Pros and cons of a big mortgage
Discussion
After some advice about living with a much larger mortgage. I'm guessing it's mainly going to be cons!
Currently live in a nice 3 bed house in a great area. We pay almost double the base payment on the mortgage and have a decent amount left over. I'm pretty careful with money and log EVERYTHING I spend but we do still have a fairly good lifestyle. 3 decent cars, 4 holidays a year etc. In other areas we are careful, PAYG phones, No sky, ALDI shopping, printer paper from work!
I've always felt the property we're in would be a temporary one. It's a great place but has a very small plot (3 floors). I want somewhere with a decent driveway, double garage, large private garden 4 or 5 bed. This would mean almost doubling the mortgage loan.
It would probably bring it into line with the overpayment we are currently making but one concern is when rates go up (i'm guessing 1st quarter 2015) we wouldn't have as much spare.Of course we might be able to get a fixed rate deal which resolves this in the short term. Just to be clear we could afford it, it would just leave us with a lot less. The general worry of having a huge loan and a considerable amount of interest would still haunt me though.
The pros? Well I'd be in dream house. I could lavish time on my car in a double garage. Our lass could have her ducks she's always going on about. We'd have more room for guests and the kids when I have them (not often). Financially the % increase in value over time would amount to more equity in the property.
I'll admit there is only 2 of us and half the time I'm working away. Mrs who works full time would be home alone.
Is this just a silly pipe dream, would I end up regretting it? If we did move I hope not to be moving again mainly due to paying all that stamp!
p.s Should add we are 34/35 and both with fairly steady jobs.
Currently live in a nice 3 bed house in a great area. We pay almost double the base payment on the mortgage and have a decent amount left over. I'm pretty careful with money and log EVERYTHING I spend but we do still have a fairly good lifestyle. 3 decent cars, 4 holidays a year etc. In other areas we are careful, PAYG phones, No sky, ALDI shopping, printer paper from work!
I've always felt the property we're in would be a temporary one. It's a great place but has a very small plot (3 floors). I want somewhere with a decent driveway, double garage, large private garden 4 or 5 bed. This would mean almost doubling the mortgage loan.
It would probably bring it into line with the overpayment we are currently making but one concern is when rates go up (i'm guessing 1st quarter 2015) we wouldn't have as much spare.Of course we might be able to get a fixed rate deal which resolves this in the short term. Just to be clear we could afford it, it would just leave us with a lot less. The general worry of having a huge loan and a considerable amount of interest would still haunt me though.
The pros? Well I'd be in dream house. I could lavish time on my car in a double garage. Our lass could have her ducks she's always going on about. We'd have more room for guests and the kids when I have them (not often). Financially the % increase in value over time would amount to more equity in the property.
I'll admit there is only 2 of us and half the time I'm working away. Mrs who works full time would be home alone.
Is this just a silly pipe dream, would I end up regretting it? If we did move I hope not to be moving again mainly due to paying all that stamp!
p.s Should add we are 34/35 and both with fairly steady jobs.
Edited by Rick101 on Sunday 17th August 08:20
There are 2 risks of a large mortgage.
1) The mortgage becomes a chain, which attaches you to the "slavery" of a job you hate. You need that job, and can't afford to loose it.
2) Less money available for LIFE.
But in the OP's case, he's already paying twice what he needs to, and the bigger house would allow him space to persue his hobbies. And if things change he could always take in lodgers.
1) The mortgage becomes a chain, which attaches you to the "slavery" of a job you hate. You need that job, and can't afford to loose it.
2) Less money available for LIFE.
But in the OP's case, he's already paying twice what he needs to, and the bigger house would allow him space to persue his hobbies. And if things change he could always take in lodgers.
There is also the question of what you think property prices will do.
If you think that they are going to fall then you would be better off staying put, building equity in your home and pouncing when prices drop. This assumes that the loss in value of your property will be half that of the larger property.
Conversely, if you think prices will continue to rise then you are better off getting in early.
If you think that they are going to fall then you would be better off staying put, building equity in your home and pouncing when prices drop. This assumes that the loss in value of your property will be half that of the larger property.
Conversely, if you think prices will continue to rise then you are better off getting in early.
