Pay off mortgage...or buy a new house?

I am looking for some advice and wonder if you could help. We currntly live in a 4 bedroom house with a mort of £100,000 with 14 years to go, its prob worth £200,000. After being inspired to pay off our mort we have started to work towards paying it off in 6years when my husband is 40.

HOWEVER my husband would like to move house, origionally it was to move to a nearby village where both our children go to school. The plan was that this would be a sideway move, but now my husband thinks it would be better to upgrade. This would mean (if he gets his way) a mort of £180,000 over 25 years, on a property worth 280,000

Financially we are in quite a secure situation, and can save over £1000 a month. We have no debt except the mortgage, and my husband has a student loan which should be finished next april. (we have to cash to pay this off).This would be an extra 300 a month. I don't work but stay at home with our two children.

Although our house is four bedroomed it was origionally 2 but was extended, so its layout could be better (IYSWIM), and we have a tiny garden, so I can see the benefit of moving to some where nicer. The house in question is a big 4 bedroomed on an executive estate.

My husbands argument it that if we don't upgrade now we may never, and it would be a better use of our money than saving £1000.00 plus a month. (the mort would be an extra £300 month), he also likes the idea of downgrading when we are older, and feels this would give us more options.

But to me it seems scary especially the extention to 25 yrs. I liked the idea of no mort, and the financial freedom it would give, and I worry that with the interest rates going up things could get tight.

Any opinions would be welcome as I am not sure what to do, and the funny thing is I would feel uncomfortable talking to family and friends about this..perhaps is that british thing about not talking about money.

Thanks in advance

Axx
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Replies

  • skimskim Forumite
    417 Posts
    I was in a similar position

    I had a 3 bed semi - £41000 mortgage with 10 years to run

    Saw a nice 4 bed detached -worth £100,000 more

    Took out a £119,000 mortgage with the One Account with over £60,000 savings. All they take out of the account each month is £96 for the interest because we are ahead on payments due to our savings.
    Well worth it in my opinion.
  • p.s. when I say "you" in the post (as I do a lot), I mean "You", in the broader sense meaning everyone else but me. Hope you understand that I'm not trying to generalise about you specifically.

    (got to watch myself on here, they're out to get me)
    Baddass Mofo
  • susiebsusieb Forumite
    1.5K Posts
    1,000 Posts Combo Breaker
    We have done exactly this - we had a 40k mortgage, and upgraded and ended up with a bigger mortgage and on 25 years, however we are already overpaying this (only moved in Nov) and hope to get it paid in 10 years. We decided to move as this house is far bigger and more suited to a growing family, its in a great area, with great schools and a great secondary school for a couple of years time.
    You never know whats around the corner, and I feel that yes we need to save for the future, but also we need to enjoy today!
    Always on the hunt for a bargain
  • Why not go and see the house - if it's right for you, you'll know instantly. And if your heart isn't in it, you have the best possible reason to put your foot down. It has to be your dream as well as his, otherwise regrets and resentment are inevitable, regardless of the financial pressures.
    :T:j :TMFiT-T2 No.120|Challenge started 12.12.09|MFD 12.12.12 :j:T:j
  • I did the same, my mortage doubled overnight when we bought our dream house, then we added a further 50k getting a new extension and lovely kitchen. The mortgage looks daunting at first, but we can well afford it and my job prospects are excellent so why not. If anything goes wrong then I have 6 months of my salary saved up to give me breathing space to get another job or worse case scenario to sell it and buy a smaller place for cash.

    Having a large mortgage that you can afford and having a dream home is NOT the same as getting into debt with credit cards and loans to fund a dream lifestyle. You can always sell your home to pay off your mortgage, you can't sell your lifestyle to pay off your credit cards!

    As I said on the DPOYM, my friend paid off the mortgage on his terrace when he was a young man in his early 30s. He laughed at the rest of us with our mortgages and sat back waiting for us to "come a cropper" because we were "upto your eyes in debt". The cropper didn't happen and we now have nice 4 bed detached houses. He was in the same industry sector as us and had the same great, long term prospects and yet was still fearful of some disaster occurring, much like the dedicated POYMers.

    I liken the dedicated POYMers to those weird American survivalists who build bunkers in the mountains and bury tins of food, waiting eagerly for armageddon.

