We’ve noticed a recent trend on TikTok of people documenting their journeys to downsize their home and become mortgage-free.
@hannahcollinsgrimes has been sharing her thoughts on why she and her family have decided to sell their dream home and become mortgage-free.
Hannah’s dream home
If there’s one thing we love as Brits, it’s our houses. Maybe it’s the ancient throwback to the castle connection? Millennials and older will know of property TV classics such as Location, Location, Location or Property Ladder. Whatever the root cause, us Brits are obsessed with buying homes.
When Instagram came along, this obsession exploded. With the rise of “interiors” accounts, suddenly it wasn’t just our fashion and beauty that were a reflection of us in the digital world – it was our homes too.
Combine that with lifestyle creep – wanting the upgrade once the dopamine hit wears off – and houses become the ultimate (and most expensive) example.
Why do people move up in house?
Aside from obvious reasons such as a location move, wanting a garden, having a family and needing more space, there’s also just the pure desire of wanting something bigger and better.
As we earn more, we’re able to borrow more, which means we can afford to buy bigger and better houses.
Why is this problematic?
There are a few reasons why buying bigger is not always better.
Mortgage: the bigger the mortgage payment, the bigger the stress. Not only are you likely paying thousands more per year in pure interest to the bank, a change in interest rates could skyrocket what you pay each month – for the same property.
Risk / Stress: with a high mortgage payment comes additional stress – as a household you are one job loss or one health episode away from being in a financially vulnerable position (especially if you don’t have the right protection in place) [ link to protection page]
Cost to renovate, refurbish and maintain: Bigger houses are exactly that – they’re bigger – meaning the cost to do a renovation, have an interiors makeover, furnish the home or even basic maintenance is much higher. Carpets are bigger, there are more light fittings, the table and chair sets are larger – extrapolate that across the whole house and budgets can be blown.
Running costs: Once the house is just as you want it, running costs are higher too. Likely higher council tax, bigger utility bills – it all adds up in the budget.
So what are people doing?
Just like Hannah, people are selling their larger houses and downsizing, with the aim to be mortgage-free. Lots of us are thinking about how our homes make us feel financially and are moving towards creating a calmer financial set-up.
Hannah herself says they renovated their dream home and added over 1000 sq ft – and they don’t use it!
The comments back her move – here’s what some people said:
“Best decision ever, we did the same. It’s so liberating to down size. We had at least 3 rooms we didn’t use before.”
“We have just done this! Moving from a 4 double bedroom house with utility, office open plan kitchen. Into a semi detached 3 bedroom house! It’s been amazing decluttering and organising everything for the move. We have knocked so much off our mortgage and closer to being mortgage-free by at least 10 years!”
“You’ll never regret it! Cosy house club and money for life!!!”
“We did this in November. The financial freedom is SO worth it! More money for fun things”
Honestly, the comments go on and on – you can check the video below to see more.
What’s the right thing to do?
As ever, at Financielle we say money is personal and all our circumstances differ.
Where possible, keeping mortgage payments at less than 25-30% of take-home pay can give you breathing room for paying down debt, investing and also living your life.
There does, however, seem to be an appeal to having a simpler home to upkeep and maintain – without piling on extra costs that come with having the dream home.
Bigger isn’t always better.
Would you trade the dream home for a mortgage-free life? Tell us in the app community.
