Have some MFW done the wrong thing?

abingdonboy

We haven’t moved due to a belief that the housing market was well and truly over priced, and so have focused on paying off the mortgage on the house we have

Strikes me that with credit being harder to come by and possible higher inflation, without a reduction in house prices guaranteed, trying to pay off the mortgage may have been the wrong thing to do...
If we had moved and mortgaged ourselves to the limit, we could have been sitting in the house we would like with our loan reducing in real terms without having to do anything. Instead we are looking at saving in a time of high inflation, and possibly unable to raise the funds we would need to move...

elantan

i think you should do what is right for you own situation...if you spend all your time thinking oh i shouldve done this or oh i shouldve done that you will end up having lots of regrets ..accept what youve done and move on

Little_Mama

I suppose it also depends if you are in your 'forever' house....or one that'll do until you clear the mortgage and emigrate!

IDN101

personally, I'd much rather live in a "nice" house that "I" own; than in a "dream" house that the Lender owns and that I'm paying a fortune to reside in. For me, a home is just one facet to a good life- travel, dining out, etc; are the others. I'd love to be mortage-free in order to spend that element of my outgoings on these other things.

Regards,
Ian

ailuro2

If I were made redundant tomorrow I'd still be able to stay in my home because I could afford to take a minimum wage job to keep the mortgage paid until something better came along.
Not worrying the house would be repossessed because it couldn't be sold in a very slow market but I couldn't afford the mortgage on it.

That's my tuppence anyway.

nearlyrich

I think if you keep second guessing what might have been you will never be happy, I am secure in a house that is paid for and fortunately it's the house I am happy to stay in for as long as I am fit enough to enjoy it, I don't have any objection to moving into a more manageable flat in my dotage LOL.

If I lost my job tomorrow we could manage on DH's pension but I enjoy eating out and travelling (and buying shoes):o if we had a massive mortgage on the place we would have to sell up.

Each to their own, we managed to clear a sizable mortgage by overpaying, we could have spent that money on more long haul holidays or designer clothes. We didn't feel deprived we had holidays and other luxuries maybe not as many as some but enough.

hannahgibbs

But you have reduced the total amount of interest you would have paid on this house, and you will have more equity if you decide to move

Capricorn_One

I've been thinking about this question, too. No point regretting either way. I think we're beginning to realise that the shortage of houses isn't quite as previously portrayed but the shortage of affordable houses was.

Guess it all boils down to how much you think the market will drop and if it's sufficient to warrant selling against overpaying. In my opinion it would have be a lot to compensate for renting in the meantime (and for how long?), stamp duty, estate agency fees and inconvenience.

My personal hope is that if house prices drop my next climb up the ladder (detached) will be a little closer.

Dithering_Dad

abingdonboy wrote: »

We haven’t moved due to a belief that the housing market was well and truly over priced, and so have focused on paying off the mortgage on the house we have ...

This is the best thing you could have done. House prices are way over priced, so you've sat tight, paid down your mortgage and will be sitting pretty once the house market tumbles. The less you owe on your mortgage, the more equity you will have, the more money you will have to buy your next house.

abingdonboy wrote: »

Strikes me that with credit being harder to come by and possible higher inflation, without a reduction in house prices guaranteed, trying to pay off the mortgage may have been the wrong thing to do...

The credit crunch is the result of an economic downturn in the US, where sub-prime mortgage holders have lost their jobs and defaulted on their huge mortgages. In times of economic uncertainty, such as we have now, the very best thing you can do is to increase your savings and reduce your liabilities (debts). Paying down your mortgage will have been the very best thing you could have done to safeguard your family's financial future.

abingdonboy wrote: »

If we had moved and mortgaged ourselves to the limit, we could have been sitting in the house we would like with our loan reducing in real terms without having to do anything. Instead we are looking at saving in a time of high inflation, and possibly unable to raise the funds we would need to move...

If you had mortgaged yourself to the hilt then you would be in the same situation as the US sub-prime mortgage holders. Recession is looming large on the horizon and (as you've said) inflation is climbing. If inflation climbs then interest rates also have to climb (the Bank of England's prime directive is to control inflation). If interest rates rise then you'll struggle to pay your 'up to the hilt' mortgage, if the credit runch continues, then when your discounted mortgage deal ends you won't be able to negotiate as good a deal and so your mortgage will increase and you'll struggle to pay your 'up to the hilt' mortgage. If there is a recession and you lose your job, you will struggle to pay your 'up to the hilt' mortgage.

All in all, I think you've done the sensible thing. Anything else would be property speculation and I for one am not prepared to gamble with my family's home and future for the sake of getting a couple of rungs up the property ladder.

abingdonboy

well thanks all,

I was having a bit of a dark moment, and now looking at it in perspective we have done the right thing...

I take on board the whole sitting tight thing, but we have two kids coming up to school age, and aren’t in a good area for schools. This whole schools catchment thing really sucks, as we would be happy to stay here if the schools were better.

Anyway, I am happy again without too many regrets!

Regards,

AB.