To think having a house with a mortgage is not 'owning your own home'

[easternuts]

We had a mortgage for 30 years before paying it off recently on our modest home. Now we consider ourselves home owners.

Dd rents because she doesn't want to pay the bank more in interest than the cost of her rent is. Yes her rent can go up but so can your mortgage.

I've had friends of mine make snide comments that dd is going on another holiday when she doesn't own her own home. This is as opposed to their own children who have recently bought with 95% or 90% mortgages in a part of the country where a 3 bed house is less than £150k.

AIBU to think that you don't own your own home just because you have a £15k down payment. DD has far beyond what is needed for a deposit but it makes zero sense in central London at present.

It's strange how so many people don't know what a mortgage is. If your home is mortgaged you are still the owner of the property. The lender only has a charge on the property, they don't own it. Haven't any of the people saying the bank owns it ever filled in any forms for insurance etc where it asks you about your living situation? On those it asks if you're a tenant, or a homeowner with a mortgage or a homeowner who owns outright. So having a mortgage still means you own your own home.
As to which is better, well I'm glad at 60 and retired I own my own home outright, I've got an asset worth 500k which if for some reason I needed a large amount of money I could sell and move to a smaller place. I can't imagine how awful it would feel to still have to pay rent every month at this stage in life.
Also renting is just so insecure. Just in the last 2 days i have talked to or heard of 2 people who have unexpectedly had to find new places to rent, one because the landlord died and the beneficiaries sold the property, the other because the owner's boyfriend was moving in with her. Those were young people who were happy renting for now but how unsettling would that be for a family or older person. In most cities there is a shortage of rental properties and rents are at an all time high.

No. It. Doesn't.

You're wasting your breath. The levels of stupidity on this thread is quite alarming.

If you can’t work out that a mortgage is just a secured loan, you’re too stupid to own a house.

I once told a friend - who is a teacher - that I am
overpaying my mortgage. She laughed and said what a waste of money. The next owners will get that money!

I have no idea how people function in the world without basic knowledge on how their finances actually work. This thread is horrifying.

schools should teach basic personal finance courses.

Dear God.

Oh dear. Do you have a mortgage?

I know, and I think I'm going to have to give up now. It's just so frustrating because on every page, at least one person explains the situation, so are these people just not even glancing at the thread before bringing up all this misinformation? They must have given the same level of attention to the legal documents they signed.

And I'm supposed to believe some of them have been buying and selling houses almost as long as I've been alive?

This is it. Knows DD is in a shit position renting but squirming this way and that way to put down owning a house in every conceivable way.
Transparent as hell.
Renting is nothing like owning- and yes that’s owning with a mortgage as you are the legal owners.
Renting is extremely unstable, it can be pulled away at any time. You will never own an asset- you are paying for someone else to own that asset.
Decent houses in a reasonable area will always go up in the UK. Always. There isn’t enough housing stock and the population is ever increasing and increasing. You can’t even compare buying a house to renting, not in the same ball park.

I don’t understand how this happens. Did they not read the paperwork?

Yeah, it’s kind of hilarious the way people are implying that landlords actually do repairs thoroughly and promptly. Many don’t.

We bought our first house in our 40s. Really wish we’d been able to do it sooner.

I consider I own my home in the same way I own my car, although I took a bank loan for it.
And I'm happy that in the long run I'll own both outright, although one hopefully will give me equity... which renting wouldn't do.

I don't think the issue is the definition of home owner, it's just words at the end of the day. Most people I think would assume when 'home owner' is used that a mortgage is, or has been, taken out at some point - far more common than owning outright from the get go?

The issue is the attitude towards renting that clearly OPs friends and some of the people on this thread and others have, and that being a home owner (mortgage or not) somehow makes you a 'better' person. It's like not wanting to be or being able to be a home owner somehow makes you a deficient human being.

Yes, also true. I am in the 5% /40 years category now, and if it goes to 65% LTV in the next four years... I'd personally be glad, of course, but dread to think how big the property bubble would be.

