Sell up, live mortgage free?

Discussion in 'Mortgages and buying and selling homes' started by Brookfield, 12 Feb 2019 at 3:23 PM.

  1. Brookfield

    Brookfield Registered User

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    Hoping people can advise on the following.

    Have an outstanding mortgage of 275k. 28 years remaining with repayments of around €1150 per month.

    The house is valued at around 600k. Over the term of the mortgage we'll have paid north of 500k on the mortgage.

    We're contemplating selling up and using the proceeds to clear the mortgage and buy/build another home with the remaining 300k or so.

    We're based in a rural area of the midwest and 300k would comfortably see us get a house to our liking in our current area where we live.

    We're in our early 30s and our thinking is that with no mortgage to pay we could have a good standard of living.

    Our joint salary is about 90k per year and to be fair we have a decent standard of living at the moment but with no mortgage it would make it a whole lot easier. We'd continue to live in the area which we like so it's not your typical sell up in Dublin, buy a cheaper house in a commuter area situation.

    Our current home I'm sure will continue to rise with inflation etc but at the same time there's interest to be paid on a mortgage. With no mortgage we'd be in a strong position to save money and perhaps invest these savings further down the line. At the moment it's pretty hard to save anything substantial.

    Hopefully someone will be able to offer their opinion on our line of thinking.
     
  2. Leo

    Leo Moderator

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    Might be an idea to post in the Money Makeover forum using the template to outline your current position and financial goals.
     
  3. Blackrock1

    Blackrock1 Frequent Poster

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    it must be a pretty nice house to be worth that in the rural midwest? how realistic is it to build something comparable for half its value?
     
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  4. PGF2016

    PGF2016 Frequent Poster

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    From the details you've provided it's a no brainer. Go for it.
     
  5. dub_nerd

    dub_nerd Frequent Poster

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    Ditto. There's nothing crazier than paying unnecessary interest on a mortgage, especially for a house which you've intimated you don't need or can do without.
     
  6. PaddyBloggit

    PaddyBloggit Frequent Poster

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    Ditto.. here too. Sounds like a great idea. You only need one bed to sleep on. A €300k house will provide as much comfort as a €600k house and NO mortgage!

    Why not test the waters by putting your house up for sale and see what interest in there?
     
    Westgolf likes this.
  7. Brookfield

    Brookfield Registered User

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    Thanks for all the replies. To answer a few previous posts.

    It's located on a lake with lake access hence the value. We do like the location but if it meant financial sense we could see ourselves purchasing/building in the locality with the remaining money. It would be very achievable to build a high standard house somewhere else in the locality for 300k. We'd still be able to buy/build something very nice in the area just not on the lake.

    The only thing that is probably holding us back is the fact that it's on the lake and it would be a nice place to raise a family, plus we put a bit of work into it over the last few years to make it what it is etc

    However the financial aspect of it is swaying me towards selling as it would be great to continue on in life mortgage free living in a decent standard house/area.

    I just wanted to post here to see if my initial thinking was correct. Kind of a head ruling the heart decision.
     
  8. RedOnion

    RedOnion Frequent Poster

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    Imagine yourself in a different situation fur a minute.

    You've no house, but 300k in cash.

    2 houses come up for sale:
    1. A 'normal' house you can buy with your savings, or
    2. A stunning house with lake view, that will use all your savings, and put you 275k in debt.

    From a pure financial sense, that'll be your decision.

    Personally, I went with option 1. Mortgage free in your 30's is an enviable position to be in.
     
    so-crates, Ceist Beag and Westgolf like this.
  9. Brookfield

    Brookfield Registered User

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    That is certainly a very interesting way of putting it !
     
  10. bleary

    bleary Frequent Poster

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    Last edited: 13 Feb 2019 at 9:26 AM
    It sounds like you are in a dream home with a very manageable mortgage ,great incomes and your life ahead of you. 1100 mortgage with 90k salary is very manageable .

    If you were selling for a reason, start a business ,reduce working hours etc I could see the argument but without that I don't really see the point.
    You'll have a house that should always be worth twice an ordinary house in area if you want to sell .
    If you don't want to pay interest pay it off earlier, but putting yourself through a build to end up with a house you like less, why unless you are worried about incomes and security?
     
