage and retire early!!

Mortgage free definitely. I understand the moving envy thing though as I have a few friends who have recently moved & are doing lots of building work and I’m actually jealous of what their house is going to become & the excitement of planning it all. I did a few bits about our house to decorate it a bit more, sorted out storage and I feel more settled now. Maybe refresh a few bits and hopefully that will help.

Op we're mid forties and should have the mortgage paid off by this time next year. Our major focus is now our pensions - we've massively upped them which we wouldn't be able to do if we didn't know there was an end in sight on the mortgage.

Having said that, we did do a move when we were just thirty and mortgage-free, to our current house. So maybe look for something bigger that will only cost you a ten or fifteen year mortgage rather than a twenty five year one?

Stay put and use the money for travel and Uni - kids - when you’re mortgage free.

We could potentially be mortgage free due to large shares redemption but we have chosen to keep our mortgage and move to a much bigger house. This is a house that I cried at when we walked in as I felt I was “home” though so it’s worth not being mortgage free for another 10 years!

Personally I’d stay put. We aren’t mortgage free but have a low mortgage compared to our income. We toy with the idea of moving to somewhere bigger sometimes, like our friends houses that are double the size of ours and all new and shiny. But we live in a lovely area and although our house is small we’ve done it up quite a bit over the last 5 years. Being comfortable financially is more for us that the bigger house thing. But everyone is different so do what suits you. You can always downsize again if needed.

We are in the same position except I'm 40's, we have a bit left on the mortgage but can over pay the entitlement each year. Reckon we'll have it paid off by the time I'm 50.
Think we will need to move as we will soon have two teenage daughters! It's a 3 bed, one bath with no garden. But I absolutely love it, it's a picture perfect cottage, the area is expensive and to move to something that is still 3 bed but an extra bathroom and garden it's going to be another £100k plus. At £150k move we could get another bedroom.
It's so hard to decide and I feel absolutely torn, this house without children is our perfect home so I'd feel sad to not be here once the children have ditch us!
Anyway not much help but your not the only one who hasn't a clue what to do for them best

@Nowmum43

You could always rent it out.

We are in a very similar house to yours as we are currently planning on staying put, adding a dorma for 4th bedroom and bathroom, and will be mortgage free in a year at age 42.

We have enough room, live in a period house with lovely neighbours on a nice street. We can focus on savings/pensions, but also gives us the luxury of more secondary school choice as we could afford private school if state grammar doesn't work out, as well as more money for leisure, holidays etc.

In order to move to something bigger even in our area we'd need a new £200k mortgage and I just could face starting that again.

[quote Nobloat21]**@Nowmum43

You could always rent it out.[/quote]
That's something we've considered but we wouldn't be able to afford to have a new mortgage for the amount of a new house and finish the payments on the one we would be renting out

Fifteen years ago we were in your position. We decided to go for the bigger house and have to enjoyed the extra space and especially the much larger garden, particularly during pandemic. In the beginning we could only pay the standard mortgage each month but over time and interest rates low we only have 2 1/2 years left to pay on what was as 21 year mortgage. We have even added a loft be extension with 2 additional bedrooms and shower room. We have grown into the additional space and would not want to go back to the much smaller house again. We rent out our former home as btl. When all children leave home, second one just bought his own home now, we have option to downsize. Property is as sound investment.

I was in a 3 bedroom townhouse slightly older than you and we moved to a much bigger semi in a nicer area with more amenities.

You need to look down the road a little bit: what are the primary schools and secondary schools like? Are you in catchment? Imagine sharing the house with 2 other adults..teens take up a lot more space than toddlers..

Then balance that against full cost of children which you won't feel with toddlers (all the extra curricular activities, school uniforms, paying double every time you go out/on holiday, sheer quantity of food in teen years, phones, tech)

Also bear in mind that around 40 most people's income will plateau and redundancy etc becomes more likely as you are the higher earners and new jobs more difficult to get.

I feel we sacrificed a our standard of living to get this house and don't go on fancy holidays etc any more. But overall we are pretty happy and during lockdown we were very grateful all the space.

There is no right answer is there.
If you move and take on a bigger mortgage, over time, it will be smaller as a percentage of your income and inflation will erode it too. When people move, it always feels hugely expensive and then 10 years later they find it’s all much more manageable and also that their bigger hosue has increased by more money than the smaller house and actually they couldn’t now afford to buy the larger house. If you think the downstairs of your house will be too small when your kids are bigger (loft extension won’t make the downstairs into a 4 bed house space…such houses can be a bit too heavy, but not all of them) then consider the move in a year…if you’ll end up doing it in 4 years, it’s probably better to just get on with it and do it.

Alternatively, benefit from being mortgage free and see the other benefits that come from this further down the line. Sometimes people find they can now afford school fees, or they can boost their pension contributions and retire a good 5 years earlier than if they hadn’t paid off the mortgage. Being mortgage free could mean you save cash and buy a buy to let, or that you have more holidays and quite simply enjoy life without money worries. It could mean you have hefty sums to gift your kids for their housing needs or to pay off their uni debt. Quite simply, being mortgage free gives you lots of money options.