    Follow my advice and enjoy your life to the full, listen to theirs and become miserable, grumbling misers who lives have stagnated and are waiting for world economic meltdown just to be able to say "I told you so" in a smug manner, little knowing that if there is a global economic meltdown their single asset will be as worthless as mine :p

    Note: this may be SloppySavers last transmission from Radio Freedom, one of the POYMers has been given admin powers and is not afraid to abuse them. Hence the dissappearance of Sloppy Saver V1. Fear not friends, I will return - the cause of freedom, liberty and egality are strong within this one.
    Baddass Mofo
  • Like my mother always says to me - you can either spend £100k on 1 house or as a deposit on 2/3 houses. However, in 25 years time when you have still just the one house, I'll have 2/3.

    Based on renting the extra properties out for rental income + that 100k (and mortgage) will be worth a lot less in 25years time than it would be in now whilst the property value will just keep going up.
  • nrsqlnrsql Forumite
    1.9K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    Pay off the mortgage in 6 years living somewhere you don't enjoy or take longer, feel more comfortable and settled.

    I think you already know what you want to do and it doesn't sound as though you would struggle with the extra mortgage.
    What's the worst that can happen - and would that be worse than regretting not makng that decision.
    (Think about a fixed rate mortgage if you are worried about interest rates).
  • Jarlawuk wrote:
    Like my mother always says to me - you can either spend £100k on 1 house or as a deposit on 2/3 houses. However, in 25 years time when you have still just the one house, I'll have 2/3.

    Based on renting the extra properties out for rental income + that 100k (and mortgage) will be worth a lot less in 25 years time than it would be in now whilst the property value will just keep going up.

    Property values don't seem to be going up anywhere outside of London, and if the UK follows the US and Eire (and we usually do follow the US), then we're in for a crash.

    But apart from that, many people don't want the hassle of renting. It's great if you have full occupancy and they're nice and reliable. When you have a house empty for 6 months because everyone has piled aboard the BTL bus and there is a glut, or you have squatters who you can only shift with a court order, then it's not so great.

    Finally, the poster has stated she wants her dream house. In my book, staying in a house you don't want to live in for 25 years (in your example) or even 10 years for investment reasons is just as wrong as living in the house in order to pay off the mortgage. You have to enjoy your life, it's the only one you'll get.

    Save a little, spend a little and invest a little.
    Baddass Mofo
  • comping_catcomping_cat Forumite
    24K Posts
    Part of the Furniture Combo Breaker Mortgage-free Glee!
    Forumite
    i agree with mrs-deadline, if this new house is for you, you will know when you see it. If you do move and take out the bigger mortgage, you can still overpay if you can/want to.

    Sloppy - you keep mentioning that POYMers are 'stiffled' financially? I agree, the pay off your mortgage in 2 years was exactly that, but i would say the majority of mortgage free wanabees are not like this, and havnt said they are!!! Yes, i throw all 'spare' cash at my mortgage, but if i saw a house i prefered to the one im in now, and wanted to move, i would - i would still be a MFW, but would just put it back a few years.
    I think this is why you are upsetting so many people, you are asuming something about the MFWs, which isnt the case!!!!
  • catowen wrote:
    i agree with mrs-deadline, if this new house is for you, you will know when you see it. If you do move and take out the bigger mortgage, you can still overpay if you can/want to.

    Sloppy - you keep mentioning that POYMers are 'stiffled' financially? I agree, the pay off your mortgage in 2 years was exactly that, but i would say the majority of mortgage free wanabees are not like this, and havnt said they are!!! Yes, i throw all 'spare' cash at my mortgage, but if i saw a house i prefered to the one im in now, and wanted to move, i would - i would still be a MFW, but would just put it back a few years.
    I think this is why you are upsetting so many people, you are asuming something about the MFWs, which isnt the case!!!!

    There have been quite a number of posts and PMs from people who have paid off their mortgage and just can't bring themselves to get another. Even the guy who remonstrated with me for saying that still couldn't bring himself to move until he had saved up the 80k it took to get his next house (however many years that took).

    Naturally I'm not including you in my sweeping generalisation as you have a keen mind to go with that pretty little face of yours.

    Though saying that, if you had actually paid off your mortgage and had been mortgage free for a year or so, could you really bring yourself to get another one? Come on be honest...
    Baddass Mofo
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