Mortgage free or forever home?

movilogo

Forever home is an elusive term. A house which satisfies you now may not do so in few years time if your circumstances change. Many lifestyle changes (whether intentional or not) may force you to move.

housebuyer143

lookstraightahead said:

markin said:

Every one seems to be jumping to the conclusion that 'dream home' means Bigger!  An extra 50k - 200K could find a better location, a better view,  a nicer area, Or as simple as a bigger private garden

Area first, always 👍 for me and I would pay for that.  I have the most incredible views but I have very little parking space. I have birdsong continually but only one loo. My walls are very thick but they're not straight. My dream home is someone else's nightmare 😬. 

100% area over house anyday!

jenni_fer

We bought what I told everyone was our forever home 10 years ago

We're now mortgage free. But, we've also had kids and while on paper this house is big enough for us to sit back and enjoy being mortgage free, we feel like we're too young to do so and would benefit from a better school catchment too.

So we've been looking for 2 years, had a vendor pull out just before exchange last year and multiple stressful best and finals over the last few months...

Only you can decide what is right for you, we all have very different needs and opinions.

Sistergold

babyblade41 said:

At the end of the day you still sit down to watch TV in one room , go to bed in another  & maybe cook in the kitchen 

I would always choose mortgage free 

Oh I like this! Very true BUT? We then look at what kind of room what kind of kitchen? Humans we like to complicate things. 

Sistergold

What is not ideal is to keep loading on the debt for something bigger after a certain age I suppose? Initially though climbing up is good? At each stage I would only get a mortgage where I can easily overpay so that at each stage I have a bigger deposit also always aiming to be mortgage free. 

You need to be very happy with where you live within your affordability always.

Having said that I always “stretch” myself when I am buying a house as I don’t want to be doing it too often. As have children I have always tried to get a bit bigger than I need house so we can spread out over the years without quickly needing to move. 

Zerforax

jenni_fer said:

We bought what I told everyone was our forever home 10 years ago

We're now mortgage free. But, we've also had kids and while on paper this house is big enough for us to sit back and enjoy being mortgage free, we feel like we're too young to do so and would benefit from a better school catchment too.

So we've been looking for 2 years, had a vendor pull out just before exchange last year and multiple stressful best and finals over the last few months...

Only you can decide what is right for you, we all have very different needs and opinions.

Congrats on becoming mortgage free within 10 years!

Yes kids always complicate things. We looked at a number of houses in one area which has fantastic schools but the house prices for the relative size didn't feel like great value.

Are you looking for a bigger house + better catchment area or just better catchment area?

Sistergold said:

What is not ideal is to keep loading on the debt for something bigger after a certain age I suppose? Initially though climbing up is good? At each stage I would only get a mortgage where I can easily overpay so that at each stage I have a bigger deposit also always aiming to be mortgage free. 

You need to be very happy with where you live within your affordability always.

Having said that I always “stretch” myself when I am buying a house as I don’t want to be doing it too often. As have children I have always tried to get a bit bigger than I need house so we can spread out over the years without quickly needing to move. 

Yes I know what you mean. I feel like we're still young as in our mid-30s hence feel a bit more relaxed about the size of mortgage. I think we can still easily get a 30 year term too.

Agree with the latter, especially when at the higher prices, you're spending a large amount on stamp duty. Saw another property where the vendor is looking to sell after less than 6 months (15-20k on stamp duty) which makes me think there is a problem otherwise it's an expensive mistake when could've rented for 6 months!

Sistergold

Yes the younger you are the more ground you can gain. Get the longest term and reduce it through overpayment. That way when times are hard you stick to paying less. 

nicknameless

Zerforax said:

onylon said:

I think another factor is any other savings/investments you have. If practically all your savings are tied up in the house then it may be better to put your extra cash into an ISA and/or pension rather than a mortgage.

Pension is doing okay I think but it's another one of those things where it massively varies for every person at how much they think is reasonable at a certain age! Not really bothered with ISA for a while and I saw even Martin Lewis was recently saying he would ditch an ISA for most people! No doubt we keep a good rainy day fund but probably would leave in a Chase saving account rather than ISA.

ISAs are not just cash savings vehicles.  Stocks and shares ISA for long term (tax advantaged) investment outside of pensions.  Sure if Martin said that he was talking about cash ISAs and interest associated with those.

As with everything these decisions ideally should be taken in the round.

Do you have a long term financial / income plan i.e. beyond working life?

Atomix

Can only go on my experiences/thoughts. We are in our fourth house (moving up the ladder) detached four double beds, double garage, its not perfect / forever home, (it never will be, there will always be something) we will be mortgage free in x7 years. Both mid-40s 80k joint income, x2 kids. 

We could, remortgage/sell and buy a bigger house, quite easily - say add £250k to the current mortgage, but then the mortgage is £1200 a month for 20 years. We are currently overpaying our mortgage by £300 a month and the total is £1000 a month.

I personally would not want to risk, having to come up with £1200 a month for the next 20 years. When im 60 - i dont think i will be very employable - plus bigger house means:
more council tax, more £££ to heat / run etc etc. 

that spare £1200 a month will be going in the pension, in x7 years time 👍🏼

nicknameless

Atomix said:

Can only go on my experiences/thoughts. We are in our fourth house (moving up the ladder) detached four double beds, double garage, its not perfect / forever home, (it never will be, there will always be something) we will be mortgage free in x7 years. Both mid-40s 80k joint income, x2 kids. 

We could, remortgage/sell and buy a bigger house, quite easily - say add £250k to the current mortgage, but then the mortgage is £1200 a month for 20 years. We are currently overpaying our mortgage by £300 a month and the total is £1000 a month.

I personally would not want to risk, having to come up with £1200 a month for the next 20 years. When im 60 - i dont think i will be very employable - plus bigger house means:
more council tax, more £££ to heat / run etc etc. 

that spare £1200 a month will be going in the pension, in x7 years time 👍🏼

Realise this is the wrong board but generally overpaying mortgages at low interest is not the best financial decision.  It might give peace of mind but it is generally tantamount to throwing money away long term.

Long term spare cash would be much better in investments or pensions (making use of tax relief) and benefit from compounding over time.

I would be tossing and turning at night thinking I was paying down a low interest debt vs tax relief in pensions and compounding of returns from investments.

If you don't need the spare cash do consider using it in another way to benefit you more long term, if only via pension saving.  Obviously if rates rise substantially there would be a tipping point for most.