Pay & Save now or live a bit now ?

ProDave

14 years ago we "sold and upsized" and in the process got rif or our mortgage and had spare cash to invest.

How? By moving from an expensive part of the country to somewhere very much cheaper.

Is that an option, if not now, when you retire. Suddenly the need to be close to well paid work in your field stops when you retire, so the scope to move somewhere cheaper is an option for many then.

Nebulous2

One of the issues with downsizing, where I am at least, is that prices are very compressed. A 3/4 bed semi can be had for £260-300k and a modern 2 bed flat could well be £200-220k.

That means giving up a huge amount of amenity and space for very little in the way of cash. It's possible to move from 4 beds to 2 and after costs struggle to clear £50k.

Your situation is slightly different because you would be reducing monthly payments rather getting free cash, but you should look at how many compromises you would be making in lifestyle as part of your decision-making.

You may well find the compromises involved in moving somewhere cheaper more palatable.

duck&dive

Thanks for the extra replies. It all helps me to make a decision. To Nebulous2, I too have that price compression phenomenon around here (East Midlands). New housing estates are swamping the area and are in direct competition with older housing stock. Mine was built in 1974 but this estate offers more in terms of room size and space between houses than most of the new builds. So, if I sold this one (4 Bed Detached - 2 beds unused, but nice dumping/hobby rooms) for a 3 or 4 bed semi then I'd still need to spend about 230-240k plus the inevitable modernising costs which if I sold my present one for 300k - 310k that wouldn't release much cash - it would just cut down my mortgage to a more manageable £500 per month rather than £970. (Approx. figures.) I'm finding it a difficult decision to make. Thirty years ago I was hoping by now I'd be an Investment Broker, not a Broken Investor!

crv1963

Hi duck&dive,


More of an observation than advice- If downsizing is not really much of a choice due to moving in your local area meaning living for you in an area that is not of the quality/ standard of that which you currently own, why not think a bit wider such as ProDave suggested?


If you have no dependents/ ties to your current area then look to move to a different area of the country, either same size house as you currently own or a 3 bed one? There are plenty of areas that have 1970s estates that are a lot cheaper than 300k. Or even a different style/ era of house. There are lots of areas where say 150k would get a decent home, giving you a 150k pot (3000pa income at 3% drawdown/ spending 50k getting the new home future proofed to your liking) obviously this depends upon what you buy and do to the property.


That way you could view the current high mortgage payment as a form of investment/ pension saving and move whilst still young/ motivated enough.

Thrugelmir

duck&dive wrote: »

if I sold my present one for 300k - 310k that wouldn't release much cash - it would just cut down my mortgage to a more manageable £500 per month rather than £970.

At current interest rate levels. Divided 3 ways would enable you to save more into your private pension, overpay your mortgage thereby shortening it's term along with perhaps taking an additional holiday every year.

All about life balance.

Thrugelmir

duck&dive wrote: »

if I sold my present one for 300k - 310k that wouldn't release much cash - it would just cut down my mortgage to a more manageable £500 per month rather than £970.

At current interest rate levels. Divided 3 ways would enable you to save more into your private pension, overpay your mortgage thereby shortening it's term along with perhaps taking an additional holiday every year.

All about life balance.

P.S. Smaller property would also reduce your outgoings.

Dansmam

Having watched family wait to move until they can’t I’d say find a level access bungalow or flat somewhere you can afford and make sure you have day to day spending covered. Then breathe a deep sigh and relax ��

Thrugelmir

Dansmam wrote: »

Having watched family wait to move until they can’t I’d say find a level access bungalow or flat somewhere you can afford and make sure you have day to day spending covered. Then breathe a deep sigh and relax ��

My late mother wanted to move but never did. Died asset rich and cash poor. I know she regreted not biting the bullet. Though when you've lived somewhere for years it gets harder and harder to make the move.

kidmugsy

duck&dive wrote: »

I've considered the rent a room route but to be honest I don't know if I could have a stranger under the same roof

An advantage of taking a lodger is that you can try if for a while and if you don't like it, stop. The other options are harder to reverse.