Clear Mortgage then Stay... or Move & New Mortgage AARRGGHH!!

likesallweather

We're in quite a fortunate position. Mid 40s and able to pay the 110k mortgage off next month when the product lapses. The house is fine, has what we need but isn't our dream home. Once paid, we could live happily enough where we are, or borrow a further 100k and move on, to our 'dream home'. Of course, fees, higher bills etc...all countered in.

If we move, we introduce a 100k mortgage fixed for 5 years based on 10 years repayment. We'd try to pay back sooner if possible. We'd also add 100k savings to buy the new place. We'd have the 30k fees for selling and buying inc removals, solics, agents, survey...and stamp. We'd also spend IRO 30k on the new place. We'd be left with 30k savings and potentially a higher increase in property value over time.

If we stay, we have zero mortgage, zero fees, no higher bills than we're used to but potentially a lower increase in property value over time and 190k savings.

Considerations — two kids, early teens. Pension — both teachers, probably should add a bit to our pot.

We're in a spiral of questions — I'm sure we'd be fine to move but what if...We'd be fine to move but would have to tighten up spending across the board...If we stay, we're pretty free, could enjoy more 'extras' but wouldn't enjoy 'home' quite as much.

We'd love a definitive answer...or at least some opinions from people who we don't know. Thanks in advance.

elsien

I can’t afford a dream home. So my home is always going to be okay but not much more than that.
 I could move somewhere a bit better but then I’d have to shelve any plans for dropping from 5 to 4 days a week and probably have to keep working for longer. I’m mortgage free at the moment so it would mean taking out another mortgage for me as well.

So I guess what I’d be asking you it is, what is your dream home? What exactly would you be hoping to gain from the move? Do you know what your dream home is, where it is, how much different the area might be to where you are now? Because if it’s just a vague “yes we could get something better” for me that wouldn’t be a good enough reason to
add extra to the mortgage.
Personally speaking I don’t think any increase in property value is that relevant either, because it only matters when you want to sell. If you’re planning on staying put somewhere for a long time and you’re not consciously moving up the ladder then it is a factor but it’s not a huge factor.

likesallweather

@elsien thanks. Yes, there is a house nearby who have accepted an offer in principle. Larger more mature garden, more character house (early 1900s vs 1969 at present), nicer location — same village, different part...So we know what the dream is. The increase in value, if it doesn't go on nursing home fees, will go to the kids...not moving and having some for the kids sooner might be more beneficial though.

EssexHebridean

We cleared our previous mortgage back in 2016 - overpaying saw it gone in 13 years instead of the original 25, it was a slog, and hard work, but the day I called to make the final payment was just fantastic. 

Now, we are looking at a move - from a flat to a house, mainly for the garden, and for a roof over our heads, not upstairs neighbours. A few other considerations as well. In our case we'd be using the value of the flat, plus a small by current standards (but still larger than the previous one!) 15 year mortgage, plus a chunk of our savings. we've done a lot of deliberating so I completely get your dilemma - in some ways it seems crazy to swap somewhere that generally speaking, we've been very happy, and that we have put a fair bit of work into  making what we wanted, and that we owe nobody anything on, for a "step backwards" to a mortgage - and particularly at a time when interest rates seem to be only going in one direction! We've come to the conclusion that where we are now, yes, is "fine" and suits us well, but that it feels as though staying there when there are also other things we want for the longer term would be "settling" and that we would be staying put for the wrong reasons. We are already confident that we are not overstretching ourselves with what we're considering doing, and we know that we can be disciplined in spending in order to overpay the new mortgage. The "more character" and location we like boxes will also be ticked if we manage to get the house we are hoping for too. 

Ask yourself about your quality of life going forwards - and I would certainly hope that your children would heartily advise you doing what is best for you, not for them - I know I would with my Mum! 

likesallweather

@EssexHebridean sounds very similar. The kids would always tell us to do what we want but as parents, what we want is what's best for them. We're lucky to have the problem but it makes it no easier. The thing is that degrees are expensive, house deposits never been so hard to save...so it's more important than ever that where they can, parents help their kids. Otherwise getting on the ladder will be so hard, much later, so kids later too ...The thought of no mortgage, a decent amount of savings and cash for the kids...and the house we chose 6 years ago, if good. I keep thinking that a move to a more interesting house...a little bigger...might be wasted too when the kids move out but that's 10 years away...hopefully longer! It's really more about the maturity and chatter of the house and garden.

EssexHebridean

Of course you want what's best for them - that's absolutely natural - and no, that it's in many ways a "nice problem to have" doesn't help with the quandary! 

Another way of looking at it - if you think that you and your OH might be happier for a move, for whatever reason, then that also has a reflection on your family unit as a whole. Things like more space benefit you all...and remember that the new house will also have, as you said, an increased value too which in the future will be of benefit potentially to you all. 

Martin has some good stuff to say on the subject of student debt - but you said your kids are early teens - so uni is still several years ago and they may even decide not to go at all - lots can change in that timescale. Ultimately, while obviously there will be parental contributions to consider if they DO choose to go, it sounds like you would be a good place to have the mortgage substantially reduced by then in any case?  And once they are in a position where they want to purchase property of their own, a further move/downsize for you might well again be able to change the whole family picture? 

It's incredibly hard to balance things I think - but sometimes it's just not practical to allow future unknown factors to influence things to that great a degree? (Pun intended!)

trix-a-belle

I paid off my mortgage in similar house circumstances (but a housemate & small business instead of kids) & ended up staying put for another 18 months, before moving (saving well during that time) & taking on a mortgage again for a better long term home.
I agree with your closing thoughts there of the longer term, if you might end up downsizing and moving again. You know what blend of properties are in the area, would sticking as is and then buying a dream home once you know you definitely don't need the extra bedrooms give more of a balance between the 2 initial options?

likesallweather

we don't need more bedrooms. Both houses are 4 bed...it's really a side step into a much more characterful version of the same size house, with a better garden, in a better spot. One worth 130k more than the other.

jonnydeppiwish!

Wow, what a fantastic position to be in!

Quick question though. Given your pension position, and that you have 2 teenagers, do you really need to move and why do you want to have a property that will increase a bit more than the other?

I am in that situation of having the non-dream house, without a mortgage at your age. Yes it’s not exactly what I want but we make it work for us, plus we go on holiday 3-4 times a year, in the position to help the kids with deposit on their first houses, and, most importantly, don’t have to worry about money. It’s a very nice place to be.

In your position, I’d be waiting till the kids leave home, then look for somewhere new, if at all.

likesallweather

@jonnydeppiwish! yes that's what my brain's telling me. We don't want to be in a house that will go up a bit more than the other...that's more of a byproduct of the move. I don't think we'll ever go on holiday 3-4 times a year but to have the option is nice.

jonnydeppiwish!

likesallweather said:

@jonnydeppiwish! yes that's what my brain's telling me. We don't want to be in a house that will go up a bit more than the other...that's more of a byproduct of the move. I don't think we'll ever go on holiday 3-4 times a year but to have the option is nice.

I’m on my second career, been teaching for 4 years. Having home settled and paid for makes such a difference on the outlook I have in life, with both of us able to work 4 days a week, and still enjoy time in the classroom.

Its my wife who has the holidays, I’m happy with Parkrun and the occasional overseas marathon!