One thing I’d ask you, is what age you are now. If you’re currently in late 20s or early 30s, taking on a bigger mortgage isn’t such a burden as taking it on if you’re almost 40 already. Your kids are still little and there’s lots of time with them at home still…a bigger house has plenty of time to be enjoyed by the family and also more time for career advancement and higher wages. If you’re older, the big mortgage can feel more of a burden and have more impact on your ability to save into pensions and for uni etc.

I’d actually move if this house is going to become too small for you. Do you have 2 living spaces (really important as kids get older) or room to extend downstairs as well as the loft? What’s your kitchen like and is it what you’d want? Some 3 bed semis have good downstairs space, such as a loo, 2 good sized reception rooms or a large kitchen diner, whilst others are really small downstairs and just have 1 downstairs space without any room for people to be on their own or away from each other doing different things as kids get older. So the size and layout of downstairs seems important to be in determining if this house can work for you longer term.

I know a famiky who have stayed in their 3 bed Victorian semi whilst others have moved onto bigger houses. They have the lioft conversion and en-suite and it still works well for them as there are 2 reception rooms and all the bedrooms are doubles. They do only have 1 child though so there is plenty of space for them all. They are mortgage free and I think have been for a number of years. Their kid (again just the one) goes to fee paying school, the family have amazing holidays and own a flat that they let out and often talk about their plans to retire in their 50s. They are also not very material people or bothered by what others think, so the fact they don’t have a utility room or big drive way or 3 bathrooms doesn’t seem to bother them in the slightest.

Can your current house work for you long term both downstairs and up? Will you always hanker after the utility room or big drive or other features of the bigger detached house?

Boring as it sounds, I would suggest listening to the Meaningful Money Podcast. Paying off a low rate mortgage may not give you as big a return as a stocks and shares ISA. Have a listen and read up on the tactics of the FIRE community (Financial Independence Retire Early).

You need a pot (pensions, ISA's etc) of approx 28 times your expenses to draw down at approx 4% per year.

I'm 48 and only just discovered Stocks and shares ISA's but the rate of return is higher than the low mortgage rate...so over 5/10 years you will make more in ISA than you will have paid on the mortgage ask your net worth is higher.

Also, if you like your house can you stay and extend? We live in a mid terrace originally 2 and 1/2 bedrooms...and now have a rear extension (Inc utility room and downstairs loo) and master suite in loft conversion.

What are school catchments like? That would be the deciding factor for me rather than size necessarily.

I’d love to be mortgage free at 40 but I also think investing in property is sensible so a larger mortgage and house isn’t a bad thing to invest in.

We got the bigger house and have zero regrets. We liked our old house but coming home from our first holiday and feeling so content that our new house was our home. We still overpay just not as much. You just need to see if buying the new house will still allow you to have the lifestyle you enjoy. Paying for a few extra years isn’t a concern, your salaries will go up and you’ll come into some money at some point. Plus you have a lifetime to enjoy the house where I’m sure you spend a lot of time.

There's so much to weigh up! Lots of fantastic replies and food for thought in the thread already.

I personally would probably move but that's because I have a small terraced house in a rough around the edges area. If this small house was somewhere nice that I liked, I would make it work.

The other thing to consider, which might sound random, is your garden space. I think with extreme weather events becoming more frequent, we should be trying to grow more produce in our back gardens. I have huge food insecurity issues, so I want a bigger house on that front alone.

100% pay off the mortgage.

Bigger homes don't bring happiness, they are just more to clean, more to fill with crap we don't need, less calm, costly to heat and cool. The list is endless.

Depending on noise levels where you are I might go for detached.

The other thing to consider, which might sound random, is your garden space. I think with extreme weather events becoming more frequent, we should be trying to grow more produce in our back gardens. I have huge food insecurity issues, so I want a bigger house on that front alone.

I was going to say that we are looking to move in the next couple of years and a massive priority for me is looking at predictions on what areas will be increasingly likely to flood and doing everything I can to avoid them.

We were in your shoes 5 years ago. Went for the mortgage free option. We’ll stay where we are now for another 8 years then downsize.
Like you we dreamed of a big detached house in the country (have a nice size 4 bed semi on a nice estate). Truth is our house is close to the bus routes for dc college and part time jobs etc so we decided to stay put. We have added a huge conservatory to add more space downstairs though.
We were mortgage free at 42/45. I still dream of a huge house and all the flash trimmings but the monthly savings and lack of financial worry makes it worth staying put. We have nice holidays (covid permitting) and can help dc with uni etc. Plus we’re saving for a holiday home instead!

@Wakeywakey86 any update to this - did u stay or move? In the same predicament myself and came across your post!