Mortgage free Vs Upgrading
Discussion
Not sure if this is best here of the finance forum.
Situation is we'll have paid off our mortgage this year. Current house is a ~1900 4 Bed semi which we've lived in for 13.5 years. We love the house, location is good etc it's big enough for our family of 4 (kids are almost 5 and 2 no more planned). There's a few things about the house which I don't like but can't do much about.
We have a drive big enough for 2 cars, to get this had to sacrifice an old prefab garage. I'd ideally like a garage but isn't really any scope to do this.
I'd like a bigger more useable garden. It's not tiny there is a small-ish lawned area big enough for the kids to have a play kick about.
The house was gutted when we moved in and done top to bottom, it's getting to the stage we need to start freshening it up again, kitchen could do with being replaced, we don't have a downstairs toilet so we were considering an extension to incorporate a WC and utility but don't think the cost will be worth the benefit.
My wife an I will probably WFH for good now, we have one office but could do with another, which ideally means doing something in the loft.
We're going to get the house valued next week to see where we're at. Problem is as it's a big house we'd really have to go towards the top of the local market to get a tangible upgrade. This would mean getting a 100-150K mortgage. Something has come up locally which has caught my eye, huge gardens inc a small wood, double garage. Jobs are as secure as they can be in these times.
When I was montgage free I was considering a new car, but looking at the options I'm thinking of scaling this back and investing that in a new house.
Situation is we'll have paid off our mortgage this year. Current house is a ~1900 4 Bed semi which we've lived in for 13.5 years. We love the house, location is good etc it's big enough for our family of 4 (kids are almost 5 and 2 no more planned). There's a few things about the house which I don't like but can't do much about.
We have a drive big enough for 2 cars, to get this had to sacrifice an old prefab garage. I'd ideally like a garage but isn't really any scope to do this.
I'd like a bigger more useable garden. It's not tiny there is a small-ish lawned area big enough for the kids to have a play kick about.
The house was gutted when we moved in and done top to bottom, it's getting to the stage we need to start freshening it up again, kitchen could do with being replaced, we don't have a downstairs toilet so we were considering an extension to incorporate a WC and utility but don't think the cost will be worth the benefit.
My wife an I will probably WFH for good now, we have one office but could do with another, which ideally means doing something in the loft.
We're going to get the house valued next week to see where we're at. Problem is as it's a big house we'd really have to go towards the top of the local market to get a tangible upgrade. This would mean getting a 100-150K mortgage. Something has come up locally which has caught my eye, huge gardens inc a small wood, double garage. Jobs are as secure as they can be in these times.
When I was montgage free I was considering a new car, but looking at the options I'm thinking of scaling this back and investing that in a new house.
sociopath said:
You're only investing in a house if you plan to sell it at a later date, otherwise you're spending to make it nicer to live in.
So as with the utility and downstairs wc, it's worth it if it makes you're life better regardless of if it increases house value.
If you're only doing it so you can sell then it's only worth it if it makes the house more valuable or easier to sell.
So the question is i guess, is this your "forever" home or will you be moving in the future. Once you've answered that question you can answer the others.
If we did any real works in the house i.e. downstairs toilet we'd be staying put. We're ok just now with the age of the kids but I think an extra toilet would be useful as they get older. There's no ensuite etc, we've never had one and can't say it bothers us hugely but I guess when the kids are older that would also be useful.So as with the utility and downstairs wc, it's worth it if it makes you're life better regardless of if it increases house value.
If you're only doing it so you can sell then it's only worth it if it makes the house more valuable or easier to sell.
So the question is i guess, is this your "forever" home or will you be moving in the future. Once you've answered that question you can answer the others.
blackmme said:
Your kids are very young the outside space will become more and more useful up until the age of 12 when suddenly they won't use it at all.
Borrowing is extremely cheap at the moment and by the sound of it the new mortgage will immediately be visible to you from a value perspective.
My wife and I had a slightly different set of parameters (age of children being the main one) and we decided to move. We were mortgage free and decided to take on about 150k, We haven't regretted it for a second!
I think your main questions is actually "Do we want the hassle and stress of moving?"
The kids would definitely benefit from the big garden, has swing set etc scope to build a tree house etc but on the other hand I think kids are content with whatever they have. I usually make the argument with myself over the current houses garden that as we're in Cumbria we're maybe getting good use of a garden for a few months of the years, the rest of the time it's pissing down Borrowing is extremely cheap at the moment and by the sound of it the new mortgage will immediately be visible to you from a value perspective.
