Small house mortgage free or bigger house with mortgage?

[Housemo]

Now in the position to buy a smaller house mortgage free or a bigger house with mortgage. Here's the pros and cons of both. Which would you choose?

1. Smaller house mortgage free:

Pros: No mortgage. Can potentially save a lot. Enough space to live in and feel cosy Cons: Massive declutter will be needed and probably renting storage space/garage for excess 'stuff' and furniture etc. No room for guests staying. Bathroom downstairs likely.

1. Bigger House with mortgage:

Pros: More space to live in/breathe! Won't need additional storage/garage as above. Cons: Mortgage fees each month. Less money to save.

Other things to mention. Both in same good desirable area. We will probably be moving again in 1-2 years for work reasons. We may consider renting out above property when selling in the future. Tempted to go for 1 because of no mortgage but space will be much smaller than currently rented house. Which would you choose?

Do you have children? If do I'd say go for number 2.

@MrsJaminOne Yes, one child

Semi or detached. Garden. Busy road.

how old are you both

@porrideoat Both houses same area. Both terraces with gardens. Small house has small garden. Bigger house has a bigger garden. Both roads have through traffic but not big main roads. Main difference apart from the size is in smaller house bathroom is downstairs and bigger house it's upstairs.

I'd say definitely go small house as we went the big house route and it didn't work out. All we think now is we wish we went smaller in the first place.

Bigger house and definitely upstairs bathroom!

As long as you can afford the mortgage. And as long as you are making pension contributions.

If you go mortgage free now you will find it hard to 'progress' to a bigger house in the future.

@louisethedisease

I'd say definitely go small house as we went the big house route and it didn't work out. All we think now is we wish we went smaller in the first place.

What was the problem? Was the mortgage unaffordable?

Mortgage free. So much you could do I life without that monthly payment.

If it's only for 2 years then the smaller one , save money while you can

Agree, if it's only.for one or two years choose the smaller property mortgage free. It's very expensive to take out a mortgage and for such a short period of time, it wouldn't be worth it.

Since you'll be paying for storage with the smaller house, I'd go for the bigger one. If you're going to paying either way, it might as well be towards an asset, rather than money in someone else's pocket.

What about your finances? Eg if mortgage, what percentage would it take of your income, how long?

Bigger house with mortgage - the mortgage rates are next to nothing at the moment and even if you do save that amount every month there is nowhere to save it that earns you any money. Also you never do save quite as much as you think you will, whereas with a mortgage you have to pay that set amount every month. It's harder to get credit without a mortgage too, I discovered.

Do you like stuff? We went for the bigger house with mortgage. We have loads of space and have filled it with stuff. DH is in heaven because he loves having stuff and space. I dream about moving to a one bedroom flat and chucking everything in the bin!!!!

Also, now we are in our fifties, the cost of mortgage is impacting on retirement saving, which sucks.

So... why do you want space? For stuff? For hobbies? Or just to avoid each other!!!!

Smaller house. Even in two years a lot can change for better (fingers crossed) or worse.
To know you have a paid for roof over your head takes a lot of worry out of life should the latter befall you.
Meanwhile, save and if you do move, you have a nice chunk towards that property. I would guess that whatever you put into storage you probably won’t miss after a couple of years.

Mortgage rates are cheap. I’d go bigger and not naff around with downstairs bathroom and storage. Unless you want to get rid of the stuff.

Sounds easier to rent out the bigger house too.

How much is the mortgage going to be?

Have you ever had a downstairs bathroom before? Never again for me...plus with kids it's a nightmare trooping downstairs with them for a wee.

Do not underestimate the cost of storage! If you're storing things for two years, you'll want an indoor unit, and if you're storing furniture, you'll be looking at £150+ a month, which might wipe out any mortgage savings.

I was just coming on to say make sure you factor in cost of storage as you might find your storage costs could equate to mortgage amount and then bigger option nit only makes more sense size wise, but also financially.

How much would the mortgage be?

Paying the mortgage on the bigger house is like putting money into savings, but with a higher risk, it prices fall.
It won't be a big mortgage payment, how much more will it be than paying for storage?

Cost of storage space will be about £100 a month (garage for excess furniture). Without a mortgage we will be able to put aside approx £1000 each month into savings account.

Mortgage for bigger house (worth 50k more) will be in region of £900 a month minimum for 5 Yr term.

I'm in same boat op . I can't decide either

If it's definitely only for 1-2 years go smaller and be mortgage free. We are lucky in that we have been mortgage free for nearly six years and it's been so great , no stress etc about interest rates. But we scrimped and saved and did without tons of extras to overpay and then my dad died so we had a small lump to finish it off. We now try to save the equivalent of the mortgage every month. Obviously many people couldn't possibly do this but I consider ourselves very lucky to be in this position especially this year. Earlier in our marriage we had desperate times with huge debts ( redundancies) and I never want to go back there.