Play it safe or gamble?

mozfan

We have 10 years left on our 80,000 repayment mortgage, (coinciding with kids possibly going to uni) house is worth around 400000. We've seen another bigger house in a better area though, which we could extend, add value to and enjoy. The only way we can afford it is to extend our current mortagge to 20 years, and borrow another 90000 interest only, sell up in 20 years when we're 65 and downsize. Is that madness?

Comyface

Hi mozfan

Play it safe, play it safe, play it safe! I'm not a risk-taker by nature, but you'd be asking for trouble IMO.

If the only way you can afford it is to go interest-only, then some would say you can't actually afford it. In 20 yrs - what if you don't want to move after being there for so long? What if we're in the middle of another slump and you can't sell?

Also, lenders are being a bit more cautious nowadays. You might be lucky to even get an interest-only mortgage (or part interest-only) if the only way to repay that debt is to sell up.

Obviously the info I have is limited, you say it's a better area and i don't know where you live now but my twopenneth is play it safe!

wymondham

Personal choice, but I would not risk it and the cost.... take up nice holidays instead!

Raggs_2

Are you happy where you are? Would you be happy to stay there beyond 65?

Personally I'd play it safe, use the extra cash to future proof the house, excellent insulation, maybe some solar panels etc etc, try and make it so that come retirement I know that I can sit back and relax, and not panic if for some reason income drops significantly, since outgoings are nice and low.

Bikerchicken

I wouldn't personally risk it either, I've recently had a light bulb incident and learning from it. If your thinking of interest only your opening yourself up to possible risk and upset later on. If your happy where you are stay put and make it perfect.

ItMightBeUsefulOneDay

mozfan wrote: »

The only way we can afford it is to ... borrow another 90000 interest only

Then you can't actually afford it. Sorry to be blunt but that's the cold hard truth. The bank is likely to insist on seeing the "repayment vehicle" which shows how you'll clear this loan in 20 years time. That's IF you can find a bank suicidal enough to be offering such a deal.

Can you afford "interest only" at 6%, 8%, 10%, 12%, 15% rates plus a repayment vehicle?

mozfan wrote: »

sell up in 20 years when we're 65 and downsize.

This ONLY works if house prices rise, substantially over the time. A number of people right now are finding themselves stuck - unable to sell for enough, unable to retire, unable to find work.

mozfan wrote: »

Is that madness?

Given what you've said so far, yes, I think it is.

hillcats

Agree with all others, PLAY SAFE...
Pay off the property you are living in now and then relax and enjoy.

That is certainly our aim, I will always play safe personally as I am looking for piece of mind and security for my family in knowing that we own our property and nobody can take that away from us. Aiming to have cleared mortgage within next 5 1/2 years we can then enjoy some lovely holidays with the kids. Think of all those Mortgage free (or Rent free) months & years ahead....... regardless of what happens to the country and our interest rates etc, of which I personally think will rise high to pay for this existing mess we are in.

mozfan

Thankyou all for your input...i think i have my answer!

Thrugelmir

Sell now and have no mortgage to repay. Use the "mortgage" savings to fund your pension scheme and retire at 60.