My wife and I had a slightly different set of parameters (age of children being the main one) and we decided to move. We were mortgage free and decided to take on about 150k, We haven't regretted it for a second!
I think your main questions is actually "Do we want the hassle and stress of moving?"
This particular house also has a large vegetable garden, something I dabble in but If I'm WFH for good something I can have the time to do more of as I get older. I've not really thought of what the goal is once the mortgage is paid off I'd always thought I'd start to plan for an earlier retirement.
SweptVolume said:
It depends on the term of the mortgage, but based on the size of it, you might be spending around £600-£700 a month paying it off. Does that money give you more quality of life being spent on the house you're looking for, or on other things?
One factor to consider is that houses tend to hold their value, so even if you never sell it, your children will not only reap both the rewards of a bigger and better home, but also the money you paid into it in years to come. A car is typically a depreciating asset, and a holiday is nothing but memories (and children love simple coastal holidays just as much as fancy ones!)
It really depends on what you value more.
A mortgage has always just been something that's 'there' for us. We've over paid a lot, once it's paid off we'll be ~1K a month better off. On one had it's not what you'd call life changing money, we don't have an extravagant life style, but don't want for anything when we could we still do holidays where and when we want. As above we'd probably start putting some away (into what I don't know) for the future and possibly a nicer car and nicer holidays. That's about it. My wife will possibly go back to full time once the kids are both in fulltime school so earning should increase.One factor to consider is that houses tend to hold their value, so even if you never sell it, your children will not only reap both the rewards of a bigger and better home, but also the money you paid into it in years to come. A car is typically a depreciating asset, and a holiday is nothing but memories (and children love simple coastal holidays just as much as fancy ones!)
It really depends on what you value more.
I suppose those who've WFH a lot in lockdown has made them reassess what they get out of there house. During April onwards last year because we were home we got to sit outside a lot more too.
Thanks for the replies, some things I didn't really think of. It's probably the mrs who needs to come around to moving more than me. She a bit more risk averse.
I've kept it instant access for the time being but I'm getting about 16p a month interest on 20 odd grand which is pitiful
Pretty much a standard 37 hour week I work those over 4 days to have one day a week off. i.e. so long as I do the hours there is a great deal of flexibiltiy.
Register1 said:
Money in teh bank is pointless.
Either go for bigger house or go for 2 smaller houses.
Live in 1, rent the other.
Houses easy make 5% a year, never going to get that in any bank.
True, I have a decent wedge of cash that has built up more during the lockdown(s).Either go for bigger house or go for 2 smaller houses.
Live in 1, rent the other.
Houses easy make 5% a year, never going to get that in any bank.
I've kept it instant access for the time being but I'm getting about 16p a month interest on 20 odd grand which is pitiful
eltax91 said:
Back in 2018, we were about 3 paydays of adding to our savings away from being mortgage free. At the time we had a 6 and 1 year old. We saw a plot of l.and for sale, bought it. Did a self build at a cost of over £700k, now we have a £465k mortgage. 
Sometimes i think it was stupid, then i look around at the lovely house we have and how much more space the kids have and i don't regret it for a secoond. It'll almost always benefit you financially to upsize now, because when you downsize later the % growth in the market was worth more in the more expensive property
Gladly not talking those sort of borrowing figures! I can't see interest rates going up with what the government has borrowed. Never really thought of it but one day hopefully a long way off we'll be getting some inheritance.Sometimes i think it was stupid, then i look around at the lovely house we have and how much more space the kids have and i don't regret it for a secoond. It'll almost always benefit you financially to upsize now, because when you downsize later the % growth in the market was worth more in the more expensive property
hyphen said:
Is it a 9-5 job and something you enjoy? Then go for it.
If a stressful job/long hours. Then perhaps time with kids first.
Pretty much. Although as I've mostly worked from home since last April I'm a bit sick of it now, my employer is going to allow those who want to class there home as there main location to continue to do so. It's harder to see at the moment but once life is back to normal there will be lots of benefits to WFH.If a stressful job/long hours. Then perhaps time with kids first.
Pretty much a standard 37 hour week I work those over 4 days to have one day a week off. i.e. so long as I do the hours there is a great deal of flexibiltiy.
