Dilemma: mortgage-free first then move or ??

I'm more of a lurker than a poster, so I'm not sure where to post this - mortgage board / mortgage-free wannabe board / house buying board ???

I have a dilemma that I would like some opinions/advice on...

We are desperate to move because we need more space. We have a 20K mortgage left to pay, which we are throwing all our spare cash at to overpay it. By my calculations, July 2008 will be the earliest possible date that this will be finally paid off. But this also means we do not have enough left over to save up for a decent deposit for the next property.

As far as I can see, our only options are:

1) Pay less towards our current mortgage so we delay the end date (say an extra year to July 2009), but we will then also have a decent deposit for the next property, and current property will be mortgage-free.

2) Don't overpay, save up for a decent deposit instead, and take out a new mortgage for the next property while paying off current mortgage (paying two mortgages).

3) Pay off current mortgage as scheduled, and get a 100% mortgage for the next property (no need for a deposit).

I know option 1 is the most sensible financial choice, but it will mean waiting 2 more years living in a cramped house. I'm a little concerned that option 2 might be difficult to manage financially. Also the size of the new mortgage will be limited by the presence of our current mortgage. Option 3 seems like an easy route, but not too sure 100% mortgages give good rates or income mutliples, (also more risk of negative equity.)

We don't want to let out our current property - been there, done that and found it too much hassle. We're not keen on selling our current property yet (hoping to hold on to it for children/retirement) but might sell if we really needed to.

Are there any other options? Which option would you go for? Looking for some words of wisdom... thanks.
Mortgage started July 2010 = £223,314
Mortgage @ March 2014 = £0

MFiT-T3 No.81
Mortgage-Free challenge completed.

Replies

  • What is your present house worth?

    What value of property will you want to buy?

    JoeK
    I am an Independent Financial Adviser.
    Anything posted on this forum is for discussion purposes only. It should not be considered financial advice. Different people have different needs and what is right for one person may be different for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser who can advise you after finding out more about your situation.
  • Kaz2904Kaz2904 Forumite
    5.8K Posts
    Mortgage-free Glee!
    What are you actually planning to do with your current property if you don't want to sell it or let it? Some councils have been seizing properties in order to get people off the council list and into a property. Beware of being stung- would be better to make some money on this.
    It shouldn't be a problem to get another mortgage with all the equity in your house unless you have other debts. Your best bet is to speak to a couple of companies and see what they would charge?
    Debt: 16/04/2007:TOTAL DEBT [strike]£92727.75[/strike] £49395.47:eek: :eek: :eek: £43332.28 repaid 100.77% of £43000 target.
    MFiT T2: Debt [STRIKE]£52856.59[/STRIKE] £6316.14 £46540.45 repaid 101.17% of £46000 target.
    2013 Target: completely clear my [STRIKE]£6316.14[/STRIKE] £0 mortgage debt. £6316.14 100% repaid.
  • starlet10starlet10 Forumite
    85 Posts
    Part of the Furniture 10 Posts Combo Breaker
    Thanks for the replies so far.

    Our house is worth 200k, with 20k mortgage left to pay. We're looking at moving to somewhere costing 250k. We got an AIP from Nationwide for 237k, so need 13k for the 5% deposit. We don't have any other debts.

    Not sure what to do with our house once it's been paid off. I think it's just nostalgia that is stopping us from selling it. It was perfect for us when we first bought it as newlyweds, but three children on, we really need more space for them to grow up in. But I was thinking, once they have flown the nest, we could downsize and move back in again - maybe a silly idea? Maybe once we have moved to another house, it would be easier to be more objective about what to do with our current house!
    Mortgage started July 2010 = £223,314
    Mortgage @ March 2014 = £0

    MFiT-T3 No.81
    Mortgage-Free challenge completed.
  • Tiger_greeneyesTiger_greeneyes Forumite
    1.3K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭
    If I was in your situation, I would think about the family's physical needs. You'll make just as many memories in another house - even more - it's where you'll be when you have your first grandchildren! Enjoy your time with your family and let time take care of the financial side of things :)
  • GreenNinjaGreenNinja Forumite
    601 Posts
    ✭✭
    Hi Starlet10,

    I can really feel for you on this issue of not wanting to move from the house due to how happy you have been there and all your happy memories etc.

    I was the same about my house, I loved it and had lived there for 12 years and just could never envisage moving. However, last year I discovered my husband had been having an affair for the entirety of our married life so needless to stay I started divorce proceedings. I then had to move, there was no way round it. To cut a long story short I moved into a new house in October last year and the day I moved out was very painful as I simply did not want to leave my lovely house.

    6 months on, I have realised that its the people and personal items in a house that make it a home not the building itself. When I visit that old house now, it seems like an empty shell with no life to it, because there is nothing of mine there. In contrast my new house I adore.

    I guess what I am trying to say is, once you move into your new house and create new memories there, etc and have all your things around you, the other house will cease to feel like your home, you will just think of it as somewhere you used to live.
  • Try Northern Rock, they will go up to 125% of the property value.

    JoeK
    I am an Independent Financial Adviser.
    Anything posted on this forum is for discussion purposes only. It should not be considered financial advice. Different people have different needs and what is right for one person may be different for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser who can advise you after finding out more about your situation.
This discussion has been closed.
Latest MSE News and Guides