Mortgage completely paid off this year - Sell or stay ? Dilemma

Little_Miss_Winner

Hi All
Just looking for a bit of advice/ thoughts if that's ok. We are currently in our first home bought back in 1997. Mortgage coming to its end this Autumn and although the house has always been fine for us ( 2 quickly became 5 )  in terms of locations (schools, parks etc) we have always wanted a back lawn and more room outside but just never got around to moving, mainly because of chaotic lives, bringing up children, working shifts etc, lower wages than now (part time for childcare etc)   

We are in a large 4 bedroom terraced. (wasn't large to begin with, lots of renovations and loft turned into 4 bedroom with building regs)

The main reason for my post is - We are thinking it may not be wise to end the mortgage in its entirety as potentially could be hard if we need the Nationwide in the future. (25 years loyalty, never missed a payment) and also coupled with the fact we are earning far better wages than ever before due to working hard, studying,  and promotions in our fields we feel that we can afford to continue to pay a mortgage payments of a decent amount for more years. I'm 51 - husband 54

I know I need to go a speak to mortgage advisor but would just love a bit of input for those who have upsized after (nearly) paying off mortgage. I say upsized, we would still be looking for a 4 bed, but a semi, with garage, lawn, and walk-around kitchen (my dream!)

I haven't looked into figures, mortgages etc that thoroughly at the moment, as still debating and mulling it over.

Just for a bit of background. 
House was 40k, would probably sell for around 250k. Houses I have seen and love in the area are about 400k

Thanks for reading x

canaldumidi

Make your decision based on where you want to live and whether the current property meets your needs. Not on the mortgage question.

If you need a new/bigger mortgage it will make little difference whether you have an existing mortgage or not. Indeed, some lenders will consider you a FTB for mortgage purposes if you've paid off the existing one, which could be an advantage. But what will really matter is your income/affordability, and credit history.

RelievedSheff

Loyalty to a mortgage provider means nothing when it comes to making a fresh mortgage application. 

It will not matter if you have paid off your existing mortgage or not so don't make any decisions based on that.

penners324

Nationwide won't care how long you've been with them if you apply for more credit.

eddddy

As others say, your mortgage coming to an end isn't really a key factor (for example, you could have moved to a £400k house 5 or 10 years ago, if you were prepared to pay higher mortgage repayments).


Perhaps bigger considerations are things like when you and your husband want to retire. Perhaps your husband wants to retire in 11 years - so you'd perhaps want a £150k mortgage repaid over 11 years.

That's likely to be substantially more expensive each month than your current £35k/£40k (?) mortgage repaid over 25 years.


Maybe start-off by talking to a mortgage advisor - you could ask Nationwide as a starting point. Find out what the repayments would be for a £150k mortgage and/or a £100k mortgage and/or a £50k mortgage over 11 years (or until your planned retirement dates) - and see if they seem affordable.

Snookie12cat

I think you need to consider long term. Are you going to need or want such a large property in a few years? If yes, then you should get the get the house you want if you can afford it. 

Also, at your age any. Mortgage term is going to be very short and so the payments will be much higher, bare that in mind. 

GDB2222

It’s quite stressful moving home. 

TripleH

The only loyalty you 'might' get is if there is a better mortgage deal for existing customers but that is only a plus point if that is the most competitive offer on the market.

sammyjammy

Do all three children live at home still?  What about a nice sized three bed semi?  As has already been said Nationwide don't care about your loyalty when it comes to lending you more money, if you do go with the move consider other lenders too, you want the best deal for you.

Thinking of your future life it sounds like three beds and a garden is a better fit than a three storey, four bed terrace with a yard (I'm assuming thats what you currently have)

getmore4less

As said where you live want or need is independent of the current debt other than affordability.

I can see it is a milestone that triggers reflection but there have probably been loads of those along the way.


looking at the rough numbers to get a feel for what it might be

lets say you have paid off the mortgage and plan to swap a £250k for a £400k, add £20k for costs 

New borrowing £170k  LTV <60%  using nationwide 5y rates 1.35%

Nationwide lend up to 75 oldest, so lets say 20y max

term payment
10 £1,500
15 £1,050
20 £800

Bottom line if you meet all the criteria is do you want the best part of £1k a month for 15years going to a better house or have you got other things to spend it on.

if your  plans are to retire in your 60's and you don't want a mortgage then that's £1,500pm for the next 10 years 

Maybe you have savings you can reduce the borrowing.
New debt at this age needs to be considered as part of retirement planning 


We are currently in our first home bought back in 1997. ........... ( 2 quickly became 5 ) 

How old are the 3 kids, maybe there is a middle option Semi/detached  but a bit smaller and cheaper as they may move on to their own lives.

eddddy

getmore4less said:

Nationwide lend up to 75 oldest, so lets say 20y max

term payment
10 £1,500
15 £1,050
20 £800

But obviously 20 years implies paying £800 per month until age 75 - will you still have sufficient income to cover that at that age?

I guess you could take that option and plan to sell-up and downsize on retirement (e.g. age 65). But maybe that's an extra chunk of stress that you could do without - being 'forced' to sell-up on or before retirement, or find another source of finance (like equity release).