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.

I really think you should do some reading around this subject or a little research! It’s honestly not owned by the bank! A simple google of this question will give you answers like

’If you have a mortgage you still own 100% of your home, the only difference is that the lender has the right to take it off you to recover your debt.’

i honestly don’t find this hard to understand - I have a master degree in economics!

have you ever bought a house - the solicitor will explain this all to you.

Until you actually own something, it’s not yours, without restrictions.

But, mortgages are a normal way to buy a home.

Yes - that’s how a secured loan works!

hone ownership isn’t for everyone 1 as this thread has demonstrated.

but I am horrified at how many people don’t understand what a mortgage is and are telling their children to rent instead of buy based on very flawed logic and mathematics.

Christ alive.

Even ''Famous'' areas to be affected by Negative Equity weren't hit anywhere like that much.
{Sadly Broke in Gloucestershire } was one
I don't believe a 50% loss was even possible back then.

This article is over 21 yrs old

https://www.theguardian.com/business/2003/feb/18/housingmarket.houseprices

I was going to ask where in south london this was but couldnt be bothered. (my home town)

Please don't say things like this. Even if you understand the legal reality (do you?) many people find it very difficult to understand basic legal and financial concepts. They hear things like 'it's the bank's house' or 'I only own 10% of the house' and think it is literally true. I have seen people on here saying that they want to pay off some of their (ordinary) mortgage in order to increase their investment in property market, or that they are worried that it's a bad time to pay a lump sum off the mortgage because prices are going down and they don't want to own more of the house at the moment. People really struggle to make rational decisions if they don't understand basics. Please don't add to that confusion.

The house {Or flat} is simply collateral.

The point is the income a landlord receives from their investment. In fact as I said, nearly all landlords with mortgages have interest only deals which means they are not reducing the capital sum borrowed.

The purpose of purchasing the property is to gain income from the invested capital, and generally over a long period, the capital will also increase as well because over long periods the property prices increase fairly stabally. At the moment you'd get a better return on the stock market.

The majority of landlords who have mortgages couldn't care less about paying off the mortgage. That's not relevant to their investment.

It seems almost impossible. I'm not believing it either.
Pics or it didn't happen!

Think most people would still opt for owner - mortgaged than social housing tbh. Not that there is anything wrong with social housing. But those with the ability to buy, tend to.

100%.

My in laws got out of their Social housing estate the minute they could to buy.

They never regretted it for a minute, and were very happy in their peaceful house in the village where FIL had been born .

I chose to own when the situation arose instead of stay in social housing.

Or as a lovely pp said, I 'arrived' ...

Yes HA offers you stability, but not as much as owning your own home does IMHO.

I remember in my parents generation people joked that the bank owned the house - it was a joke. I know my parents had the intelligence to know they owned it but it was self deprecating humour - particularly as their parents rented. My parents were from working class stock so home ownership in the 1970s was something to be inwardly proud of but outwardly bashful.

I think a lot of people on this thread have taken that flippant comment and assumed it had some legal basis!

This thread is….wow.

One thing, the amount of people on here who are so ignorant about property, tells me that there are many triggered non ‘homeowners’, and so the ol‘ weirdly widespread “I-earn-six-or-seven-figures-and-have-six-or-seven-holidays-a-year,” Mumsnet claims must be total bollocks. Shocker. 😂

I think there are many outdated views on this. "Back in the day" it was normal for people to take out interest only mortgages, with a 95%-100%LTV which means changes in the market were felt very keenly. The market changed to prevent crashes happening again by encouraging repayment mortgages over interest only, and obviously interest rates dropping helped that!

Some people are being purposefully obtuse, yes ideally housing wouldn't be a commodity and would be affordable for all but that's a completely different argument.

Buying a house with the help of a mortgage is still always going to give you more financial freedom and flexibility and security over time than renting. Maybe not the same flexibility of where to live, but then renting out a property to someone else when you have a mortgage is possible if you decide you need to be less fixed somewhere, and you'll still be effectively paying money where you can see it again, and the interest is a smaller cost to have somewhere to live than paying rent outright to another individual who isn't a bank.

OP, ultimately, no one should know what your daughter's financial situation is unless she's told them. It would be a smart decision to get money into somewhere to live, but ultimately if she can invest elsewhere, that would also be good. However, she has plenty of time.

