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!

@Sayitisnotso I'm 42 and husband 44 and we have 5/7 year old kids and are mortgage free. It's the best feeling, especially with such uncertain types ahead.

I wouldn't trade it for the world, it's such a huge weight lifted off your shoulders. The thought of another mortgage is frightening almost to me. It's definitely a decision you won't regret.

@Indoctro thanks we would be same age/ DC. We tried to move to a bigger house in the past but fell through due to other reasons ( twice!) so make me think maybe should just be content with where we are/ hard not to compare to friends who are on their second home- bigger detached garage etc. We LOVE the location of where we are, but by staying compromising on things we thought / expected we would have . The trade off is financial stability though and being able to pay into pensions more as both not as great as they could be currently.
Did you compromise on the house to stay put or have everything you need/ want?

You only live once. I'd buy the bigger house. We have chosen that route, it's luxurious and makes the long working hours worth it!

We were in your position and moved.

I wanted to have space, a play room, home office, good utility room etc. It felt like a stretch at the time, but as our salaries have increased and childcare costs have dropped it's totally manageable.

Had we paid off the mortgage earlier we'd have put at least a part of that into savings. As I see it we're paying a mortgage at a very low APR, so it's sort of savings as we'll eventually downsize and free up some money.

It completely depends on your priorities, a home where everyone has their own space causes less friction for me personally.

Are your salaries likely to increase?

It would be interesting to see what the OP decided. We were in the same situation and decided to move. That said, we couldn't have done the loft conversion in our old house and the area had been going downhill so for us it was an easy decision, it wasn't our forever home..... although DH does sometimes wistfully talk about how we could have paid off the mortgage in the old house!

For us, more space has been invaluable and we've never regretted it. The new mortgage is due to be paid off by the time I'm 57 but we've been able to overpay a bit since nursery fees have reduced so hopefully that will come down.

We stayed put for family reasons when we got an unexpected legacy in our late 40s.it was a nice feeling to be mortgage free and as the DC are leaving the nest 10 years later we don't need more space.Of course if we had bought up then we would now have more equity in a property as house prices have obviously gone up a lot more than savings.I also slightly regret not having the experience of living somewhere with all the things we don't have here eg detached house, utility room,my own space, garden sheds etc.I don't regret not moving because it wasn't an option. It will become one when we retire but at that point we wouldn't be upsizing in any way.

@Scottishgirl85

You only live once. I'd buy the bigger house. We have chosen that route, it's luxurious and makes the long working hours worth it!

But it could be that without the mortgage to service, you don't need long working hours.

I suppose it depends whether you identify with the Mexican fisherman or the American businessman.

I would definitely go for the bigger house. You'll enjoy the extra space and you'll have a bigger profit when you eventually downsize. This will make your old age much more comfortable.

We bought the bigger house at 47. Every day we know we made the right decision for us, particularly during lockdown. It would have been an absolute nightmare homeschooling 3DC and WFH in our old 3 bed house with courtyard garden whereas here (4 bed with 2 sitting rooms, nice garden) we could have everyone working in a different room. With a baby and a toddler a 3 bed probably still feels spacious but as they grow you will want more room. Plus when you reach old age you always have the choice to downsize, a house is an investment. The one thing I'd say is we didn't overstretch ourselves to buy this house so we still pour money into our pensions and investments and can afford holidays etc.

your old age could also be more comfotable by p[utting most of what was paying mortgage off inot pension, life style creep doesn't always bring happiness, more stuff beyond what is necessary and nice doesn't often bring contentment
what if you take new mortgage and then interest rates rise by 3,5, 7 % what then? if mortgage free interest rises won't be a problem

@Sayitisnotso a bigger house isn't important in my eyes. With ever increasing utilities and cost of living, having a mortgage on top of spiralling living costs is just not a place I want to be.

We have great savings, zero debt and a far more stress free life due to the burden of a mortgage lifted at 40. That's what we feel is a better quality of life. If we keep saving the way we are also means retirement at 55 if things keep going as they are. Just something not possible had we got another mortgage.

I did the big house personally because being mortgage free is, frankly, stupidity when interest rates are low & you live in a rabbit hutch. I would much rather live in a larger house / have investments etc.

Mortgage free definitely unless the house doesn’t meet your needs.

I would stay mortgage free. How much more space are you likely to get that would warrant being tied to a mortgage for 25 years?

Think of your financial freedom and cushion should either of your circumstances change.

Your dc will have their own bedroom so there is no overcrowding.

