to think you're not a 'home owner' if you are still paying a mortgage on it

[pipsqueak25]

prepared to be flamed but over heard a conversation of a loud guy the other day and it really irritated me. the jest being ' got my mortgage last year, £260,000, in my name so she can't get the house [knob], now i can do what i fucking well like with it, gonna knock out the interior and do open up stuff, blah,blah' eh?? so he's splitting with his dp/dh and possibly going to knock half the house down that he does nor own because he's paying a mortgage and the bank owns most of the house ? er, knob, you aren't a home owner until you've paid in full for it !
mainly i felt sorry for the ex, but glad she was going to be rid of him!

[EnormousTiger]

One reason I loved studying law was you get into all these minds of issues - who owns what, what is ownership. Most of us know if someone owns a house with a mortgage they own the house. Anyone who thought otherwise has now been put straight and will never again tell the lie that they do not own the house I hope!

They could certainly say I wish didn't owe money on my mortgage and credit cards.

They need to know the difference from hire purchase too - you own the hire purchase item when you pay the final instalments. Lots of our grandparents would have bought items like vacuum cleaners on HP and cookers too. It was not your property for years until you made the final payment. Houses are not like that at all. It is your property from day one.

[Oliversmumsarmy]

Mixed grill we are interest only.

There would have to be one hell of a crash if your selling price didn't cover your 25 year old mortgage.

Equally my interest payments on my 100% mortgage has never exceeded my friends rent on her council house. If I had to rent a place it would cost me more in rent than I pay in mortgage.

[gillybeanz]

Wizard

You didn't offend me at all, I can just see why some people who do understand about mortgages choose to look at it from a non owning pov. We have had numerous homes throughout the years and even more houses we didn't consider as home.
We just tend to see it all as a profit and loss business, even our home.
This might be because we have always been self employed/ small business owners, who knows
I am just as frustrated as you at people who don't understand the law though.
If you are paying a mortgage you are a homeowner, fact.
Not opinion.
If you let a property then you are the homeowner, whether you live there or not you are responsible for the property.

[MixedGrill]

Kennington: I don't think 'homeowner' is a legal term - it means someone who owns their home, whether or not they have a big debt.

Negative Equity. This may or may not be a big problem. If you can afford the mortgage, paying the mortgage is likely to be about the same level as if you were paying rent. Everyone has to have somewhere to live. In the longer term the property value is likely to rise again. If the mortgage payment is unaffordable and the value is unlikely to ever rise significantly (for some reason - maybe the area took a nosedive in reputation, or the main industry providing the only employment for miles around packed up, for example) then it might be a good idea to study the 'sunk costs' fallacy and pull out before the unpaid debt gets bigger and the value sinks lower, cut your losses and run.

In the 90s when thousands were plunged into negative equity, many people rented their property out rather than sell, if they moved. The rent covered the mortgage and they paid another rental. Eventually prices rose again and they regained the valu....and in fact prices since then have been ridiculous, mostly.

The question of buying being no better than renting because 'interest is dead money'. Well yes, interest is 'dead money' - or at least needs to be calculated into the overall cost of buying, and I obviously inflates the overall paid price no end. BUT again, everyone needs somewhere to live, and if you are paying out for a mortgage you will have something to show for it. And at the same time as you are paying interest on the loan, your asset is (probably) also rising in value.

Situations where it is 'dead money':
Interest only mortgages where you have no parallel vehicle with which to pay the capital at the end of the loan. In ye olden dayes, interest on endowment policies etc was sky-high. You had enough cash at the end of the period to pay the mortgage and a chunk left over. Now such policies have rock bottom interest rates. People buy a house on interest-only, and hope that the value will rise enough so that on retirement they can sell the big house, pay off the mortgage and still have money left (lots!) to buy a smaller house. These are some of the people who will be well and truly left high and dry if there is a big price crash. They will be left owing the full mortgage, and may have none left over to buy elsewhere, and worse, may owe thousands due to negative equity. Nothing to show at the end = 'dead money'.

[Doglikeafox]

Well if someone leant me £10 to buy some lunch with, and I bought the lunch, I would not think 'this is actually my friend's lunch until I pay her back'. It would be my lunch, I'd just owe my friend £10 too.
I am a homeowner... I can do whatever I want with the house (within reason), so therefore it is mine, even if I have 70k left on the mortgage.

[NarkyMcDinkyChops]

There are no details as to what is mortgaged

Of course there are, there are very detailed descriptions of what is mortgaged.

