Larger mortgage advice

Biza123

Hi all,
After a little advice if that’s ok?
We are looking to buy a bigger house. Will be looking to increase our mortgage by about £150k. It is affordable and we have met with a mortgage advisor who has advised us of the available mortgages that fit our criteria, but what would everyone advise re maxing out the available mortgages to you? It’ll mean our term increasing by 5 or poss 10 years but it is a properly almost double the value of ours currently.
Would this be a recommended move or would it be wiser to take on a smaller increase in mortgage and look to move again at a later date?
Thanks in advance!

getmore4less

Moving twice will have a lot of unrecoverable costs.

Compare that to the cost of interest on a bigger amount earlier.

Biza123

Thanks a lot for your reply!
Does anyone else have any advice too?
Just trying to get as much advise as poss.

scottishblondie

We moved last year to a property double the value of our previous one. This is the "dream house" as it is in the area we want to stay long term and has the space and amenities that we really wanted. Nothing else in the area really compares to it, so it was a one time opportunity that we decided to seize.

To make this move we took on 4x the amount of mortgage debt we had previously, increased our term to 40 years and tripled our monthly payment. Extending the term has made the payments much more affordable in the short term, and we took a 5 year fix so we had certainty about the cost for that period. We are comfortable with what we've done, and have planned ahead to be able to overpay the mortgage and bring the term down. On our previous 30 year mortgage we were on track to pay it off in 12 years, so we have prior experience with overpaying aggressively and are confident we can do the same here.

Really this is a personal decision about what you're comfortable with. No one else can tell you if a massive mortgage is going to keep you awake at night and make you ill with stress! However moving house is expensive - stamp duty, EA fees, legal costs, moving costs etc. - and personally, I wouldn't want to be moving more often than I had to. So maybe tot up how much it would cost you to make 2 moves rather than one and factor that in when making your decision.

DrSpendLittle

We are doing (fingers crossed as we haven't exchanged yet!!) exactly what the above poster has done.

We will be more than trippling our monthly mortgage payment and buying a house that is worth over 2.5 times the value of our current house. However, we bought our current house on only one salary and are now moving up the ladder with two salaries. We haven't moved in over 14 years and have therefore missed a rung or two (and saved the associative transaction costs).

We've gone for a property that we know will be our final home - the one we will retire in. We will therefore be saving ourselves from further financial and emotional transaction costs. It also means we can properly 'invest' our time, effort and money in the property to make it our own without the worry of losing any of it. We've opted for a 5 year fix mortgage (got a deal at 1.90%) to add further certainty to the monthly mortgage payment so we get used to that more frugal way of life.

It was a big decision for us. We looked at properties £150K below what we are now buying at and felt that they didn't meet our expectations and wouldn't be our forever home. We're willing to compromise on lifestyle - we'd rather have our forever home (fingers crossed!!!) and fewer material possessions / expensive holidays than a cheaper home that we know we'll want to leave when we retire.

Good luck with whatever decision you make!

DSL

getmore4less

DrSpendLittle wrote: »

.......We've opted for a 5 year fix mortgage (got a deal at 1.90%) .....
We looked at properties £150K below what we are now buying at .....

That extra £150k will cost £237.50pm, £14,250 over 5 years in interest.

A single move at the £500k range has that covered just by the SDLT, other costs give more time.

With a 1.9% mortgage rate it won't be far off inflation, effectively getting the better house now for the opportunity cost of not investing £237.50pm somewhere else with a better return than inflation.

For most that stretch to avoid a move really does make a lot of sense.

What many starting out don't realise is that unless a minimalist those moves get harder as you accumulate more stuff over time.