I'm mortgage-free, I'm not sure I want to be

edited 30 September 2013 at 7:45PM in Mortgage-free wannabe
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WobblyDogWobblyDog Forumite
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edited 30 September 2013 at 7:45PM in Mortgage-free wannabe
I've been mortage free for a couple of years. It's nice, in that I don't worry too much each time my employer starts muttering about cost-cutting and off-shoring. I've almost forgotten what it's like to have a mortgage, but I would probably be more stressed if I got another one.

On the other hand, although my current house is quite nice, I would really like a larger one, in a more expensive area. I have plenty of surplus money each month, which I split between savings accounts and a FTSE tracker. Even so, I think my nominal wealth would grow more quickly if I made a big leveraged bet on rising house prices, ie. bought an expensive house with a big mortgage. In theory, it's a risky thing to do, but politicians of all types seem to be obsessed with helping people who make that bet.

Is having a big mortgage really that risky? The government currently seems to be encouraging big mortgages, and I don't know anyone personally who has lost their home through failing to meet their mortgage payments.

Replies

  • originalmiscellanyoriginalmiscellany Forumite
    1.7K Posts
    Part of the Furniture 1,000 Posts Combo Breaker Mortgage-free Glee!
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    Well I'm in a similar position to you -I'd say enjoy the fact you've cut your costs and saved hard to put yourself in a position where you are debt free. How other people live their lives and prioritize is upto them, but the fact that I am not in debt means that I sleep well every night!

    We too could have bought a huge house and be mortgaged until we're in our 60's but as it is we are able to enjoy our life and if necessary one of us can try a different career/not work for a bit with much smaller overheads over us.

    So I think when interest rates go up lots of people are going to struggle, as the previous 5 years have simply kicked the can further down the road rather than ever dealing with the issue (of huge debts and excessively large debts.)
    Feb 2012 - onwards MF achieved
    September 2016 - Back into clearing a mortgage - Was due to be paid off in 32 years in March 2047 -
    April 2018 down to 28.00 months vs 30.04 months at normal payment.
    Predicted mortgage clearing 03/2047 - now looking at 02/2045

    Aims: 1) To pay off mortgage within 20 years - 2037
  • I quite agree. Lots of people will be getting a huge shock when rates inevitably rise, and the interest will cancel out much of the capital growth which is no good to you until you sell anyway. And then where would you live...?
    Paid off mortgage nine years early in 2013. Now picking and choosing our work to fit in with the rest of our lives!
    Still thrifty though, after all these years:D
  • This is really a personal choice but I have been in your situation and we made the decision to move on.

    We became mortgage free around 6 years ago at the age of 32 but this lasted just a couple of years before we moved on to a bigger house in a better area. At one stage we were looking at spending £100k more than we actually did and I am so pleased we didn't overstretch ourselves (our mortgage was £148k at it's highest anyway). Having been mortgage free previously I find I am even more uncomfortable with mortgage debt now and so it needs to go asap.

    Will we be moving again - no way! I will consider a BTL property or two maybe to boost my wealth and I would love to live abroad in retirement so need to save for this, but I think the next move from our family forever home will be to downsize.

    Do you need to move for practical reasons, do you need a bigger house, for instance?
  • ArkersArkers Forumite
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    Hi WobblyD, we were MF until a few years ago. We moved to a wreck and bought a BTL. Two years later the BTL produces a welcome income and £100k later on our home things are beginning to take shape. Yes our debt is greater, but looking at the long term we can envisage an exit plan. It may an idea to think about. On paper we have made money doing this, but with hindsight there was a bit of luck finding this house as it is in a lovely spot, and in the ever crowded South East on our budget it was not easy! Good luck WD.:)
  • SmlSaveSmlSave Forumite
    4.9K Posts
    Part of the Furniture Combo Breaker
    I think its all your choice WobblyDog but I wouldn't move just because you think you'll make money, move because you find a house you love and can afford.

    While you may not know people who have lost their homes personally it does happen (repossession properties are always on the market albeit not for long) and I'm currently working on 3 files atm of people trying to sell their houses before the banks take them away.
    Currently studying for a Diploma - wish me luck :)

    Phase 1 - Emergency Fund - Complete :j
    Phase 2 - £20,000 Mortgage Fund - Underway
  • Its not so much the risk I'm bothered about, its the cost.
    We're moving in the next couple of months. We're buying a very "nice" house. 3 bed house converted from a two bed bungalow 140-160 seems a fair price for houses that have actually sold in the area. We're paying £125k (family)

    We were looking at £250k houses.
    What sold us wasnt the risk, it was the cost.
    Its another £600(ish) per month, or £7,000(ish) per year.

    I want to spend that.
    I'd rather do without the second ensuite upstairs, and have a 60" plasma with surround sound. I'd rather go on a "luxury holiday". I'd rather have two years emergency money in the bank. Damit I want a Nexus Pad!

    It might be nice to die in a 10,000sqft 16th century manor, but I'd like to to live a little on the way.
  • Mrs_ZMrs_Z Forumite
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    Part of the Furniture 1,000 Posts Name Dropper I've been Money Tipped!
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    Hi, I'm also 'technically' mortgage free. It's nice and secure feeling. However, I'm living in a house that is not my dream home. I'd be happy to be paying off mortgage with the money that I save every month as it's not earning much interest. The problem is that the house prices have gone crazy, decent houses in our budget are few and far between and the really nice ones are well over our budget. Feeling stuck.
  • That's sort of how I feel.

    I think for me, being mortgage-free would be great once I've reached the top of my own personal housing-ladder.

    On the other hand, being mortgage-free while I'm still planning to take at least one more step up the ladder means that I don't benefit from the (risky) increase in wealth that comes from betting on rising house prices using borrowed money. As a result, the gap to the next rung of the housing ladder gets bigger relative to my wealth. Trying to save enough money in savings accounts and share trackers to climb to the next rung without a mortgage appears to be difficult.
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