Also, I bought a house for 150k 4years ago which is now worth 260k, there's still plenty of places around where you can buy a whole house for less than 200k!

I feel the same about capital letters at the start of a sentence!
Let's be honest, anyone coming here for good legal advice about equity or anything else is an idiot.

😂 I am using my phone and sometime typos slip in.

I can’t put typos and not knowing what a mortgage is in the same category. One is a bug bear, the other can results in serious financial difficulties and poor life choices.

It happened. I was the lucky one as i didnt have a 100% mortgage, unlike my neighbours.
I bought it in 1988 at the height of the boom for 56k and it sold in 93 for 24k, looking on rightmove it sold again in 96 for 32k. Itt was a one bedroom flat which along with studio flats always hit the hardeest in recessions.
Cant be bothered to read the Guardian article as i know what happened to me

Sorry, but your logic is beyond ridiculous.

Rent is dead money and your DD is paying her landlord’s mortgage, when she could be paying her own mortgage on her own house.

Your friend’s children are the bright ones here.

Yep, the reason my no DH and I bought our first flat was because was the rent was 20-50% more than having a mortgage on a similar property. It was 33 years ago but no less valid today.

The landlord pays the same mortgage you do as a potential owner - only he pays tax on income, a maintenance company to deal with repairs, landlord insurance, and has to maintain parts of the property to a higher standard (boiler etc) all of which cost and are added to the rent. It is absolutely insane NOT to buy if you can - but you obviously need a deposit, high enough basic wage (without need for housing benefit etc), a good credit history/job security to jump through the hoops to get a mortgage which is why many can’t.

OP’s daughter may, as some of my friends adult children have been advised, be waiting to buy in a year or two rather than at the current ‘high’ of the market, and she may be saving for a deposit. We don’t know, but she’d be foolish to opt to rent long term and simply be funding someone else’s investment if it’s within her means to buy for herself.

My DS bought a 2 bed flat in Nov 2022 and pays 650 a month mortgage , he did have a 25% deposit, a similar flat in same road goes for £1200 a month in rent.

It was as a result of the property crash back in the 90’s that banks stopped doing 99-100% mortgages. Several of my older friends got caught out by the property crash and had £20-50k negative equity (@10-15% of the market value if I recall correctly) which made it difficult to proceed with a divorce in one case, as they couldn’t afford to sell.

Banks have hedged themselves against this sort of risk by insisting on bigger deposits and offering better rates, the more the buyer puts in. Our mortgage is only for 25% of the value of our home now (we’re in our 50s) and although it is still a substantial amount, we have no issues getting it renewed/renegotiated every couple of years - and at preferential rates - because the bank knows it will get it’s money back in a bad market… even if we make a loss ourselves.

We plan to help our kids get onto the property ladder as soon as they leave university so that they can start building that nest egg and not be fleeced by landlords.

I own my house (well 50% of it, my DH owns the other 50%). However, I do have a very large loan that needs paying back in order for us to have been able to buy said house. I am under no illusion that if we stopped paying our mortgage the bank would very quickly repossess.

Essentially, the bank does not have a right to our house - we own 100% of it. What the bank does have a right to is their loan being repaid each month, on time, according to the contract we signed with them. If we forfeit our part of the contract, then they will very likely demand their payment in full, and repossession would be very likely, in this case, in order for them to have their money back.

However, when we bought the house, we had a 32% deposit. based on the valuation from when we remortgaged last year, we now have 49% equity. We currently pay £1100 each month for our mortgage. of that around £750 is interest (so we are only paying £350 each month off our actual loan). You could argue that the £750 interest is just being thrown away each month, and is 'wasted' money - it is. But our home has a rental value of around £1700 a month. So you could also argue that we are actually saving £600 a month.

Swings and roundabouts. As long as you have a roof over your head, that you are able to afford each month, it does not matter how you pay to live in said property (whether by rental or mortgage). The priority is that you have somewhere to live. Even when I was renting, I never considered myself to just be throwing money away - I was paying for my home. I was doing exactly the same as I am now, except now I am paying a bank each month, instead of my old landlord.

Homeowners homes are owned by the bank (unless your mortgage free obvs) Renters homes are owned by their landlord.

Well if we’re going to follow your “logic” (I use the word very loosely), renters’ homes are also owned by the bank, unless their landlords are mortgage free.