Is it better to be mortgage free or buy bigger?

freeisgood

Thanks for all your input

Yes we would eventually perhaps rent the house out, and rent something small to live in when the kids have grown and left.

Cornucopia

Mortgage free is great.

I find it interesting that many people would think nothing of going down the mortgage-based upgrade route, but if you put the scenario where they were already mortgage-free with £200k in the bank, they would stay put.

(Spending the bank's money is easier than spending your own).

laidbackgjr

For me there are two questions to ask yourself.

1) Can you get a property you would be happy with mortgage free?
2) If so what would you do with the extra £xxx per month you would otherwise have spent on the mortgage? If your alternative is investment, then are you comfortable that the alternative investment risk / reward is better for you than investing in property?

Yolina

I'd go with mortgage-free but it's personal choice really.

Bought my flat in London 15 years ago, it's a nice flat and I like it still I had a large deposit and small mortgage (50k) which I ended up paying off in about 7 years. I could have moved and bought something bigger but (big but as far as I am concerned!) the price increases have been such that although I would get a quite a bit for my place, I would also need to borrow a lot. And frankly to me that's not worth it - I'd much rather appreciate what I have (even if I sometimes do think it would be nice to have a bigger place) - but about 75sqm plus a 12sqm south-west facing terrace is after all perfectly fine for 1 person!

*If* I ever consider moving in the future, then it would be to get out of London so that what I can sell my flat for would get me a nice house mortgage-free.

gazzabboi

If you have time on your side, buying in a rising market is best to stretch yourself to the max you can afford. That way, when inflation and your house price goes up, you will have more % equity. The long term house price always increases. Its better to downsize later on.

Thrugelmir

pinkteapot wrote: »

I'll make the opposite case to Thrugelmir.

We're in our early 30s and currently overpaying the mortgage by £1,750 per month. In the new house we will still be able to overpay by £800 per month which will reduce the interest paid over the life of the mortgage.

Then you are in are in a priviledged position. Your £1,750 overpayment equates to the entire median monthly take home pay.

Nor forget we live in unusual times. Interest rates are abnormally low. At 6 or 7%, even 8% your mortgage wouldn't be so appealing.

ging84

it's risk vs reward
what Thrugelmir suggest is the exact opposite to how people make large amounts of money from property in the good times, but it's also the opposite of the way people end up in negative equity and possibly repossessed in the bad times

racing_blue

If you consume less (energy, services, products, housing) you'll have more to save.

But you only live once & maybe having a bigger house is part of the lifestyle you want- fair play.

calicocat

I tried to get a house that would mean I was mortgage free but just couldn't find one I was happy with, so have ended up with a mortgage.

It is as everyone has said personal preference at the end of the day. Luckily I managed to find what I was happy with without a big mortgage, and later on i'm sure I will be pleased I did as it will give me more scope to downsize if I ever want to or have to. I planned it so that the payments are not huge if anything happened to my job and that savings are in place to cover me for quite a while if I lost it. Also fixed for a longer term, and if all goes to plan will be mortgage free well before retirement giving me options on when I can retire with a bit of luck.

I can't wait to be mortgage free having said that, but I think /hope I have made the right decision in kind of going in the middle if that makes sense...it isn't my dream home...but I can't afford my dream home as that would involve a gardener (for sure) and cleaner , but think I have managed a happy medium.

Good luck in your search.

Tancred

freeisgood wrote: »

For a "forever home"

.......Do you think it is better value to buy a home outright,(cash) or buy bigger (eg 25% more expensive, topping up with a mortgage) the most we could afford?

Hope that makes some sort of sense.

Would love the peace of mind to buy something smaller outright, but also would prefer something bigger, might increase more in value long term?

It depends on what you need. If you don't need the bigger house then don't buy it - simple as that! I have enough money to buy a flat outright but prefer to have a mortgage and live in a detached house. It's a bit like asking: buy a second hand Citroen outright or buy a new BMW with a loan.