    Last edited: 13 Feb 2019 at 9:26 AM
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  11. NoRegretsCoyote

    NoRegretsCoyote Frequent Poster

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    €600k in the rural midwest buys a lot of house.

    You don't say if you have kids. If you don't, and don't plan to, then there is probably not much benefit to living in a house where there are rooms you barely ever set foot in.
     
  12. dub_nerd

    dub_nerd Frequent Poster

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    Different people have different priorities. The mortgage is costing you up to €28k of your gross salary, or nearly one third. You've got to decide if you want to spend that on a lake view, or something else.
     
  13. Blackrock1

    Blackrock1 Frequent Poster

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    to be fair a nice view is worth a lot, 300k probably not, but make sure you want to give it up

    what do you plan to do with the extra money?
     
  14. David1234

    David1234 Frequent Poster

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    Do you have any other debt? Do you want to have kids? Are your jobs secure, do you expect any salary increases in the coming years? Do you want to retire early?

    I'd estimate that your net take home pay is €5,500-€6,000 p/m. After mortgage repayments you have €4,350- €4,850 disposable income. For a couple with no kids you could easily be saving €20-€25k a year as it stands. This would be a substantial amount to save.

    You're in your early 30s and there is absolutely nothing wrong with carrying some debt at this stage of your life. You could be mortgage free by your early 40s if your situation stays the same and you made some adjustments
     
  15. michaelm

    michaelm Frequent Poster

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    I wouldn't be in a rush to sell up if it wasn't a financial necessity. If you overhaul your finances you could probably build substantial savings. If I was to move then ideally I'd want have the site bought for cash and planning secured before selling my lake house. A house on a lake might be nice to raise a family as you say, but would both of you still have to work? A move which leaves you mortgage free should enable you to operate as a single-income family (or indeed two part-timers). In your 30's you probably don't have the luxury to dally re kids.
     
  16. Brookfield

    Brookfield Registered User

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    Last edited: 13 Feb 2019 at 2:14 PM
    No other debt. Jobs are secure on incremental pay. Net take home pay around 5k p/m. No kids but that will change. Not much savings as the house needs a few things done to it yet in order to complete it. When we do get savings together it usually goes to furniture or work on the grounds etc. Like any new build/renovation there's always money to spend on it if you want to. It'll probably take another 15k to 20k of us building up our savings to complete the property to a point where we could put it up for sale. It's valued at 600k once these works are carried out. If we decided it was our forever home I'd probably carry out other works. If I knew there was a good chance of us selling in a year or two they're certain things I would do in the completion of the house that I wouldn't do if we were keeping it for obvious reasons.

    To answer a previous poster , it's not a financial necessity to sell, I'm just looking at it from the point of view of being mortgage free and as a result not paying interest while living in a comfortable house albeit not to the standard of our current home. We could also then have more capacity to save and reinvest this money or even flexibility with regard to work/family life as a previous poster pointed out.

    In saying that once we complete the build we should still be able to save a decent amount of money if we planned our finances better as a poster already mentioned. Thanks for all the opinions.
     
    Last edited: 13 Feb 2019 at 2:14 PM
  17. PGF2016

    PGF2016 Frequent Poster

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    Your life is more important than a big house. Being in your thirties with a very nice 300k house and a wedge of cash would free you up for many adventures. Great flexibility when there's no mortgage to pay.
     
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  18. so-crates

    so-crates Frequent Poster

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    Really it comes down to what is most important to you. You have the luxury of choice, both paths are open to you it just depends on whether you want to continue to prioritise living in your dream house and paying for it or living somewhere else without the financial burden.
     
    SBarrett likes this.
  19. Marsha25

    Marsha25 Frequent Poster

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    Given the choice I'd prefer to be mortgage free. But will you get planning permission in the area you want? For now I'd suss that out and also talk to an estate agent to see if there is a market for your house - are people willing to spend an extra 300k for a lake view? Once kids come along and you are paying for childcare, you might relish the fact you don't have to pay out 1150 mortgage payment on top of crèche fees.
     
  20. PaddyBloggit

    PaddyBloggit Frequent Poster

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    A mortgage is a big halter acround a person's neck. I would jump at what you are considering because you get one shot at life and I would live and explore life more with the money freed up.