What would you do? Mortgage free or big house?

[Rainbowstr]

Hi Mums. We currently have a big 4 bedroom home, the 4th bedroom is never used - we have 2 kids. We are thinking of down sizing to a 3 bedroom home, in a different area (not quite as nice), but this would mean we would be mortgage free with a bit of $$ in the bank. The kids can attend the same school. Pros and cons? Has anyone done this? thanks.

If the smaller house is big enough and the area is still nice then I'd go for that

Will you really free up that much money once you’ve factored in moving costs, stamp duty etc?

I wouldn't move to downsize unless there were other factors , eg we needed the money now. It's expensive moving house plus the hidden costs of changing furniture that doesn't fit, finding out about unexpected maintenance etc.

Definitely, extra money for experiences and holidays 😀

Yeah, this.

Unless you have a very good reason, I wouldn't do this.

Assuming the current mortgage is affordable and you are not skipping meals etc:

You spend a lot of time in your house. And you can't have that many holidays if dc are in school and you're both working, there's a limit to how many days you have. So for me I'd rather not be on top of each other and I'd also not compromise on area because again, I've got to come home to this house every day.

We'll downsize when kids leave home. Until then I'd rather have as much space for everyone as possible!

This.
We could downsize and be mortgage free but if 2020 taught me anything, it is that l need my own space!!

Mortgage free - we are headed for further house price falls and a recession next year. You can live insulated from the worst of it without debt. It's liberating. Try it. Having savings instead of worrying about money owing is really life changing.

Savings are only really worthwhile if they are working for you. Otherwise they are being eroded by inflation

Depends on how secure your job/income is. If you can afford the repayments and you work in the public sector go for a bigger house.

We are making just over 5% a year at the moment, it's thousands of pounds a year extra. If we still had a mortgage we would not be getting that PLUS we would be paying the bank over 5% on the debt. It's a no brainer if your able and lucky enough to be able to do it.

Thank you for this thread

We are the other end - family of four in three bed house in mediocre area - house big enough and area sufficient enough to serve purpose.

But we keep toying with the idea of moving - probably a similar sized house, but a better area - at a cost of perhaps £100k

So we don't we.

Based on the responses here, we should stay put, clear the mortgage and enjoy life. That's actually my preference and it's DH that is trying to persuade me.

Not something I would bother doing whilst I still had kids at home unless we had no other financial options. You will benefit from the space now (can you really not use that room at all?) and have the advantage of a larger investment growing, plus as others have said moving is expensive, it's also not a good time to sell in most areas to get the best price at the moment. But you haven't explained to what extent you need to do this.

How big is your current mortgage and how long left on it?

What's the "not quite as nice" area like compared to your area?
I find living somewhere really nice makes so much difference to quality of life.

Also , how well will the smaller house work when they are young adults? I am assuming mine might boomerang back after university so not planning to downsize till they are well established.

But it's hard to say without knowing your financial position, so there may be more pressing reasons to downsize?

100% downsize slightly and go mortgage-free.

You could save the money you would have been paying on mortgage, or pay it into your pensions and focus on retiring or semi-retiring early.

Life is too short, and having a spare room or bigger house is unimportant compared to having less stress every day.

I think downsizing is one thing but the "not quite as nice" area is a different story! So no, unless you can't afford repayments, I wouldn't do this say, just to have more disposable income for holidays.

What is your lifestyle.

i would want the larger house and space. We don’t travel much, can afford the mortgage. I love having the space and the large garden. It is really good for me to be outside in my garden, and my H gets a lot of joy from maintaining the house.

so the answer depends on what you want from your life. If you find your joy in travel, adventures etc, and can’t afford them otherwise, I’d absolutely downsize.

if that’s not where you find joy maybe your decision will be different.

I also think we don't have enough info here on size, downsizing sounds financially practically, but if you've got 2 young kids and you're downsizing to a much smaller house your quality of life could be massively impacted. 4 bed and 3 bed tells us nothing, my 3 bed we moved from was less than 1000sqft, it was tiny and not a fun place to raise children, I wouldn't recommend it for money in the bank. But equally you can get good sized 3 beds so it really depends on the figures, financially and in terms of measurements, on how much anyone here can advise you, all your ages too.

I would want the larger house if the repayments are affordable. Kids take up lots of spare and having a spare room is helpful. The area pont is also worth carefully considering. I really do like walking back to our house when it's such a nice place. The previous house was fine but the area was depressing.

How old are the kids and how big are their current bedrooms? You may find more space becomes necessary.

Location is very important so think carefully before moving!

Not sure I would downsize unless I needed the money and cos it’s not such a nice area. We liked having a spare bedroom to use as a study. It’s also good when you or your partner r unwell to move into spare room.

The not so nice area is a deal breaker in the plan for me .
Hard times are coming in the property market , you would be better placed to be in a good desirable area for any future sale rather than an area that struggles . You will take a harder financial hit on your property in the “lesser “ area .

I would focus on current spending and overhaul your budget stringently to try to free up money for extras .

It's the "not quite as nice" area for me that I struggle with.

I'm in a similar position. We have enough capital in the bank to pay off our current mortgage, with decent savings still. We live in a 3 bed house but it is very much a small 3 bed starter home that just doesn't seem adequate for when we our two children are teenagers. For that reason, we're going to upsize to a larger home and our mortgage will stay the same as it is.

Given you don't have teenagers yet I'd stay. You'll need the space. Checkout how much moving will cost:
1%+ for EA
£1k solicitors
??stamp duty - that's the biggie
1-3k removals