Upsize or pay off mortgage

[YorkshireMum28]

Household income of £5,300 after tax pensions etc.

Current mortgage £580 a month, £77k left to pay, do we overpay £820 a month and clear mortgage in 6 years? Then upsize when DDs are 7 and 10 and ready for their own space. They will be room sharing during this time. It’s a 3 bed but 3rd room houses dryer and clothes/coats/toys.

or

Upsize now increasing mortgage to £1,400 a month

What would you do or what did you do?

The house we’re in now is lovely but it’s small, barely any storage no space to extend. It’s fine but it’s a squeeze. We are happy here but I don’t want the girls to share forever. Would it be financially sensible to stay put and clear the mortgage and then get a new mortgage out to upsize later?

any advice would be great thank you

Quite a lot of what ifs and further info… are you (and DP) in secure jobs and or with income insurance? Have you found the house you’d move for? Does it need further renovations, and can you manage the higher running costs as well as the mortgage?
Is that per month cost keeping the same term or you would be ok signing up for a longer mortgage period? Are you currently just saving the difference?

If you are going down the overpaying route do watch out for the annual penalties (mine was anything above 10%), and perhaps instead look to save the difference in a high interest account and pay off / significantly reduce the principal when the current mortgage deal is up for renewal.

We upsized. Yes we have a big mortgage but we have a low LTV, and I love our house and the extra space we have. It makes such a difference to quality of life - it's where we spend most of our time, after all!

I also think our children will be boomeranging back to our house as young adults so extra space is to some extent future proofing that issue.

I'd upsize now but take out a long term mortgage (20 /25 years) which has low monthly base that you can overpay if you want.

Eg. Payments increase to £900 but you can pay 1,300 with no penalty if you want

Why pay off a mortgage completely to restart? Surely it is easier to move shortly as although your house will increase in value, so will the houses you are looking to buy and the mortgage becomes bigger. I would look long term, take out a long mortgage but you can overpay later on in life.

As someone with adult children, one has graduated from uni, living at home so needs a bedroom here and is lucky enough to have a separate space to work from as he has a hybrid working pattern. He isn't just stuck in his bedroom at a desk or camped in the dining room. Our other child is at uni and will do the same as their brother, live at home and save for a house.

We moved when my children were in lower primary for an outstanding secondary and sixth form because we looked ahead. We bought a house with potential to change it into what we wanted it to be, that included what started as a large playroom and morphed over the years into a gaming room and sitting room separate from the lounge. It meant the children had their own space together but could also escape each other in their separate bedrooms. We divided the space and now each child has their own desk so can work or game.

The space in the house was the selling point. Loads of storage ample car parking, space outside for the children to play and now we all sit out chatting making pizza in the pizza oven. Think long term of what you want.

FWIW, we had a small 3 bed semi on a busy road that we lived in for 15yrs, ready to pay it off, making max OPs every year, got the mortgage down to £60k and could have had it paid off in 3yrs. The DDs got bigger, I started wfh and the small house felt very tiny so we did end up moving to a spacious 4 bed detached. This was 3yrs ago when int% were on the floor, we brought a decent chunk of equity with us so our mortgage payments are still very low £500pm. We are working hard to repay this mortgage before our super low % fix ends in 18m.

For us, it was the best decision but we didn't triple our mortgage payment. We did buy a fixer upper so we have ploughed £££££ into renovating it over the last few years but we now have a spacious (half-renovated) house on a quiet street in a great location. We still aim to be mortgage free in the next few years so we can finish the reno.

Upsize now, as long as jobs are secure and disposable income can weather the increase.
The eventual end date will be sooner and you will enjoy the house for longer!

We upsized to a 4 bed when our children were 10,10 and 7. How I wished we had been able to move when the kids were younger, the extra downstairs living space would have made life that much easier. Now they've hit the teenage years, they spend most of the time in their bedrooms.

I think it’s worth to upsize and have your forever home. Something that is comfortable to live with the family but not too big that you will need to downsize later in life.

Agree. Upsize when you can afford to (so now). Try to get your monthly repayments as low as possible and overpay if you can. You never know what’s around the corner. Could market conditions or your financial situation be better in the future? Maybe. Could they be worse? Absolutely. If it’s affordable to do, then do it.
You can also afford to be fussy right now and hold out for the right house, not just any house like you might when the children are older and needing to get into a certain catchment area before secondary school.

What’s the value of waiting 6 years to clear your mortgage while overpaying?

I’d be getting the bigger house and enjoying it while your children live at home - you can always downsize later.

We’re in secure jobs but no income protection, we would take this out if we upsized though. We have 15 years left on this one as it stands but if we upsized we’d be locking in £1,400 a month for 25 years! I’m 29 DH is 35 so it is a bit daunting the increase.

thank you I’ve been keeping an eye on the 10% allowance

Talking about disposable income weathering the increase, what would you say is acceptable disposable income? I’ve estimated we will have £400 a month leftover after absolutely all bills, fun money, savings pots, car payments holiday pots contributed to etc. that’s with £650 childcare we pay now also so that £400 will increase to £1,050 in a few years when they’re in school.

I was thinking paying less interest in the long run maybe

You're young to be even thinking about paying off a mortgage! I would move if you need the space now.

I don’t think there’s much point in being mortgage-free but miserable and cramped, but at the same time you’ll know if this particular bigger house feels like too much of a stretch and if you’ll feel like you need to make too many cut backs or feel under pressure.

If you know you’ll need to move in x years I’d say bite the bullet and move now and maximise your years of enjoyment in it.

Being mortgage free at 45/50 does sound pretty good… could you find somewhere thats a middle ground in terms of size or potential to extend when you need it later?

Move now and enjoy your larger home while your family is growing. If you wait, chances are the new home will have increased in value and you’ll wish you had moved earlier.