How do you feel about paying a mortgage

[illovefisk]

I'm grappling with this a bit and would like others perspectives.

We have a big mortgage on a small 4 bed z2 London house with a tiny garden (not complaining about the size just factual). The mortgage is just over double my income and very low loan to value ratio so very small risk of negative equity. It has increased in value.

What I'm struggling with is the feeling that maybe we should cash in and move somewhere cheaper. I do feel the strain of cost of living and I can't work out whether we just suck it up and know it will get better as we pay down the mortgage or downsize to a flat. 2 primary age DC.

Pros

• because it's close to work our commuting costs are very low
• location means no need for car and the cycling and walking helps with fitness
• short commute means I have more time with kids in morning and evening
• the kids each have their own room and there is an office (DH and I wfh 3 days a week)
• it's a new build so very energy efficient (albeit less attractive than a period property)
• because its a house we don't have leasehold or service charge worries or any neighbour noise/ impact
• close to a number of good schools
• close to central London and nice green spaces

cons

• big mortgage with 20 years to go
• not an attractive property although very well built and comfortable

I know no one has a crystal ball but what does sensible future planning look like exactly? We have pensions, rainy day savings but not much. We live ok. I can't tell if this is the right thing to spend a big chunk of earnings on or if we should downsize and save / invest more.

Background to all this angst is that we are both from very working class backgrounds and don't have anyone to advise us really.

If you have a very low loan to value ratio (hence minimal risk of negative equity) then I don’t understand how you have a big mortgage? Or do you mean the other way round? You also say the mortgage is double your salary, do you mean you earn eg. 40k a year and your mortgage is 80k total (in which case that’s not really a big mortgage) or do you mean that eg. you take home £1500 a month and your monthly mortgage payments are £3k per month?

I think many parents with young DC feel like this.

Firstly do you think your incomes will rise? It’s would be quite unusual for neither of you to climb the career ladder.

Secondly are you happy with the area for secondary schools?

The mortgage is just over double my income and very low loan to value ratio so very small risk of negative equity.

eg you earn 100k & the mortgage is 200k? How is double your salary a big mortgage?

The mortgage being double your salary doesn’t sound like a huge mortgage… not sure if I’ve misunderstood.

But why downsize? Can you not afford to live properly, buy food etc? What do you need the spare money for that would make such a difference to your quality of life when you’ve moved into your flat and bought a car?

It depends on so many factors like what you value in life. A small garden wouldn’t bother me at all as I don’t like gardening but location is important as walking is my preferred method of transport too.

Are your wages likely to increase ?
Have you looked at what you might be able to afford elsewhere?
Can your jobs be done away from London ?

I lived in the M25 and moved out because I couldn’t afford to live near good secondaries for my kids. I live in a place that is considered unattractive (commuter town ) but it doesn’t bother me and I don’t have to go to London regularly so it’s not a big deal. My house is bigger and better and my kids walked to their much better schools which was a priority for me. I miss London but don’t have the money to live how I’d want to.

Double your income doesn't sound like a large mortgage? Mine is over 5x

I lived in the M25 and moved out because I couldn’t afford to live near good secondaries for my kids
I did the same, where I live is actually a good commute to London but it’s not considered a highly desirable area. My family have had a good life here, a large house, excellent schools and then good universities, plenty to do and most importantly we’ve all made lots of friends.

I think the OP is going to say something like mortgage is 700k but house is worth 1.5m & income is 350k.

Not sure how she is struggling with COL though.

Your pro list is very strong! I would stay put if I were you.

We went from being effectively mortgage free to taking a large mortgage for a bigger house. It’s definitely been a mental adjustment and I think about finances more; but give it a couple of years of a few more pay rises and fewer wrap around care bills and I know the picture will change.

and if it doesn’t, we can downsize knowing we have a hefty chunk of equity.

That's a hell of pros list! Especially compared to the cons.
Unless you are really struggling to pay the mortgage (another who isn't sure if you mean the total mortgage is double your salary or if the monthly payments are twice your take home and therefore presumably your OH is a high earner) or might struggle in the near future, I'd stay put.
A 4 bed house in zone 2, which ticks a lot of other boxes, is not just an amazing thing to achieved, it's also a great financial asset in the long run.

Thanks for the replies.

We bring home £100k and our mortgage is just over £200k.

Our salaries will not rise. I'm as senior as I can get in my specialism and taking on a higher paying role would likely increase my hours to the point that it would impact on my ability to be present for the kids. DP is in a low paying specialism, if he became more senior he would be managing specialists and would not be able to do his job which he loves. We are content with our income.

COL, yes we have it a lot better than many but as we have equity in our home we could release it and, say, pay for our kids university costs or invest it with the view to gifting them deposits for their future homes.

It's really a question about how to invest and manage money I suppose.

What an odd thread. You have so many pros to your current house and that mortgage with your income is negligible. I don’t think you’ll find a better balance than the one you’ve got already.

If you have 8.3k per month income after tax, and your mortgage repayment is about 1.5k per month, then that seems quite affordable. It's about 18% of your after tax income which is reasonably typical.

The list of advantages for your current house seems quite compelling to me too.

Secondaries are ok, I think. I don't feel very happy with any secondary option to be honest. We can't afford private but even if we could (through downsizing) I don't really want that. DH and I grew up in a grammar school area, I failed he passed and we both had a horrendous time. So I'm gingerly prepared to give London Comprehensive system a go. There are outstanding schools that we are within catchment for.

Is this thread just bragging? I don’t understand what the problem is…

To the posters saying the thread is odd and we don't have an issue. Thanks - I think I'm being a bit irrational and neurotic. We had major money problems growing up and I'm frightened of debt I think.

No it's not bragging.

How much do you pay per month for your mortgage? It can’t be thousands can it? I don’t understand the issue here.

Unless I have missed something major, I’m really struggling to understand what your issue is, OP.

Your income is good. Your mortgage is manageable. Your house suits your family, your jobs and your lifestyle. In due course, you will own outright a family home in central London, an asset that will literally set you up for life. This is a position which many millions of families would love to be in. You may be feeling the pinch with the COL crisis, but so are the vast majority of families in the U.K.

We pay £1.5k per month

That's not a big mortgage on a 4 bed house in London. The house is a good investment and down the line you could downsize but now isn't the time. There aren't any sensible or necessary reasons to move house now. You should look into where the rest of your salaries are being spent and see where you can make cutbacks elsewhere as you shouldn't really be struggling with your salaries, a lowish mortgage and no travel, car or school fees.

It's not really clear what your OP is about. If it's money advice, then read barefoot investor and some money saving forums.

I'm really good with our finances, but I'm massively risk averse. Dh is not, so we some how balance out.

It sounds like staying where you are is the preferred option fof you. Pay off your mortgage as quickly as you can. Over pay every chance you get, every little bit helps.

IMO once you move out of London it’s very hard to move back in as you will be priced out of the market.
Make sure moving out is really what you want to do, not just because you have itchy feet.
I also wouldn’t consider moving out without having a specific area in mind and spending a lot of time there researching the area and getting a feel for it.

Sorry if not clear. It's this - if you could move to a flat and be mortgage free in your late 40s would you do it. Or would you commit to a mortgage for the next 20 years to hold on to an asset.

If my net income was £8.3k per month, and my mortgage was £1.5k, I would be looking seriously at substantially overpaying it to pay it off faster. I might even be looking at taking the next step up the property ladder.