Bit of an update. Went to see the property that has peaked our interest. We're getting ours valued this week so we know where we are. We've no idea what ours is worth, and depends what the sellers would accept. Not getting ahead of ourselves, it's been on the market a while. I've come round to the way of thinking that while being mortgage free is great, we could comfortably get a 15 year mortgage, over pay when we could and be mortgage free again by our early 50's.
Ziplobb said:
We were mortgage free 11 years ago at 40. a really nice detached house in a lovely garden but it was just too small. We did not want to move from the hamlet where we live but place round the corner had been on the market for 3 years. Triple garage, 5 beds, 9 acres. So we borrowed £270k and moved there. no regrets at all. Yes its a massive commitment but money is cheap and like someone else said on this thread its a waste of time in the bank as savings. We wont stay here forever but when we do check out we should have a nice bit of appreciation and I should be able to keep some of the land (on which I have built a big barn) for free.
Our situation is a little reversed, our current house is big enough for us, has nice views etc but it's a semi and the gardens could be better. If this doesn't come off i.e. the other house sells I'll be happy staying here. Other house has 5 acres, something not really known of in the local area outside of former farms etc. The house itself is anything hugely special, its big but not so big we'd rattle round in it if we stayed once the kids were out. We spent most of the time in the gardens. The wooded area is impressive, it doesn't flat my wifes boat but I can just imagine the kids get 10+ years of enjoyment out of it, camping, having campfires. We normally have to jump in the car now to get to a park or for a walk etc I'd see us not needing to leave the house much.gangzoom said:
We were in a similar situation a few years ago, pretty much mortgage free and interms of living space more than enough for the family. When we first moved in I did have some thoughts about why are we taking on extra debt when we just became pretty much debt free, but 4 years on from moving in I cannot believe we didn't do it sooner.
If you are lucky enough to have the means, and the area around you offers the plots, there is nothing like having a decent sized garden. I still cannot believe I just have to step out of the kitchen to get view like this, and when the snow arrived a few weeks ago its was like going to lapland.
If you have the job security the mortgage is just a number no one really remembers in a few years time, but memories you have with your kids will last a life time.
When you add in the fact borrowing is so crazy cheap, its no brainer to find a way to improve your family life. Yes you can save up, but time wait for no one, and ineffect the cheap borrowing is simply letting you access stuff sooner, and providing you can pay the debt back it really adds virtually no risk.
We love our garden so much we are changing the major structure of the house to ensure we can get more view/usage from it, £200K extra borrowing over 7 years fixed at 1.5% over 15 year term is £1200/month - people are spending that much on cars there days. After 7 years the debt amount would be sub £100K even with no overpayments, not a small figure a figure that means you probably don't really need to worry about interest rates and effect on mortgage payments.
So I've gone from been obsessed to clearing the mortgage a few years ago to now itching to get into more debt so we can extra building done
.
Lovely gardens If you are lucky enough to have the means, and the area around you offers the plots, there is nothing like having a decent sized garden. I still cannot believe I just have to step out of the kitchen to get view like this, and when the snow arrived a few weeks ago its was like going to lapland.
If you have the job security the mortgage is just a number no one really remembers in a few years time, but memories you have with your kids will last a life time.
When you add in the fact borrowing is so crazy cheap, its no brainer to find a way to improve your family life. Yes you can save up, but time wait for no one, and ineffect the cheap borrowing is simply letting you access stuff sooner, and providing you can pay the debt back it really adds virtually no risk.
We love our garden so much we are changing the major structure of the house to ensure we can get more view/usage from it, £200K extra borrowing over 7 years fixed at 1.5% over 15 year term is £1200/month - people are spending that much on cars there days. After 7 years the debt amount would be sub £100K even with no overpayments, not a small figure a figure that means you probably don't really need to worry about interest rates and effect on mortgage payments.
So I've gone from been obsessed to clearing the mortgage a few years ago to now itching to get into more debt so we can extra building done
.
We took the kids along and the kids had a whale of a time so really got me thinking about that side of things. I'd happily live in the middle of nowhere, my wife less so. Job security is good, earning potential should increase for me in the short to medium turn. My wife will consider upping her hours once the youngest is in full time school, maybe sooner if WFH becomes a more permanent feature. bmwmike said:
Not only is money cheap but inflation also helps take care of the debt over the term of the mortgage. IMO if the debt repayments are manageable with a buffer, its almost daft NOT to take on debt to improve quality of life (new kitchen, garage type thing) or invest.