If you can move to where you will want to remain then I'd say do it. We did, there was nothing wrong with the last one but it always felt like a stepping stone, moving from something built in 1979 to one from 1830, from one overlooked by neighbours to one that isn't, etc. etc. was great. 14 years later we are still here and it's hard to imagine us being somewhere else. So if you can afford to do it I'd say to do it.
Think about what you like doing and find a house which suits. We used to lie going out to bars and restaurants and wanted to be close to a town centre and room sizes did not matter, nor outside space. Now we would like to move further out, have a room which can fit a pool table, have some land which means we are willing to change to a larger mortgage..... but we also are very keen to keep a bit in the bank just in case
Pros
1. It forces you to effectively save more (because you are paying off a bigger mortgage) and spend less in other areas
2. You will have a large asset when the mortgage is paid off and can eventually cash it in or pass on to your children e.t.c
3. If house price rises, you will benefit from a greater absolute gain and the capital gain will be tax free.
4. You will be living in a nicer house
Cons.
1. You will have less disposal cash to spend on your toys/lifestyle
2. You might worry more about the mortgage
3. If house price declines you will suffer a greater absolute loss
1. It forces you to effectively save more (because you are paying off a bigger mortgage) and spend less in other areas
2. You will have a large asset when the mortgage is paid off and can eventually cash it in or pass on to your children e.t.c
3. If house price rises, you will benefit from a greater absolute gain and the capital gain will be tax free.
4. You will be living in a nicer house
Cons.
1. You will have less disposal cash to spend on your toys/lifestyle
2. You might worry more about the mortgage
3. If house price declines you will suffer a greater absolute loss
Cheers all, pretty much confirmed what I had considered already.
I'd like to think we would be there 10 years + so I'm pretty sure house prices will be higher than they are now.
Can't remember the last time we went into down for drinks/food. As long as I've got a decent local I'm happy
Mrs likes to cook and what been wanting a new kitchen suspect we'll get better value from moving to a house with a bigger one
Lots of room for my Sim racing gear and Hi-Fi setup
Double garage for performance car, 6 push bikes and camping gear, roof boxes etc. Might even get myself a motorbike again!
Decent garden for my BBQ activities and parties
Lodgers is a possibility, done it before but back when I was single. It's a bit defferent in a 'family' home but I suppose if it's big enough and they could have their own area, it would be possible. Worst comes to the worst we sell up and downsize again.
Should add Mrs has a small BTL with about 60K in, which she had considered as a long term investment but I suppose if we really got stuck we could use that....and only after then I'd consider selling a car!
I'd like to think we would be there 10 years + so I'm pretty sure house prices will be higher than they are now.
Can't remember the last time we went into down for drinks/food. As long as I've got a decent local I'm happy
Mrs likes to cook and what been wanting a new kitchen suspect we'll get better value from moving to a house with a bigger one
Lots of room for my Sim racing gear and Hi-Fi setup
Double garage for performance car, 6 push bikes and camping gear, roof boxes etc. Might even get myself a motorbike again!
Decent garden for my BBQ activities and parties
Lodgers is a possibility, done it before but back when I was single. It's a bit defferent in a 'family' home but I suppose if it's big enough and they could have their own area, it would be possible. Worst comes to the worst we sell up and downsize again.
Should add Mrs has a small BTL with about 60K in, which she had considered as a long term investment but I suppose if we really got stuck we could use that....and only after then I'd consider selling a car!
10 year fixed rate, job done 
Property prices don't really matter if the next property is the 'Forever Home'. I've been in my house ten years and what it's value has been in that time has been no concern at all. We are planning to move in 4-5 years for schooling reasons, only then will it's value become important.
If the new mortgage comes in less than what you are currently paying in total then you don't need to sacrifice anything from your lifestyle, do you?
Property prices don't really matter if the next property is the 'Forever Home'. I've been in my house ten years and what it's value has been in that time has been no concern at all. We are planning to move in 4-5 years for schooling reasons, only then will it's value become important.
If the new mortgage comes in less than what you are currently paying in total then you don't need to sacrifice anything from your lifestyle, do you?
