I am in the slightly unforeseen position where savings plus a relatively small mortgage mean that we could be very close to paying off our mortgage, out of our saved cash. We both are lucky enough to have jobs.

The house we live in is not however massive and we have a young daughter. This, plus we may have another kid soon. Maybe one day we may need to move to somewhere bigger, which around where we live is a lot more wonga (about 50% more on the value of our current house).

If we moved we would also need a second car, as we would not be able to get another convenient location like where we are now – at the moment one car is more than enough. Dilemna is larger size versus decent location…

So, would the wife and I be better to pay off the mortgage with what we have and just save in the mean time with our ‘spare cash’ (until we decide to move or not), or am I best to keep the cash in the bank whilst the interest rates are low, ‘just in case’?

Extend?

We paid our mortgage off before Christmas. Was only £250 a month anyway. Now finding we keep looking at things we’d like to fix in the house that would have been easier if we’d extended the mortgage, with hindsight. That £250 a month is quickly lost unless you are very careful.

Slightly different position to you, in the final family house, no more kids coming.

For us – live in a small terrace and want somewhere bigger. We could stay put happily and pay off the mortgage in 5 years time but by then we would have to go for a 20y term rather than a 25yr term which would make payments higher. I think now the interest rates are so low that a mortgage on a house is a good thing – property prices will probably go up long term. And in 5 years the gap between what we have now and what we want might be too much for us to afford anyway.

Mortgage rate vs savings rate? Any penalties?
If you pay it off pay the mortgage amount back into savings.

The million dollar question Im afraid.
We were in the same predicament just over 12months ago and decided to take the plunge and buy something bigger out in the country.
It meant moving the mortgage free date forward another 20 years but house has already gone up 10% so when we plan to size down hopefully were I the pound seats. As we see it borrow what you can whilst you can as an investment. There is a cut off when they wont lend to you (may hay while the sun shines).
However we do realise their is risk but on the other hand its about supply and demand in the property game.
Good luck!

We were in a similar situation 15 years ago, mortgage paid but needed a bigger house and the difference was greater than I’d ever had as mortgage in the past, still paying it now.

When I was in the same situation I paid mine off. I don’t like owing people money and the extra flexibility in my life from not having that tie is huge – it’s allowing me not to work a normal 9-5 but to have time to do the things I love.
When I did it several friends said I could buy a bigger house instead – but why would I want a bigger house? Contrary to the UK ideal a bigger house is not a better house.

I’d pay it off. The value of the house is irrelevant until you come to sell it and then it will be the same whether you have a mortgage on it or not – as come move day cash in the bank is the same as cash in the house. (Assuming you don’t need that cash for costs of moving.)

Only reason for keeping the mortgage to me would be if you were on one of these mad 0.5% above base tracker deals you could get years ago – as then you’d be better off keeping the mortgage and putting the savings in a 3% account.

We never had any intention of staying in what I viewed as our “starter home”
But then we are now months away from paying off our mortgage, so sod that we’re staying here for life.
Totally different circumstances to you as we have no kids. If I had any sage advice to give it would be this, if you don’t move now you probably never will, I can’t say with hand on my heart that Im overjoyed living here, but i am happy with the increasing level of spending money and holidays.

Be honest with yourself and ask why you want to move vs. investing in your current property? I went through a similar dilemma at the beginning of last year (though with more of a mortgage and less savings). We’re in a comfortable home on a nice estate but getting cramped with two kids running about, but I liked the idea of living in a more rural village type of place, of which the are loads around us as we live in what was a nice old quaint rural village that has turned into a sprawling estate over the last 20yrs. But nonetheless the part of the estate we live is the nicer end of the urban sprawl. But you pay a premium for nice locations, not to mention the costs involved in moving as well as the significantly higher costs of living in an older house. Ultimately we determined it would be another £100k on our mortgage just to move without factoring in the ongoing higher maintenance and running costs. All that for a house not much bigger or more spacious than what we’ve got now and less convenient location regarding the kids school, their friends, their after school clubs, shops etc. in the end I decided that was crazy relative to the minor and overly romantic notion of living in a small rural village. And let’s face it, all small rural villages are at risk of becoming big sprawling estates. It’s only a matter of time.

So we decided to stay and extend our current property to make it more suitable for our current situation in life and will still pay the mortgage off in less than ten yrs. so far I’m so glad we made that decision. The prospect of being mortgage free in less than 10 yrs and freeing up loads of disposable income at a time when our kids will be young enough to still do some amazing things with them before they won’t want to be seen dead with mum and dad and fly the nest, and to be in a position to help them financially with university costs/first home/first car etc., is great. It’s a big weight off my mind. And I’ll stll have another 5 to 10 yrs of work whilst being mortgage free before retirement once the kids have flown the nest.

