Doubling Mortgage at nearly 40 - is it worth it?

natman · 12 January 2016 at 3:20PM

Ok here goes - I will try and keep focused-
Background - I am 39 years old, my wife is 38, we have a daughter who is nearly 4. We live in the North west England
We have a mortgage on our house. Our house is worth approx £205,000 we have an oustanding balance of £77,000 mortgage and pay £450 a month. So loan to value is very good at 38%. Additional information - we fixed 5 years ago and extended the term of our mortgage as we knew having a baby / child would have costs so we increased to 20 years from 15 years. we spend £250 on nursery fees a month.

ok new situation -

Seen a house at £280,000, if we sold our house we would need approx £150,000 mortgage. This is roughly double what we currently have. we want our payments to be under £600 so our term would need to be around 29 years.

so the question - At 39 years old, is it wise to double your mortgage, increase your term and increase your payments?
From an investment point of view what is better? To have a house worth £205,000 owing just £77,000 or having a £280,000 property and owing £150,000. Or is it just the same. Though monthly my payments would increase by around 30%.
My plan to retire early is achievable in my current house as I would pay my mortgage off in say 15 years. But it would be nearly 30 years when I would pay off the new monies. If obviously I stayed and did not down size.

So I guess the question remains - when all the info highlights paying off your mortgage should be a priority. Is it ever worth doubling your mortgage mount when you get to nearly 40??

pimento · 12 January 2016 at 3:29PM

What does the new house have that your current one doesn't? Could you do stuff to your current house that would save you the fees you'll have to pay to buy the other house?

natman · 12 January 2016 at 3:34PM

Hi.. A good point, but the new house is better, different area but costs more than I wanted really, isnt that always the case. I do have the option to stay of course. Just weighing up the options really. We are after moving to this area ideally. Just wondering people's thoughts on it really.

D00gie72 · 12 January 2016 at 3:35PM

Hi - I can't really advise on your particular financial situation - only you really will know ifyou can afford the new mortgage. Just wanted to say I'm a few years older than you and also have young children. We moved into a much bigger house last year - just over doubling our mortgage and I'm so very happy that we did. Yes the mortgage repayments are higher and we've gone back to a 20+year mortgage but for us it was absolutely the best thing to do. Our children have more space - we have a much bigger garden and - well - life is good!
Try not to think just about the investment side - at the end of the day its a home and you need to consider how the more expensive house will improve your families life.

marksoton · 12 January 2016 at 3:38PM

Have you played around with a few affordability calculators to see if it's even viable?

What rates you're looking at / if lenders will lend on the term you're proposing?

matchboxfull · 12 January 2016 at 3:38PM

It all depends on what you want out of life now and for your future, as well as on what you can afford.

Don't forget that these days people are increasingly getting their first mortgages in their late thirties, ourselves included. Owning a home outright before retirement is our goal!

natman · 12 January 2016 at 3:46PM

Thanks for your replies there and yes we have played with calculators etc, and yes it is viable to do what we are doing etc, we both work full time, not on mega money but both earn approx £26k each.

we live financially 'ok' at the minute, but when our daughter goes to school this will free up some funds. we could just stay and go wild and pay off our mortgage like crazy and have it paid up in 12 years or so.
This giving us a house worth say £215,000, being just over 50 and having no mortgage - what a dream..........

But like Doogie says - I do want something a bit better, a bit bigger, a bit nicer , want to improve our families life that little bit more...but that means our long term goal / plan changes. But is it for the worse or is it for the better?

[Deleted User] · 12 January 2016 at 3:52PM

What kind of job are you in? If its a physically demanding job would you be able to still work when your nearly 70?

Do you have the potential to inherit anything in the future to help pay off your mortgage earlier? i.e. have parents that own a property/assets?

Could you up your monthly payments to shorten your term?

Personally, I wouldn't want to still be paying a mortgage at nearly 70, but that is my personal preference.

skint_chick · 12 January 2016 at 3:54PM

Is the new house one that you would stay in even after your daughter is grown up and left? If you were then downsizing in 20ish years time then you might not even need to worry about the final 10years of the mortgage.

Is it your perfect house in every way rather than just the area? Any work to do to the new house?

I wouldn't be worried about the larger mortgage because you'll still have plenty of equity. I would look at if/when your childcare costs will reduce how much of that £250 you will have spare - if it's £150 or more then you won't necessarily feel the impact of the larger mortgage. Your best plan is to do a full budget for all the new costs, increased bills, council tax, additional travel costs to make sure you've taken everything into account.

natman · 12 January 2016 at 3:58PM

I agree about not thinking about it as an investment but i guess it would roughly be equal - using the very approx figures below
to stay in current house - at age 55 own house worth £220,000 no mortgage zero monthly mortgage payments

to move in bigger / more expensive house - at age 55 house to be worth say £300,000, but have outstanding mortgage of £80,000 paying say £600 a month.

I could down size at that point like the comments above so not needing to actually see out the remaining mortgage term

However the journery over the 15 / 16 years would be better in the 'better' house...(hopefully)

[Deleted User] · 12 January 2016 at 4:00PM

It sounds like you have already decided what you wish to do. Go with your heart! And good luck with it all

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Doubling Mortgage at nearly 40 - is it worth it?

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