Buying a house outright - views please

[gables]

Just wondered what the view from the pub floor would be on the following.

Let's say you have a house worth £450K with a mortgage on it of £180K, for £250K you could buy a house that would be big enough (the current house is too big anyway) and in a nice enough area, would it be wise to sell up and buy outright, thus having no mortgage? Or would this be a daft thing to do?

I'm trying to think of all of the pros and cons.

[DaveB]

Not daft at all in my view. Interest rates are on the way up and the bubble has to burst at some point. Downsizing now while your 450k property is still worth 450k and being debt free sounds like a good move. Plus, if you have the will power, the money you are currently paying in mortgage payments can go into a high interest account or other investments to take advantage of the rising rates rather than being punished by them.

[Sockpuppet]

Sell. Sell. Sell.

I can't see a good argument for staying where you are if you ask me. In the long run it will be the best decision. That is unless you want kids and need to buy bigger in the future.

[_V_]

Daft.

Take out another £550K mortgage and get yourself a millionaires pad.

In a few years it will be worth £2M.

Buy!, Buy!

Bye Bye!

[Numptycorner]

I traded my house in for some beans, only time will tell if I did the right thing. In the meantime, can I kip on someone's floor?

[SandyDown]

I traded my house in for some beans, only time will tell if I did the right thing. In the meantime, can I kip on someone's floor?

well if you fill in the student exchange form am sure my kids arrange for you to have the spare bedroom in my house

[gables]

Sell. Sell. Sell.

I can't see a good argument for staying where you are if you ask me. In the long run it will be the best decision. That is unless you want kids and need to buy bigger in the future.

Already got kids and certainly don't need bigger than what we have. We did have the thought of saving the current mortgage payments as this would quickly build into a tidy sum.

It appears like a good thing to do, but we really struggle in looking at all the angles.

Keep the views coming..

[Swiss Tony]

A view from someone in the finance industry would go along theses lines:

Sell current place get x equity. Take out a mortgage on your new place with sensible deposit so as not to incur silly rates.

Use the equity to invest into other projects to get better returns and or to spread your portfolio.

Though as I tell god knows how many up and comers in the industry, it is your (the clients) decision. In my opinion there is nothing bad about owning your own place out right. The majority of the UK finds itself in debt for most of their lives. It would be nice to know all you have is yours, yours and yours.

Though you need to consider what your long term goals are, I guess retirement planning comes into the equation here. Pension / Property blah blah blah. All do have their own pros and cons.

Another option would be to get yourself a place in the sun or something along those lines.

One word of warning, do not overstretch yourself. Allot of equity can get locked in very quickly and you can find yourself in a situation that you do not want to be in i.e. asset rich, cash poor

[vista]

Mortgage

Dump the mortgage, contractors shouldn't have mortgages anyway ;-)

But seriously knowing that no matter how much you screw up or how fast or how bad the markets turn you and your family will always have somewhere to live is a good feeling (Ok I'm ignoring running costs)

Its also a big piece of your retirement planning which you get to enjoy now not when you're old and wrinkley and could well be a big deposit on a small block of flats if the housing market ever coughs and dies. There's a monthly chunk of change lying around which can be saved and whilst its not sexy the risk is all but nothing.

[SandyDown]

Dump the mortgage, contractors shouldn't have mortgages anyway ;-)

But seriously knowing that no matter how much you screw up or how fast or how bad the markets turn you and your family will always have somewhere to live is a good feeling (Ok I'm ignoring running costs)

Its also a big piece of your retirement planning which you get to enjoy now not when you're old and wrinkley and could well be a big deposit on a small block of flats if the housing market ever coughs and dies. There's a monthly chunk of change lying around which can be saved and whilst its not sexy the risk is all but nothing.

That is a very good point, running costs should be fine, hell you could work at Tesco or Burger King and make enough for house running costs if you have no mortgage - assuming your kids don't go to most expensive private schools