I’m all for investing in bricks and mortar rather than the rest of the worlds view of renting for life, but not at the expense of living a life. Better off having a life outside of the home than inside it. Just my opinion. My mates and family are different, they’d take the bigger house every time and are happy to carry a big (even crippling) mortgage through their life, but I’d rather pay mine off when I’m still young enough to enjoy life and before my kids fly the nest.

Thanks all for your input.

The question I have not yet answered is if we can really stay where we are long term. Having a large mortgage scares the nuts out of me, because things change and suddenly what looked affordable is a bit borderline. Having said all that, it probably is a good time to borrow as we are both in a job and interest rates are currently low.

I am not necessarily of the bigger is better variety, but I would like to be in a place that gave the kid some room as she grows up. On the flip side, our current home keeps me from going out and buying any more bikes. I rode a fatty yesterday – tempting, but no good as I have no room!

As a mortgage adviser if you need to move (family bigger, job location)then move and buy to suit yours needs and budget. If you don’t. Need to move then don’t – looking at 5k cost minimum to move usually more and paying interest on money / borrowing you don’t need. Mortgages are simply. A lender offers 3% to savers then lends that money 4% plus to make a profit which you are paying. This is from someone who sells mortgages and insurance for a living!!!!

It’s not easy!
All I can add is having paid our mortgage off a few years ago, it feels great not to have to worry about a roof over our heads. We both work, but have both been made redundant several times in the last 10 years, so knowing that if that happens again we’ll always have a home is a big plus.
But getting something bigger is a good reason to move!

Gotta stop reading these threads. It’s depressing. Mortgage is £1000 a month with 21 years left…. 😥

ill cheer you up… completed on friday, 35 yr term and 1200 a month!

oh and living with the in laws for a month whilst gutting the place…

35 years! ‘Kin ‘ell…

My mother was widowed at the age of 45, so still had a fair sized mortgage left. Fortunately the life insurance was just enough to cover it. A financial advisor advised her to pay most of it off but keep it going – I guess we’re talking £30-40 a month or something – so that it would be easy to borrow more should she need to move or do big work on the house. Now I don’t know the details, but she wouldn’t have done that if it was financially stupid, so the sums must have worked out to make the benefit outweigh the cost.

We had this in 2013 – decided to move so our little girls have a better place to grow up in – private garden, four bedrooms so they can have one each when they are ready.

And when we die, they get a much bigger inheritance as I doubt we’d save as much if we had been mortgage free (as we would have been by now) – we’d have ended up just frittering more of the disposable income.

Edit: 32 year mortgage, £678 a month – planning to increase monthly payments/reduce term when another debt (to HMRC) is paid off in two years.

My advice would be to move; otherwise you will always be coveting a nicer house. Money has never been so cheap to borrow – we’ve just been quoted £448 per £100,00 fixed for 5 years or £412 fixed for 2 years. And at least a house will almost certainly go up in value unlike cars, bikes or holidays.

However I am currently dithering about taking my own advice as being mortgage free is a nice feeling, and owing a great pile of lucre to a bank isn’t. And I like my cars, bikes and holidays.

Tough decision, and one which I imagine really depends on the nuances – how much do you want a new house, how much spare cash do you have, how do you feel about debt etc?

ill cheer you up… completed on friday, 35 yr term and 1200 a month!

I’ll cheer you up then… £1400 a month for the next 25 years… I’ll be 67 when its paid off.

Another thread that’s got me thinking…..in a similar situation in a year or two.

For the purposes of getting a mortgage, it is much better if you are both working – not simply for the extra money that your wife is earning, but if your wife is not earning (after 2nd kid) then in the lenders eyes she becomes a dependent and they will downgrade the amount you can borrow.

(hoping to complete this week)

Thanks all for the tips. I can honestly say that I have a selfish side to me which would like to get the mortgage done, then keep some cash for something useless and irresponsible like a VW California.

Anyway, luckily or not, I think the wife would like to push for a larger house. So we may look to ‘upgrade’ for more space and just pay off part of the mortgage now. The small chink in the Armour is that there seems to be bugger all for sale in our price range, in the area we want, etc etc. Usual story.

Would be nice to come home and think you actually owned the place you lived in.

Rent to buy? Use you savings as a deposit, depending on the houses market and rental value you might be set to make each month. You could also adjust the mortgage to either extend the term, reduce the payments and realise more cash each month? Interest only should see you quids in if the mortgage is nearly paid off. I’d definitely see a mortgage advisor on it, see who can lend and their costs and terms, crunch the numbers and give it some thought. I’ve done this a few times as has the wife, our approach is to keep the mortgages as repayment as we view them as pensions when they are one day all bought and paid for. Clearly there are the maintenance costs to consider as a landlord, but you can make it work.

Values going up all the time? In 5 years my house has remained at about the same value and I’m not exactly in a rough area. Maybe in the silly south but not up here…