Advice for new mortgage/house owner

mid20sMFwannabe

Hello MF community,
I'm new here and would love some advice. I managed to save hard all through my University years, and put down a 25% deposit on a house in SE London right before the market took off, taking out a 35 year mortgage in the process (I know). I took in a lodger into the spare room to help pay the bills, which at the moment is being used to pay off GF for a small loan she gave to help with the deposit.

Around 1 year later my loan to value is around 58% due to appreciating market.

The outstanding mortgage currently is £142,300.

I'm happy to live here a few years, but longer term want to move out to the country, to the sort of place where a house is £400k upwards.

Should I:

Plan to remortgage later to buy a bigger (kids etc) house (mine is 2 bed)

OR

Go crazy paying this one off as fast as possible, and then rent it out and use the income to pay to rent another house?

What do people think?

Thanks

specialkaye

Hi,

Judging my your options you want to keep the London property, Im new too but i thought of an offset mortgage maybe? That way you are using the saving to bring down the cost of the mortgage but simultaneously saving for another house. I think you would have to do some sums to see which option is better and im afraid i don't really know enough about it.

midnight_child

So if I understand right your choices you listed are:
1 - sell london house to give a large deposit to buy country house

or

2 - buy london house outright, and rent out. Use rental income to rent in country.

you may also wish to consider owning both.

3 - Save up (either with savings or paying down mortgage) and buy country house when you can afford a mortgage on it, taking some equity out of london place to help with deposit, but leaving enough equity to get a BTL mortgage with. If the rental value that can be sought for the london place is high, then this may be a quite attractive option.

MC

mid20sMFwannabe

Hi all,

just to clarify, my overall objective is to be debt free. If I overpay aggressively from here on my relatively low mortgage of £142k, I think I could do it in ten years or so.

So the plus side here would be debt freedom, the downside that I would have to rent my next house.

Alternative is buying a bigger house later with a bigger mortgage. Plus side is no rent to pay, down side is big mortgage to pay.

So the choice is what is the lesser evil or being a net renter and debt free, or owner occupier with a big mortgage.

Thanks