We need more room but we cannot justify or afford adding £200k to mortgage for an extra reception room and bedroom.

I know how you feel regarding friends/family upsizing to detached houses with multiple reception rooms, bathrooms and a large garden. I have accepted 'my lot' (took me years) and am much happier for it.

She of said, I had a friend who had a small semi 3 bed house single garage with no mortgage, they sold it and took out another £279k bought a large 5 bed, double garage big garden. 4 years later they regret it. They wished they had stayed put. She said the extra cleaning is a complete pain , also one got made redundant although back working now but that created stress. Plus the current electric bill issues is stressing them out as already paying a fortune.

Your children are very small right now. You may find your outgrow your house! Is it a 3 bed semi new build or an older larger style property?

@Lovinglife45

I would stay mortgage free. How much more space are you likely to get that would warrant being tied to a mortgage for 25 years?

Think of your financial freedom and cushion should either of your circumstances change.

Your dc will have their own bedroom so there is no overcrowding.

We need more room but we cannot justify or afford adding £200k to mortgage for an extra reception room and bedroom.

I know how you feel regarding friends/family upsizing to detached houses with multiple reception rooms, bathrooms and a large garden. I have accepted 'my lot' (took me years) and am much happier for it.

Just remember though you could have that if you wanted, but would rather not be mortgaged up to the eyeballs and in debt till almost pension age. You might find they are maybe jealous of you.. financial freedom is a good feeling.

It's like my DP has written this.
We live in a 3 bed house and have converted loft into bedroom. So technically 4 bedrooms. I love this house. Currently pregnant. And mortgage will be paid off in 10 years when I'll be 45.
DP REALLY wants to move. Really really wants to move and soon. Somewhere with a garden but the house will no doubt be smaller as all the ones we've seen, the houses are smaller but still cost £150,000 more than ours.
It's a difficult one. I'm here for the comments!

We also overpay on the mortgage now, but doubt we could do in a new house at our basic mortgage will be much higher and the monthly payments will be a lot more than the house we currently have.

We stayed put. It's been nice having no mortgage for the past ten years but I do sometimes wish we'd moved up one more step (not sure why really, we don't desperately need any more space)

We moved.
Love the space I now have for 2 growing teenagers and animals.
I love being able to host Christmas,Easter etc.
As a previous poster said,our salaries have increased,our property has increased in value (we bought new build off plan) so now over pay the mortgage too.
We have 9 years left but may get that down to 6 when we will be 55/57

We have a 1950s semi which is a reasonable size downstairs so adding a master suite in the loft has given us all the rooms we need. It has delayed us paying off the mortgage but was so much cheaper than moving. We will still clear the mortgage in 5 years and both Dcs have a large room each and we have a separate room to wfh in.

To be honest theres a lot to be said for being mortgage free. I have about 9 years to go and in my 50s but wish we were mortgage free. We live in a 3 bedroom bungalow with an average size garden wide rather than long only have 1 adult son living at home now so daughters room is now a study for wfh. We still host easter and christmas and my kitchen is tiny but it does have a full length conservatory across the back. To be honest it's big enough for us 3 potentially 2 when son moves out but we brought both our children up here own room each though not huge but bigger than a box room. Garden had trampoline large pool swings slide playhouse sandpit etc yes it was a bit cramped but at 53 I'm glad I dont have a huge garden to look after and or a large house to clean
Best thing of all it's a bungalow so no stairs though some have extended up but also it's in a lovely village loads of amenities great catchment for schools and catchment for grammars if needed and right by train station and bus stops important to me as I dont drive 45 mins into London by train win win !!

I would pay off the mortgage in your case if the smaller house was in a nice area. But I wouldn't want to be tied to a mortgage till 60!! Can you go halfway and move to a slightly larger/better property but pay off in your 50s?

Thanks for all these replies on this thread,l it’s been interesting to hear that most people go with the mortgage free option. In our house case our house meets all our “ needs” just not the “ wants” but it has the 4 th bedroom, the second reception and the garden so what we gain in moving is garage and utility / toilet and ideally detached. However we’re we live is perfect location for us cannot fault the location at all so I think is an extra £150 on the mortgage enough to justify a garage and a toilet and of course likely bigger rooms in general?!
Interesting the comments about savings and downsizing- we wouldn’t need to downsize from here in future so wouldn’t be releasing any equity in comparison to say we had a big house and downsized in retirement so we will have to ensure we use the additional money we have once mortgage paid to invest properly into pensions and investments so can have a decent future.