Would we loose out by on any further price rises if we downsize now?

[deepest]

Our home is our main pension vehicle. Currently property worth 1m have �160K left on mortgage in home counties - thinking of selling up and downsizing to clear mortgage so that I can be a SAHM to 4 kids thru tricky teenage years and exams - also worried about potential interest rate rises......but would we miss out financially in the long term to any future property price rises? No sure how the trade off of mortage interest vs price rise on 1m house vs price increase on 750k hs? Other option is that we use the move to buy family house for 450 and then a buy to let with the rest of the equity....what should we do for financial security?

Or (to play devil's advocate) looking at it another way....will any downsize reduce the scale of your (paper) losses over the next few years? You can't fail to have noticed that every day carries new newspaper articles on different ways to calm the housing market and control prices with even lenders (Lloyds) starting to tighten up on mortgage lending over 500k. Lender tightening + removal of HTB + IR increases could form a nasty cocktail.

The danger of your current approach and the second of your options is that all your eggs are in one basket (the value of property at the point you come to sell). Having your wealth split across cash, property, bonds and equities is a more balanced approach to investing.

Great way of looking at it R.

I suppose I am just trying to understand if any future net profit from price growth on 1m property -(mortgage repayments on 160k) would be significantly more than any future gross profit from price growth 750K house?

I agree with RChesire speculating on house prices is not the best way to plan your life or your investments.

The truth is the difference is hard to know in advance but assuming both homes grew as fast as each other, then you would be missing for instance 5% per annum on the 250K price gap. However, from that you would need to deduct your mortgage interest payments on the principal over the same time as well as the lost potential investment returns you could have made on the capital as without a mortgage that cash could be invested in bonds etc. The answer very much depends on what you do with the extra cash, where interest rates go and if the market actually increases and if so, if the two houses perform the same.

First and foremost do what makes sense for your life and family. If being a stay at home parent is important to you then you should do that.