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Original poster

Mortgage free or nicer, larger house and rent a room out?

59 replies

needanewplannow · 26/02/2022 16:12

I've inherited some money and will be spending it on a family home, together with the equity from our current house. My choice is:

live mortgage free. Looking at what's available, it looks like we could get a 3 bed with compromises e.g. small bedrooms / small garden / "needs modernisation".

borrow about £60-80k and get a really lovely 4 bed house, with more space, nice decor and lovely garden. I'm not keen to take on debt as I don't earn a lot by MN standards (£28k), so my plan is to rent the 4th bedroom to mature students. (We did this before for several years and I loved having lodgers, I know lots of people here hate the idea but that's not a problem for us).

Mortgage free is tempting - but on the other hand we'll have a much nicer home for the kids if I borrow some money, and it'll be an investment. Also more flexible in future e.g. if my mum needs to come live with us some day.

DC are 9 and 13. DM is approaching 80, very comfortable where she is and has absolutely zero intention of ever living with us. But you never know, right?

WWYD?

OP posts:

Original poster

needanewplannow · 26/02/2022 19:03

@stuntbubbles

100% the bigger house. That mortgage is not much at all – I had the same mortgage on a smaller salary and higher interest rates than current mortgages for a boxy flat! And it was still pennies.

Imagine living in your “compromise” house forever wishing your garden wasn’t north facing or the road was quieter or the bedrooms bigger, etc, and none of those things can be changed. And if you bought a “needs modernisation” you might end up spending £60-80k on sorting it out once accounting for hidden issues, new kitchen and bathroom, redecoration throughout, plus all the dust and hassle.

That small mortgage buys you not just the bigger house, but avoiding the hassle of modernising, and no compromising.

Really good points, thank you.

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flashbac · 26/02/2022 20:37

If you choose a bigger house will you be able to afford to heat it?

Original poster

needanewplannow · 26/02/2022 21:48

@flashbac

If you choose a bigger house will you be able to afford to heat it?

I hope so. I'm not talking a mansion! Just a normal house with decent rooms. One extra room and a little more space than we'd have otherwise.

And, we keep the heating fairly low compared to a lot of people I've noticed. (Not to save money, that's just how we like it).

OP posts:

Ki0612 · 26/02/2022 22:00

I'd go mortgage free. I hate the idea of a lodger but also bigger houses bigger bills, council tax, energy etc which are just going to go up. I'd love to be Mortgage free.

Totalwasteofpaper · 26/02/2022 22:31

You like the lodger aspect so def go for the bigger house.

I had a lodger in my first home and while it was a mixed bag overall it was great in that it enabled us to go from a 2 bed flat to a 5 bed house in one move.
I just calculated it and I earned over 40k post tax doing it and that ignored the roughage interest it saved me which is pretty spectacular really...

glowingpink · 26/02/2022 22:35

If it were me I'd choose mortgage free. But given everything you've written here, I think that the larger house is the best choice for you!

RedToothBrush · 26/02/2022 22:36

Lodgers with kids over 4 are a different ball game... To both parties.

How does a mature student concentrate with a 9 year old and friends running about?

Original poster

needanewplannow · 26/02/2022 23:00

My 9 year old makes much less noise than her brother did at 4!

And a mature student concentrates by going to their room where it's quiet. If I'm buying a house with renting a room in mind, I'll make sure it's suitable, obviously!

In our old place, the rooms we rented out were on their own floor, and you couldn't hear noise in the front room from there. It was a good set up.

Also, anyone who's really intolerant of noise isn't going to rent a room in a family house, are they?! It's really important to find a good fit when interviewing people for rooms. It's totally different to interviewing people for jobs - instead of ignoring any prejudices you have, you need to embrace them and be really frank about them IMO.

e.g. if you can't stand people who leave mess around, then say so. I'm the opposite, mess doesn't really bother me that much and I need to have lodgers who don't mind a little clutter. I am honest about this and had people not move in on this basis. Which is great - it wouldn't have worked. I turned someone down as they were very religious (evangelical Christian) and wanted to play religious music in the house. Lovely young woman. She wasn't right for us, though.

It used to be very normal for people have big families and to live with extended family, it's very recent, this idea of only the nuclear family being the norm in a house. I do understand that loads of people really love that, and that's fine. But there are other people out there who like living with lots of other people around.

We never had a problem finding students to rent our room. None of them were looking for a family home as such, but were happy to live with a family and chose our place for other reasons. Of course many would hate it! But luckily there were enough who didn't to make it viable.

OP posts:

Original poster

needanewplannow · 26/02/2022 23:10

@Totalwasteofpaper

You like the lodger aspect so def go for the bigger house.

Wow, I've never calculated it, maybe I should!

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okthx · 26/02/2022 23:23

It would be mortgage free for me. I’d be so much happier dept free. People almost always want more, and it’s not bad per se. But it’s really nice to have something that’s yours outright and not to worry about paying back.

Gloschick · 26/02/2022 23:42

If you go down the route of the larger house, then you need to do so with the ability to get by without having a lodger.