I don’t think it’s a matter of not understanding legal clauses as much as it’s about how some perceive mortgages as debt, full stop. (There’s really no need to send me a link explaining the difference between a mortgage and traditional debt.)

Some of us were brought up to be really quite debt averse. My family were simply pretty hard up rather than having got into trouble with debt. They had a very small mortgage though and prioritised paying it off while still quite young as it felt like a much bigger burden to them than I imagine it does to the average person. My husband’s family feel the same about debt but for different reasons. They encouraged us to save to buy our house - in London! - outright as they don’t ‘do’ mortgages.

Whether I own our house or not in legal terms, I know I will sleep a tiny bit better at night the day our mortgage is paid off and we’ll definitely be opening a bottle of Champagne that day.

so many of my friends took interest only mortgages thinking they would pay the balance of their large

Which country are you in ?
I don't know anyone who would even have been able to take out an interest only mortgage without a vehicle to pay off the loan.

You must know a lot of people with poor financial sense.

It doesn’t. Check the title deeds for the property, the bank will not be named as title holder. They just have a legal charge over the property (a mortgage) which they can choose to exercise in the extreme circumstances where they have to.

Genuine question, what investment has a better return than circa 7% p.a plus the increase in value of the asset over time? I’d definitely be interested in this.

Ones that are a little more Good Friday and a little less Easter Sunday? “Ensure consent, discuss boundaries, and establish a safe word”?

You don't pay the bank more interest than rent in the long run! At first a mortgage is the a little lower than local rents. Say 10-20% lower. After 10 years, the mortgage is up to 50% lower. That was our experience and that of several I know. Even if it's a bit different in your area, I still don't see the interest itself every being more than rent. I wasted thousands on my 20s paying rent and really regret it because owning has been such a smarter move

Edited to add. I just noticed your DD lives in London. I did through my 20s so understand how hard it is - that's why I spent so much in rent!

I'd just admit she's buying because it's so expensive there, not because of the weird interest being more expensive excuse.

Could she look at a shared ownership flat to get on the ladder?

In the end I left to buy and have a family.

London rents are the biggest con.

Whilst I don't necessarily disagree, this -

This is as opposed to their own children who have recently bought with 95% or 90% mortgages in a part of the country where a 3 bed house is less than £150k.

• has a rather unpleasant & sneering tone

Ha ha! You reap what you sow and it sounds like you and your "friends" have a horrible relationship where you put one another's adult children down for sport.

Your friends are dickheads if they are really judging how your daughter spends her money (but how do they know whether is a homeowner or tenant?) and you are a dickhead for claiming those with mortgages aren't homeowners - they literally legally are, as you damn well know.

Hopefully your daughter is waiting to buy somewhere far far away from you, your friends, and your petty one-upmanship.

Ultimately the mortgage gets paid off and you own the property outright.

When you get to retirement age, you’ve paid it off and payments stop.
When renting, you keep paying into old age.

Mortgage interest rates were low for a long time.
Interest has gone up now but rental prices go up too as many landlords have a “ buy to let” and pass on the interest to tenants.

Buying is a no brainer imo.
I’m planning to rent out my house and go travelling.That wouldn’t be possible if I was renting.

The huge difference is that by paying a mortgage off you will reach an end point where you no longer have housing costs. When renting you have no stability with where you live, could find yourself having to move with 2 months notice, and at retirement (and forever) still have to worry about housing costs.

I’m with you OP, I bought a boat as I do not want to be indebted to the bank and have to make a certain amount of money every month to be able to keep a roof over my head. In my opinion the whole system is really broken, but I’m not sure what any of us can do about it.. I had a sizeable deposit (circa 100k), but decided that I didn’t want to go down that route. Yes for sure a boat does not offer the same security as bricks and mortar, but for me it makes much more sense to do what I’m doing, at least until there’s a point when I can buy a small place with land without a mortgage (pretty much never unless I win the lottery…)