[Quartz2208]

Legally you do own the home, you are the registered title owner on the deeds with the land registry. There are no details as to what is mortgaged and you certainly don't need the banks permission to do work on it (though you do need planning permission).

A mortgage is like any loan except it is secured against the house so if you default on paying for it they can take the house. The bank has a lien which is the right to keep possession of a property of another if they default on the loan. The ownership still belongs to them though.

He was simply saying he wants to make it open plan which is entirely reasonabl. He does sound like as twat though

[EnormousTiger]

Indeed, I thought that when seeing £260k - lucky for it to be so low. Mine was over £1.3m at its worst! Very scarey.

[tovelitime]

£260k mortgage is so not a big mortgage if you live in and around London where you can't even buy a flat for that amount in some parts. Our mortgage is over £400k but the house is worth over £1M so it's all relative in that even with a good price crash we would be incredibly unlikely, to the point that it's virtually improbable that we would be in negative equity.

[Jaagojaago]

And 3. No it's nothing like renting.

[Jaagojaago]

1. First he is a knob

1. He is a home owner

[anonbecauseiwanna]

Op why are you fawning over a 22yo with a mortgage?
I'm 29 and have 19 years left on my 55% mortgage and currently approx £170k equity, please can I get a gold star too? But I'm not a homeowner I suppose, only a homebuyer whatever that is

[dimdommilpot]

The deeds state you are the owner. The mortgage is just the loan secured against the property.

[FireInTheHead]

I think part of the misunderstanding arises from the term 'repossession' in the UK. I much prefer the US term 'foreclosure', meaning calling in the loan and applies to homes. Repossession applies to things like cars you buy on hire-purchase i.e. the asset does indeed belong to the financiers until you pay off the loan.The banks here can't repossess what they never actually possessed in law they can simply demand their money back and if you don't have that money available they make you sell your house.

[Chewbecca]

Bold fail, sorry

[Chewbecca]

@mixedgrill can I ask how serious being in "negative equity" is?

It means that the loan is more than the value of the house. It is technically not a huge problem if they are planning on staying there long term, but if they were to sell, they would need to pay the entire proceeds to the bank, plus the surplus. So they would get nothing from the sale and still owe money. When they come to the end of the mortgage term (in 25 years or whatever) they will need to find the surplus and pay it.
It also means that they will be stuck on the original mortgage rate and will be unable to remortgage to get a better interest rate. It sounds like they have been unlucky.

This isn't correct if you have a repayment mortgage (the most common type these days).

Being in negative equity with a repayment mortgage (every month you pay interest + a bit of the capital off the loan) is only a problem if you want or need to sell your home as the house value is not enough to re-pay the loan. If you are not looking to sell, you can continue to re pay the loan, eventually the value of your loan will fall below the value of the house. When the loan is fully repaid, there is no surplus to pay, you've repaid all the capital and interest.

If you have an endowment or interest only mortgage (every month you pay the interest but none of the capital), you have to find another way of repaying the capital.

[The80sweregreat]

willy, i really had no idea!! Its just another debt to me and i know that if my dh was out of work for a very long time we would lose the house ( no insurance to cover being out of work or anything like that) - thats the reason i hate the word so much!

[MyWineTime]

I reckon 6 months out of work and I would be out my house. Therefore this isn't really home ownership
You could be out of work for 6 moths and have to sell your prized record collection - that doesn't mean you don't own it now though. When you are broke, you have to sell things to raise money. You can only sell things if you own them!
When you sell your house because you can no longer afford the mortgage, you may well get several hundred thousand pounds and be able to buy a new house outright.

[NarkyMcDinkyChops]

You're not a home owner. If you don't pay the mortgage the bank gets it back

No. They don't get it back, they never had it to begin with.

This is not some obscure legal definition that only a few people will know, this is a basic obvious everyday fact that you should know if you are even considering a mortgage.

[Willyoujustbequiet]

Thes80s

Hate the term all you want but legally you are the homeowner. There is no getting away from it. That is your position in law.

[TinfoilHattie]

But there a lots of people on this thread that really, really don't understand. Despite having it explained over and over again.

It's called financial illiteracy. Lots of it about.

[Kennington]

I think you are being harsh. I don't bang my head on a desk every time someone misuses a scienctific term, e.g. Organic or detox; mutant etc.
Most chit chat doesn't presume the legal context.

[KoalaDownUnder]

Wizard - give up