There seem to be quite a lot of complex, inter-related, issues here which may affect your final decision.
"DH fancies a doer upper - so I guess that would suggest reducing mortgage."
But do you fancy it as well?
That really is the big question. Both partners have to be onboard to really make it work. But, if you are, and (critically) you have the DIY skills to do at least some of it yourselves then this could be a very rewarding decision.
In contrast, if you weren't both in the same place with regards to this then it might not be such a good idea.
Likewise, if it's just a case of employing builders to do all the work it may no longer make financial sense these days.
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"But have so much spare cash we need something to use it on. Not just save. ... I should also say, business owner."
Could you use any of that cash to expand your business in any way? But there again do you actually want to expand the business or are you happy with it the way it currently is?
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"This would be an excellent idea.....but prove even more difficult decision wise. I mean, at the moment we are looking at houses in a 5 mile radius and cant decide. Imagine if we could choose anywhere in the world!"
Personally, I wouldn't discount the idea of a holiday home.
We are around 15 years older than you (late 50s) and when we were your age, back in the late 2000s, we bought a holiday home in Mallorca. It's up in the mountains near Soller (there was even snow there one winter, but we usually have oranges in the garden every year).
When we bought it, it was very much a "doer-upper" and, back in those days, it was a very reasonable price.
Over several years we put in a lot of work ourselves to do some basic things and also employed local craftsmen and builders. Today, it's a very idyllic place to visit.
Although, even when we were mid renovations, we were still happy to be there as it's a lot easier renovating a property when you aren't living there full time (we always knew we had a nice home to go back to in the UK).
We bought it when the DC were young teenagers/tweens and it's been a great holiday home over the years. We've used it at Christmas, Easter and over the summer.
Over the years we've got to know other people who live there. Some, like us, have holiday homes (although they mostly seem to be German or Dutch - I've tried to learn some German but all the Germans just say to me "Why bother learning German? Everybody speaks English" - I don't know if this is a good thing or not!).
Others we've met live there permanently, a mix of Mallorcans and foreign nationals who have settled there.
We have a great place that we can just fly off to whenever we want (we've never done AirBnB etc, it's just for us) and Easyjet and others have cheap prices throughout the year.
The DC have made friends there from different countries and have got involved with sailing and other water sports in Palma. They really do seem to have gained a lot from mixing with different people from different countries. If nothing else, I think this alone would have made our purchase of the holiday home worthwhile.