Never really thought of it that way until recently, focus was on paying off the mortgage. Could do with speaking to a good IFA if this doesn't happen.The extra money we'll have is ~1K a month. It's a nice amount but not life changing, we could reduce working hours and possibly look at other career options. What we both do isn't massively taxing for what most would class as a good salary. Otherwise I can see that extra grand getting quickly swallowed up in a nicer car and a few more holidays-things we do anyhow.
princeperch said:
Inflation is only any good if you get payrises that reflect it.
Last few payrises I have had as a civil servant have been appalling, and now we have a pay freeze. Many people have only had a very few and very low pay rises over the last 12 years. Whilst the private sector probably don't treat their staff as poorly as my employer does, I suspect that many employers are also going to exercise some pay restraint over the next few years.
I heard an interesting bit on LBC yesterday with some finance expert who said inflation is going to be very painful over the next 5-10 years for the vast majority of people.
I've tended to get 2-3 year deals from my employer of 2.5 to 3.5% so not bad. I've probably one more step in terms of promotion which would get me to the maximum level I'd like to be at in terms of reward vs responsibility. My boss retires in 4-5 years so I'd likely step into his role for another 15 isk K.Last few payrises I have had as a civil servant have been appalling, and now we have a pay freeze. Many people have only had a very few and very low pay rises over the last 12 years. Whilst the private sector probably don't treat their staff as poorly as my employer does, I suspect that many employers are also going to exercise some pay restraint over the next few years.
I heard an interesting bit on LBC yesterday with some finance expert who said inflation is going to be very painful over the next 5-10 years for the vast majority of people.
gangzoom said:
Logically inflation has to go up with all the fake money thats been pumped into economy, which makes it even more tempting to lock in debt at rates of 1.5% APR for 5 years+ now.
My wife is worried about interest rates increasing, I know they have in the past but I think government and personal debt is too high for anything earth shattering to happen in terms of rates for quote some time.
Excellent thred resurrection!
As way of an update we stayed put.
The particular house we went for we made a best and final offer which the owner didn't accept. The house was up for sale for 3 years in total and got 4k more than our final offer in the end.
We're glad in the end it didn't happen for a few reasons.
I saw a Japanese knot weed specialist parked up.
There's a huge housing development that has been in planning that if it gets approved will be built on farm land to the rear of the house, the woodland not owned by the house will be cleared.
Since its sold there's scaffold all round the house could be some improvement (the render hasn't came off).
The house itself as I said in earlier posts wasn't anything special and the layout wasn't hugely practical so would have needed some work eventually to get it as we wanted.
We've got another small mortgage plus some savings we're getting an extension put on our existing house this will add an additional bathroom and a big kitchen diner. We're also doing alot of other work we've put off such as re-rendering, new bathroom full rewire, some landscaping work.
The local housing market doesn't seem to be cooling off yet. I still keep an eye out on right move, large family houses are selling quickly still and prices have probably increased 10-15% since we were considering the move. I wouldn't rule out moving in future if something popped up but unless the arse crashes out of the market the gap between what we could sell our house for and what we'd be paying for the upgrade will continue to increase.
Really the cost of living increases will errrode our disposable income, paying double for utilities and set to go up again in the autumn plus food and fuel increases isnt screaming out to take on a bigger mortgage and glad we didn't.
I'm still working from almost 100% of the time so saving on committing costs.
Getting the extension done has been a bit of a pain the the arse and a spade hasn't gone in the ground yet. Not many local builders seem to want to take on 'bigger' projects so choice is limited plus there's understandable reservations over material costs etc. We've gone with a builder based on reputation, also happen to be the most expensive. The start date keeps going back was originally now, then September now looking like the back end of the year.
I'm starting to look at longer term financial planning at the moment. I'm fortunate that I have a defined benefit pension currently at 60 so looking at things like SIPPs etc while balancing doing things with the kids, holidays weekends away etc.
As way of an update we stayed put.
The particular house we went for we made a best and final offer which the owner didn't accept. The house was up for sale for 3 years in total and got 4k more than our final offer in the end.
We're glad in the end it didn't happen for a few reasons.
I saw a Japanese knot weed specialist parked up.
There's a huge housing development that has been in planning that if it gets approved will be built on farm land to the rear of the house, the woodland not owned by the house will be cleared.
Since its sold there's scaffold all round the house could be some improvement (the render hasn't came off).
