To be, or not to be? Mortgage Free or in a nicer house in a better area and shackled with more debt?

JadeL1993

Hi all, 
I've been lurking on this forum for some time, haven't found a thread matching my exact scenario, so I made an account to gain some advice from you lovely and money savvy people! Basically, I live in a house I don't like and never have, but if we overpaid our mortgage, we COULD be mortgage free in about six years if our disposable income stayed the same. However, I don't think it's reasonable given that we want to start a family soon that 6 years would work, so it would probably be more like 10, and I really can't imagine 10 years here, but I also can't imagine moving to a house needing more work, or to a house that is way more expensive. What the heck do I do?! I feel so trapped! 

As a bit of a back story, it's just me and my partner and 3 pets, but we are hoping to start a family after we get married later this year. My partner and I purchased a house in 2018 (for £65k, I live in the North East so this isn't anything too out of the ordinary), never intending to stay because the area isn't super great, knowing there are housing developments in progress around us, and that the area might get nicer but the property would in any case probably gain value. We've also done considerable work to the gardens, new bathroom, new kitchen etc and it's now worth circa 120k, however, it has been such a chore and I hated almost every second of it. Neither of us are very handy, so we had companies come in to do work. The kitchen reno was done by Wickes, it was a very poor experience, to say the least, and it took 4 weeks of upheaval and having to be off work because we have indoor cats and no family to watch them, and builders who weren't very considerate (opening the room where the boiler is housed and cats were being kept, but not shutting it so they got out etc despite several requests for them not to do this). They then had to come back and fix a myriad of issues (plinth was cut in a way that steam from dishwasher got in and swelled the wood, so then our cabinets wouldn't allign right or open etc), and I wasn't satisfied with the finish at all (still not really, but it's ok and kitchen still high spec). Our bathroom was finished in November by a small independent company, and the shower tray broke in December but has only just been replaced, the tile edging was damaged etc, and they again have had to come out several times. In fact, most recently, the new soil stack they put in outside has a leak so I am waiting for them to get back to me with a time for when they can come out and fix it before it wrecks our new decking and patio out there. It's 100% put me off getting a house in the future and getting work done, especially since it's taken us about 3 years to get to this position, and it feels like we've had constant comings and goings, which we hate anyway as we're introverts and like our own company! I'm getting off point here, but anyway, great news re. equity on our home! As there is around £60k owed on the mortgage whilst house is worth £120k. 

I have loved that our payments are under £370 per month, and when my partner got furloughed or there was a risk he may lose his job with the impact of the pandemic on his work, that we would comfortable still be able to pay our mortgage. However, every day walking the streets with my dog I am reminded of why I hate this place so much. Litter and graffiti everywhere, the sounds of cars and motorbikes and sirens (on a busy road into central Newcastle), I visit our local supermarket and always see people arguing with security or shoplifting, I use the bus and feel unsafe or hear people swearing and throwing things at people on the bus etc. My neighbours have parties frequently (yes, even in a pandemic) and are up until the early hours playing music or arguing very loudly. I just don't see myself raising a family here and I really don't enjoy where I live at all. 

What I've been trying to work out today is how to make this situation better, or work out how to facilitate a move elsewhere, but still keep it affordable. We have done all we can with the house, and I still don't like living here because of the location. We have come to the decision we should move ASAP, however my partner is very against new builds. It seems all of the developments near us are approx 200-250k in price range, which is way out of budget and triples our monthly payments in some of the properties we've looked at online. 

Has anyone been in this type of position? What did you do, and what would you recommend? Is there anything glaringly apparent that I could maybe explore? My partner keeps telling me we should just buy another run down house but in a nicer area, we should have about £60k, so we could do a 10% deposit on a 130k house for instance and then spend the rest renovating it. But there just seems to be no houses in the price range we're looking at, and I'm so worried that buying another house in another area that we don't know is just going to result in the same problems we've had here. If you have any advice at all to offer or any personal experiences to share that might help me, I would very much appreciate it!

Thanks x

caeler

If you are unhappy it sounds like you need to act if you can afford it? Is a bigger mortgage what you want if you are about to start a family? Lots to consider and it will be a very personal decision I’m sure. 

powerspowers

Hi Jade, we were in exactly this position. Owed £55k and probably could be mortgage free in 2-3 years. I like the house and we’ve done a lot to it but the area is awful. My partner has had the house for 16 years and it was a rental for a long time. No garden. Lots of anti social behaviour, drug dealers targeting kids on the street etc etc. To be honest it comes in waves and it’s not too awful at the moment. 
yes we could own it in 2 years but I don’t want to raise our family or retire here. We put it up for sale in the first lockdown and we should move out next month. Good luck to the chap buying it. 

