Doubling Mortgage at nearly 40 - is it worth it?

ethank

Congrats - I am the same age as you and I owe double what you do, and I'm currently scheduled to pay everything off by the time I am 60!

I love where I live right now, but think I probably have one more move inside me!

TBagpuss

I think the issue is whether you are going to get more out of living in the larger house and whether this will outweigh the stress of the higher mortgage for you personally.

I moved house last year, at 41, and doubled my mortgage in the process - it is definitely worth it for me BUT I was already overpaying on my mortgage before the move, and did a lot of calcuations about costs, so there was no significant change in my outgoings, (mortgage payments I kept the same, some bills are slightly higher as the new house is bigger, buit others are lower as it's a better area, plus I now have off-road parking, so some things such as insurance are lower, and I moved closer to work so my commute is much shorter and so I made savings there. Obviously I had been on track to pay off the mortgage in about 9 years in the old house, and went back to a 24 year term in the new. I am now making overpayments again although these are, of course, smaller than they were, so while I anticipate paying the mortgage off early, it won't be as early as it would have been if I had not moved.

It's also worth thinking about what will happen with your finances generally - is your income likely to increase? are there other outgons which are likely to fall? (for instnace, i have a business loan which will be cleared in 2 years, at which point I intend to increase my overpaymetns (or investment into savings, depending on which would be better, finacially, at that point)

For me, it was worth doing as the move has meant a huge improvement in my quality of life - but I also did it with my eyes open - I built in a 'cushion' so I won't be overstretched if/when mortgage rates rise, and although my mortgage runs until I am 65 my intention is to overpay so that I can clear it sooner.

I also delayed the move until I could afford to do it with a decent deposit (20%) so I could get a reasonable rate on the extra borrowings and to still have some savings for emergencies.

Kynthia

I'd say in your 40s is when most people move to a bigger and better house as they can afford it then and are going to get the most benefit out of it then with having children at home.

I'd move as I too think decades of a better standard of living, as long as you can afford it and have pensions sorted, is more important that being mortgage free early. However things o would think about doing to stop being worried about having a new 30 year term until 70 are:
- you can overpay and remortgage later on in order to reduce the term.
- once you are 60 the mortgage repayments will be smaller than now in relative terms as inflation, cost of living increases and pay rises will mean your income will have most likely increased significantly. This will mean that even if you haven't overpaid or remortgaged by now, which you probably would have as the repayments would have become more affordable, you might be able to afford the repayments from your pensions rather than delaying retirement.
- you still have the option to downsize and possibly become mortgage free at the same time frame as you would have done if you had stayed in your current house.

natman

Thanks so much for the advice. My wife will be happy that you are on her ' go for it' side rather than my lets stay, overpay and look to retire early and have no mortgage.......

Still negotiating on a deal at the minute, but things seem a little more clearer.

Thanks
n

BoxerfanUK

Just go for it, you are still young enough. There have been a few times in the past when we've seen something else and thought 'shall we move', did the sums and then changed our minds due to the extra expense and mortgage.


Fast forward a few years and with the benefit of hindsight on occasion have regretted not 'stretching' ourselves as some of the places we could have pushed ourselves to afford then are now out of reach. I'm not complaining, we have a lovely home but we have let a few properties pass us by in the past that could have been even better in terms of either position or investment.


If you can afford it just do it, take advantage of the low interest rates and lock into a medium/long term deal for some peace of mind.


Good luck with whatever you decide to do.

sofarbehind

You're in a good position to do it comfortably. I'm 36 and still saving for my first place. When I do get something I will probably have a mortgage of around 140k on a single income with far less equity. I have definitely made a mess of my life re: housing and I would love to be in your position. I'm sure I'm not the only one.

golly99

Can only echo everyone elses comments - I'm 42 and have 2 kids, have 9 years left 49k left to pay and hopefully putting house on market sometime in the next couple of months - after forever house (if that exists) with bigger rooms and bigger garden- good luck in your search!

Arklight

natman wrote: »

Ok here goes - I will try and keep focused-
Background - I am 39 years old, my wife is 38, we have a daughter who is nearly 4. We live in the North west England
We have a mortgage on our house. Our house is worth approx £205,000 we have an oustanding balance of £77,000 mortgage and pay £450 a month. So loan to value is very good at 38%. Additional information - we fixed 5 years ago and extended the term of our mortgage as we knew having a baby / child would have costs so we increased to 20 years from 15 years. we spend £250 on nursery fees a month.

ok new situation -

Seen a house at £280,000, if we sold our house we would need approx £150,000 mortgage. This is roughly double what we currently have. we want our payments to be under £600 so our term would need to be around 29 years.

so the question - At 39 years old, is it wise to double your mortgage, increase your term and increase your payments?
From an investment point of view what is better? To have a house worth £205,000 owing just £77,000 or having a £280,000 property and owing £150,000. Or is it just the same. Though monthly my payments would increase by around 30%.
My plan to retire early is achievable in my current house as I would pay my mortgage off in say 15 years. But it would be nearly 30 years when I would pay off the new monies. If obviously I stayed and did not down size.

So I guess the question remains - when all the info highlights paying off your mortgage should be a priority. Is it ever worth doubling your mortgage mount when you get to nearly 40??

If you are confident that house prices will continue to rise by more than the extra interest that you are going to incur, and you want to sell at some point, then it makes sense from a financial point o view. You can downsize when you retire and realise more equity.

Othewise its a cost benefit analysis to see if the reduction in your disposable income is worth having a larger house.

70sthrowback

I was in the exact same position in 2014, I had my 39th birthday, my wife is the same age. We had the conversation of either we move now, get the house we always wanted on a 25 year term mortgage, or we stay put and would have been mortgage free by 50.

We moved in 2015, it doubled our mortgage payments, but like many others have said I would not change it for the world. I love our new (very old character house), our kids love it. Yes we could have been mortgage free, but my view point was that I didnt want to get to 50, regret not moving and then struggle to get a mortgage or perhaps have to continue working in to my 70's to enable the move at that point.

Which will give you greater pleasure, owning the house you always wanted to live in, or being mortgage free and staying where you are?