Rick,
Life's a journey, but don't forget to smell the roses along the way. There's a fine line between understanding the price and cost of something and the value of it. As long as I had considered and mitigated as much risk as possible and as long as it was affordable and all contingencies had been squared off, I'd go for the garage and ducks mate.
It's your home and you only get one life - enjoy both whilst you can.
Life's a journey, but don't forget to smell the roses along the way. There's a fine line between understanding the price and cost of something and the value of it. As long as I had considered and mitigated as much risk as possible and as long as it was affordable and all contingencies had been squared off, I'd go for the garage and ducks mate.
It's your home and you only get one life - enjoy both whilst you can.
ts all over my lawn it'll be going on the smoker!I'm in pretty much the same situation - deciding between a big house with double garage, garden, cinema room, etc. and just staying in our current 2 bed flat. Decided against the house because it's a huge amount of deposit to put down, monthly repayments are higher and as there's only 2 of us we don't really need the space.
So we're investing in BTLs, travelling the world and enjoying life before kids come along! I rent a couple of garages right behind our flats so the double garage becomes less of a concern. But it's all up to you if the bigger space is worth the premium, no right or wrong answer really. Just make sure you're doing something with your cash in the meantime.
So we're investing in BTLs, travelling the world and enjoying life before kids come along! I rent a couple of garages right behind our flats so the double garage becomes less of a concern. But it's all up to you if the bigger space is worth the premium, no right or wrong answer really. Just make sure you're doing something with your cash in the meantime.
No expert on this, sounds like you have the mortgage covered.. but what about running costs ? more to heat, council tax higher, potentially more maintenance that could be more expensive than the same job on a smaller house - for example lets say you need to re-glaze it or fit a new boiler..
Do you really need a 5 bed house for two of you, especially if you aren't there half the time ?
Do you really need a 5 bed house for two of you, especially if you aren't there half the time ?
Sarnie said:
10 year fixed rate, job done
Property prices don't really matter if the next property is the 'Forever Home'. I've been in my house ten years and what it's value has been in that time has been no concern at all. We are planning to move in 4-5 years for schooling reasons, only then will it's value become important.
If the new mortgage comes in less than what you are currently paying in total then you don't need to sacrifice anything from your lifestyle, do you?
Very good advice there. if it's the "Forever House" then your options change a bit. Like Sarnie said, if you can fix for a long period and still have affordable repayments, you're all set up. Overpay if and when you can, as you have been doing, and then any rate shock at the end of the fixed period is going to be greatly reduced. Property prices don't really matter if the next property is the 'Forever Home'. I've been in my house ten years and what it's value has been in that time has been no concern at all. We are planning to move in 4-5 years for schooling reasons, only then will it's value become important.
If the new mortgage comes in less than what you are currently paying in total then you don't need to sacrifice anything from your lifestyle, do you?
Ginge R said:
Life's a journey, but don't forget to smell the roses along the way.
As soon as I read that I thought 'that's the sort of thing Ginge would write' - then glanced left and saw that it was 
I would just add, as a witness to the 1990's 15% interest rate bloodbath, that history usually repeats itself. It's just a question of when.
.. nothing, if not predictable then!I bought my first place in that bloodbath, a new 4 bed detached place for 50k or so. I'd certainly have your scenario down as one of the contingencies I mentioned though.
Bearish thinking and housing gone to extremes?
http://www.trustnet.com/News/529507/im-so-bearish-...
You are in a similar position to us. We always wanted a bigger garden, double garage.
But we are very comfortable with what we have - we don't owe a lot, only a few years left on the mortgage. We regularly look at places on right move and talk about it for a day or 2 then when we sit back and look at what we have now we think its not that bad and put up with the small garden and single garage!!! Going to have to do it some day!!
But we are very comfortable with what we have - we don't owe a lot, only a few years left on the mortgage. We regularly look at places on right move and talk about it for a day or 2 then when we sit back and look at what we have now we think its not that bad and put up with the small garden and single garage!!! Going to have to do it some day!!
alscar said:
Do it - long time dead and this isn't a rehearsal. We did the " mad " move 10 years ago - I was 41 and wife didn't work - we always knew if we didn't we would regret it - every time I drive up the drive I smile. It sounds as if you can afford it so best of luck.
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