The house itself as I said in earlier posts wasn't anything special and the layout wasn't hugely practical so would have needed some work eventually to get it as we wanted.
We've got another small mortgage plus some savings we're getting an extension put on our existing house this will add an additional bathroom and a big kitchen diner. We're also doing alot of other work we've put off such as re-rendering, new bathroom full rewire, some landscaping work.
The local housing market doesn't seem to be cooling off yet. I still keep an eye out on right move, large family houses are selling quickly still and prices have probably increased 10-15% since we were considering the move. I wouldn't rule out moving in future if something popped up but unless the arse crashes out of the market the gap between what we could sell our house for and what we'd be paying for the upgrade will continue to increase.
Really the cost of living increases will errrode our disposable income, paying double for utilities and set to go up again in the autumn plus food and fuel increases isnt screaming out to take on a bigger mortgage and glad we didn't.
I'm still working from almost 100% of the time so saving on committing costs.
Getting the extension done has been a bit of a pain the the arse and a spade hasn't gone in the ground yet. Not many local builders seem to want to take on 'bigger' projects so choice is limited plus there's understandable reservations over material costs etc. We've gone with a builder based on reputation, also happen to be the most expensive. The start date keeps going back was originally now, then September now looking like the back end of the year.
I'm starting to look at longer term financial planning at the moment. I'm fortunate that I have a defined benefit pension currently at 60 so looking at things like SIPPs etc while balancing doing things with the kids, holidays weekends away etc.
Puzzles said:
I keep toying with the idea but stamp duty is making it very expensive, can get a lot of building work done for that. 
The whole stamp duty holiday thing inflated prices, thing is now they seem to remain inflated but buyers still have to pay it so a double whammy. Moving house isn't cheap, estate agent fees solicitors fees, stamp duty fees on a 500k house you're not getting any change from 20k I'd expect.
We just decided while having a huge garden would be nice it wasn't worth the premium over what we already have and will have once the works are done.
Another thread resurrection....... Our building work was completed in June 2023 on our current house. We're now both glad we went in this direction rather than move as it's made our current home a nicer more functional home to live in not to mention what has happened with interest rates. There seems to have been a paradigm shift in the local market with many selling up at the top end of the market and down sizing-assume for a number of reasons including fear of servicing mortgage debt at higher interest rates..
We borrowed to do the building work, at 1.54% but will have this paid off before the deal expires so it doesn't really matter what happens with rates. Shows what strange times we've been in over the last couple of years as while we were waiting for the building work to start and then pay the builder we were in a situation where the borrowed money was sat in an instant access saving account with the same bank earning twice the interest we were paying so the bank was paying us to borrow money for a time......
We borrowed to do the building work, at 1.54% but will have this paid off before the deal expires so it doesn't really matter what happens with rates. Shows what strange times we've been in over the last couple of years as while we were waiting for the building work to start and then pay the builder we were in a situation where the borrowed money was sat in an instant access saving account with the same bank earning twice the interest we were paying so the bank was paying us to borrow money for a time......
_Rodders_ said:
We're in a similar situation.
Difficult to decide what to do. We've even considered a small place in France as the OH works in a school so could take advantage of long and plentiful holidays.
Do want that large double garage and bigger garden though, the dilemma is agonising.
My advice would be do what makes you and your family happy and improves your quality of life. Things have shifted with the cost of borrowing and cost of living increases now meaning more expensive to service the debt, more expensive to light and heat, and people having less money in their pockets due to pretty much higher prices for day to day things from food, broadband insurance etc. Difficult to decide what to do. We've even considered a small place in France as the OH works in a school so could take advantage of long and plentiful holidays.
Do want that large double garage and bigger garden though, the dilemma is agonising.
I've also considered a holiday home in the past. If it's something you can hold on to it's not a bad idea per se. It's market specific, but I know many people who've had property in Spain and despite owning for years they've ended up buying and selling at what proven to be the wrong time and took a haircut. Unless one of you is an EU citizen the amount you could use a property abroad is limited but probably not an issue if you're both still working. The way I look at it is say a decent holiday home is 150k, unless you're a powerfully built director like many on PH that buys a lot of holidays. Plus owning a home abroad doesn't come without costs and stresses even if you own it outright.
On the others side of the coin if you get years of holidays and enjoyment out of it and when you come to sell you don't make a profit or loose some money most people probably wouldn't care.
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