We had lodgers when I was less than 5. I didn't mind them, in fact I found it quite exciting. Fast forward to when I was taking my GCSEs and my mum wanted to take on another lodger. This really unsettled me - I was stressed with exams and didn't want my home invaded by a stranger. She listened and didn't get a lodger again until I left home. You need to be able to do the same if your kids aren't happy.

Soontobe60 · 26/02/2022 23:52

At the ages your children are, I’d say having lodgers in your home may not work for them! It’s completely different to having them when your dc were very young.
Regarding your mum coming to live with you as she gets older, unless you have a downstairs bathroom and bedroom, then she most likely wouldn’t be able to do so because of the stairs.

Soontobe60 · 26/02/2022 23:55

How on earth do you go from a2 bed flat to a 5 bed house just with a lodger? They must have been paying £500 a month! For a room in a shared house!!!

Original poster

needanewplannow · 27/02/2022 00:30

@Soontobe60

At the ages your children are, I’d say having lodgers in your home may not work for them! It’s completely different to having them when your dc were very young. Regarding your mum coming to live with you as she gets older, unless you have a downstairs bathroom and bedroom, then she most likely wouldn’t be able to do so because of the stairs.

This is already the case now, my mum finds stairs difficult. I'll need to find a place with a downstairs loo and bedroom (or room that can be a temp bedroom) or she won't be able to come visit. (We live too far away for her to come for a day and go home again same day, realistically).

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Totalwasteofpaper · 27/02/2022 00:39

@Soontobe60

How on earth do you go from a2 bed flat to a 5 bed house just with a lodger? They must have been paying £500 a month! For a room in a shared house!!!

😂😂😂 Sorry my post was inadvertently a bit Kirsty Alsopp give up lattes and avocados.

It wasn’t “just the lodger” there were a few other factors.
Rental was high due to location and desirability (1000sq ft two bed - large room, period features, decorated tastefully/to a high spec”
So I made 750 pm ish…
I hedged and used half paying down mortgage and half in an ISA investments (which performed well)
I also moved to the opposite side of London when buying the house which made moving up in size easier (I was in a particularly high growth area and combo of area gentrifying and redecorating meant the flat doubled in value in 7 years…! )

That increase plus the higher equity from overpayments + ISA savings enabled a bigger step up

Anyway my point was lodgers can really reduce your mortgage term!

Original poster

needanewplannow · 27/02/2022 00:40

@Soontobe60

How on earth do you go from a2 bed flat to a 5 bed house just with a lodger? They must have been paying £500 a month! For a room in a shared house!!!

£500 a month is totally normal here (SE England).

Having a quick look at Rightmove, prices range from £420 - £650 a month for a room in a shared house in my town. (Not including bills).

The University-run student halls here start at £610 a month (inclusive of bills).

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Original poster

needanewplannow · 27/02/2022 00:47

@Gloschick

If you go down the route of the larger house, then you need to do so with the ability to get by without having a lodger.

Yes, it's a good point. And yes I could afford it without a lodger - with sacrifices I don't really want to make, hence the lodger, but it wouldn't be totally impossible.

It's one of the reasons I like renting to students - they come and go. There's sometimes space between them. It's not permanent and I don't need to chuck someone out if I want my house back, necessarily - waiting a few months will do the trick too!

My youngest would LOVE having someone else in the house. My oldest would understand it's what enabled us to get a bigger, nicer house. He's also sociable and laid back. I think it wouldn't be a problem for him, but yes that could change with time and circumstances changing, of course.

OP posts:

Original poster

needanewplannow · 27/02/2022 00:48

What I worry about, is what if I lost my job. That's the real risk of taking om a mortgage.

OP posts:

Original poster

needanewplannow · 27/02/2022 00:49

Like, if I got ill.

OP posts:

chipsandpeas · 27/02/2022 00:52

deffo mortgage free imo

Starseeking · 27/02/2022 09:21

@needanewplannow

Like, if I got ill.

Get good life insurance which includes critical illness cover. Job done

TheHomesickRestaurant · 27/02/2022 09:55

You do need to get life insurance / critical illness cover.
For me it would be mortgage free because I wouldn't want anyone else in my house.
But I have friends who sound similar to you so have always had lodgers (from their children being babies to now being in their late teens) and they absolutely love it. They have a very friendly sociable (I would say chaotic!) household and it suits them all down to the ground.
If I was like that I'd definitely go for option 2.

InkySquid · 27/02/2022 10:04

Depending where you are then renting to someone working away Mon to Fri might be a good intermediate option. Weekends to yourself and someone who is only going to be around 4 evenings a week. I rented rooms like this when I was working away as much nicer and cheaper than a hotel.

Changechangychange · 27/02/2022 15:40

An £80000 mortgage would be about £300pcm over 25 years, so affordable on your salary even without a lodger. With a lodger, if you still paid the mortgage yourself by using their rent as a monthly overpayment, you could have paid off the £80000 in under 10 years. Definitely Option B.

Liverbird77 · 27/02/2022 19:25

A 60-80 mortgage would mean pretty small repayments, and it would keep shrinking year on year. If you are happy with a lodger then I'd go for this option without a doubt.

Would the house be big enough for them to have their own bathroom? That would make a big difference to me.

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