I think we could have bought something similar in a better area for not a lot more than we have sold for but we are also
upsizing. My financial plan is to get back to oweing around £55k in 5 years time before we hit the expensive teen years.  

Hope that helps, it’s a hard decision and we are lucky in terms of equity, wages to make the decision we have. Good luck x

Cornish_mum

Hi we were in a similar situation about 12 years ago. We had bought 2 bed terrace in a grotty area in 2007 (all we could thought we could afford). Turned out neighbor was an alcoholic (set fire to his house on one occasion and I found him collapsed in his front garden several times in winter from times he’d locked himself out), we also had a local flytipping and rat infestation problem. Our mortgage was very manageable and we overpaid but I became increasingly upset by the house. In late 2010 we sold at a loss, took on the biggest mortgage we could to move to a nicer area 7 miles away, house was slightly smaller but cost ~130k more. We were really up against it for a few years but I never regretted it, even when we were absolutely skint and struggling with the new mortgage. If you don’t feel comfortable in your home it’s really difficult. Best of luck CM

JadeL1993

Thank you all for your responses! It's reassuring to know there are others who are or have been in this position. 
The numbers are really staggering!
I have 16 years at £370 per month left, but in a house in an area I hate. 
I've looked at new builds the same size or larger as my current home. They work out at £775-£100 per month over 30 years. 
If we managed to grab a bargain home in a nice location (not very many opportunities to do so, and hardly any coming up in desireable areas at an affordable price) the payments would be around £450 for 25-30 years depending on how much work was needed/how much we put towards the deposit. 

We have definitely ruled out staying here to raise kids. It's an absolute no on that front. And I think we've come to the conclusion that we can't afford a new build, so the middle option is the only option for us it seems, but even that feels worrysome! I guess you all have had that same worry though of feeling like you might struggle, but Cornish_mum I'm glad to read that being skint and in a lovely area is worth it! I'll have to keep my eyes peeled for the ideal home! 

folkestonelisa

Hi Jade, we too could be mortgage free in 9 years at the rate we are paying, but I too don’t really like my house so we are going to finish off doing it up ( needs a new boiler and kitchen and some other bits) so are going to do that and put it up for sale next May to move out September/October time and we are going to increase our mortgage by £80;000 but over 15 years so it’s only £120 more a month so we can get a detached house as we’ve realised we don’t like neighbours. I can’t explain the relief I felt when we came up with the plan at the weekend, knowing I’m going to be able to move out next year 😁

MalMonroe

Hi, as buyers we were always told to try to live in the best area we could afford and, as your partner suggests, buy a house that perhaps isn't quite so glamorous. I wouldn't do any more work on your current house since you'll be wasting money - especially if the area will put people off. 

I really don't think there's anything wrong with new builds. My ex partner and I bought a detached one many years ago and it was great because all the neighbours were also new and around the same age as us, we got to know each other fairly well and we all looked out for each other (smallish cul-de-sac). There may be one or two 'snags' with new builds but I think most builders these days supply kitchen equipment and flooring as standard, as well as landscaped gardens, all of which are great savings. You also have a new home warranty, when we bought it was 10 years. If it's still the same, there's plenty of time to get all the problems sorted, if there are any. 

Established homes have problems too, so I'm not sure why they are considered superior to new builds. Once the vendor's moved out, there's absolutely no warranty with them.

powerspowers

Good luck with it Jade. It helped us to work out how much we were comfortable spending and leaving ourselves wiggle room to overpay. We did look at a few houses around £20-£70k more but tried to go lower rather than stretch as far as we can. I know some would advise. borrow long as much as you can as there is more chance of getting a lot of equity but I don’t see it that way. I think we’ve picked a reasonable middle ground 

becomingbetter

Hi, your situation seems scarily familiar to my own! 

We bought our first home in 2015 (I think) it was 80k and mortgage was not very much every month. 

We did loads of work to the house, new kitchen, new bathroom, almost every room plastered and decorated. But we HATED the area, the guy across the road was a drug dealer, our neighbours were loud and I couldn’t picture how the house fitted in with what we wanted for the future. There was certainly no way we would have wanted to start a family there. 

Despite all the negatives, when we decided to sell it had set us up nicely with the equity we had built. 

And from the point we decided we wanted to move, I started overpaying the mortgage every month, just for some reassurance that we would be able to afford a higher mortgage payment every month and we had already adjusted our budget for that.
We ended up going for a new build, it might not be our ‘dream house’ but the area is lovely and if we do ever move again I’m absolutely certain it would be very close to where we are now. 

I’m not sure if any of that helps you! But if we were to have the opportunity of a lovely house in an undesirable area, or a ‘do-er up-er’ in a lovely area, I would certainly let the area take precedent, even if the house was going to take some work. Especially if it is a long term move, you can do work over a period of time.
Good luck with whatever decision you make!