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.

Google says that these places have the highest fall in house prices:

Yes I do know that the bank will then take possession and sell it to redeem the loan. This is why I continue to pay the bank back the money I owe them, secured against my most valuable asset, my house.

the fact you can lose the house if you default doesn’t mean you don’t own it. 🙄

Yes, third one on the list posted further down thread.

Mostly due to the oil and gas crashes, massive loss of jobs in the city - there's dozens of empty offices that used to hold thousands of workers no longer needed,just sitting empty. Gone are the days of the £5000 a day contractors spending thousands of pounds on client dinners whilst taxis waited outside with the meter running and everyone was driving around in the fanciest cars in huge new build homes!!

Oh and also the sheer amount of buy to let's there used to be to accommodate all the people that came here for the work, companies used to own loads of properties to put their staff in for short periods of time as well and that's all a distant distant memory. So back then yoh were competing against corporate entities and career landlords and now, there is no competition.

That's really bad.
I really hope something works out for you.

You weren't to know that the bubble would burst.

Heck, even the High streets of many cities are now in decline, with the rise of internet shopping.

Mortgages are typically significantly cheaper than renting. And even if the stock market outperforms the housing market, you’re not comparing apples with apples unless you factor in the cost of the rent into the “rent and invest elsewhere” scenario, when determining whether it makes better financial sense than buying.

Also, of course people with mortgages own their houses. Legally. Mortgages are loans. The bank registers a charge until the loan is paid off.

Most mortgage lenders will not allow letting of the property to someone else. The main reason for this is that tenants have legal rights not to be evicted under normal circumstances. This would make it difficult for the mortgage company to evict them in the event of the owner not paying the mortgage.

I know many of the places on that list above, the property prices have doubled at least over the past 10-15 years.

Over what time are those drops recorded?

You’re having a laugh. Mortgages are usually significantly cheaper than renting. You would be hard pushed to find investments with enough stable growth to match a house

Don’t know if you meant to reply to me but I think that’s exactly what I said?!

Sorry meant to reply to @easternuts who you were replying to - totally agree with what you said

I live in the south east. Before buying, I used to pay £1200 per month in rent. Buying a house with more rooms than my rental plus a garden reduced my payments to £750 a month. So I'm more comfortable and I save £450 a month, plus the money going into my mortgage remains my own as I'm building equity. Yes, the interest is money lost but this year it was only £600. When I owed more it used to be £3000 a year, but this has been decreasing dramatically as I pay off the maximum amount I'm allowed per year. So renting I was throwing away £14400 a year while after buying I lose so much less money that it's not comparable. Sure I might have to pay for repairs but in the 6 years since buying I've only spent about £6k. In 6 years of renting I would have paid £86k in rent with nothing to show for it. In 6 years of owning my home, I've lost between interest on my loan and repairs about £16k.

So you could say in 6 years I've saved £70k from not renting and this is likely an underestimate as the rental prices are always increasing. The rest of the money that goes into my mortgage will return to me once I sell my property - so it could be used to allow me to rent for many years or to buy another house.

Buying is obviously better financially than renting if you're able to do it and planning to stay in one place long term. Of course, there's nothing wrong at all with renting.

Depends where you are in the country and what sort of property you buy.

The problem is that in some areas house prices have increased hugely over the past 20 years, mostly the South East.

In others they have not even kept place with inflation and have performed significantly under it.

There are new build flats in midlands cities that are selling now for under their 2005 price. They have nowhere come close to matching inflation over the same period.

The market is pretty heterogeneous. A lot of people really seem to struggle with the concept that not every marketplace behaves the same as their local one.

What?

a residential mortgage is not a BTL mortgage, that’s why most lenders will not let you rent out your property if you have a residential mortgage.

you can apply for a consent to let, a temporary concession to allow you to rent a home with a residential mortgage

the reason lender don’t want you to rent your property is because of ICR and they have different obligations to a residential customer v a BTL one. BTL (and commercial) mortgages are not regulated mortgages like a residential mortgage is.

it’s not eviction, that same principle will still apply if the mortgage is residential or BTL,

(i work in mortgages)

It's no more difficult to repossess a buy to let property owned by a landlord with tenants in it, in fact it's easier as the mortgage lender doesn't require a court order. It can appoint a receiver or sell the property by exercising it's rights under contract, neither of which require a Possession Order.

Tenants have few rights in England outside of the fixed term as s21 can be used providing the statutory requirements are met.

In the south east a property I have intimate knowledge of, rents at £1300 a month. Its worth around £300,000, it's a two bed flat. A residential mortgage with 20k deposit would cost £1700 a month with a minimum 20 k deposit. So significantly more than the rental cost. That is typical to the area. Add on maintenance costs, and renting is much much cheaper.

It maybe cheaper but that paying down the mortgage thus reducing the debt meaning that you have paid off the debt, by paying off the debt gives you more equity to move into a bigger house if you wanted.

I know what I would do.

I agree.

Also, renting in the specific situation outlined is only cheaper in the short term.

£1300 per month x 65 years (renting for life if there were no increase in rent which there would be) £1,014,0000 total.

£1700 per month for standard 25 year mortgage (monthly payments may increase / decrease according to interest rates) plus £20,000 deposit £468,800 total. This figure can be reduced with overpayments / a shorter mortgage term.

As well as the equity, over a lifetime using those figures it costs less than half as much to buy as to rent.

Obviously there are other costs to buying plus the maintenance for an owned property mentioned and there can be very good reasons to rent but a direct comparison of rent v mortgage can be very misleading.

Over what period? If you chose to rent, you rent your whole life. Most home owners will get decades without mortgage payments one the mortgage is paid off.

I agree buying a home isn’t for everyone, but there are clear financial benefits. My house would cost about £1500 to rent, my mortgage is £800. I wouldn’t want to be paying £1500 in rent when I am 70! I will only have property taxes and maintenance.

I totally agree, I bought my first aged 20, it was a huge struggle. My rent had been £120 a month and the mortgage was £229! But I've been mortgage free for 9 years now.

I agree with this.

To add to what I said previously, I bought my current property for around £300,000 (actually £290,000) and due to my large down payment from my equity in my previous property, on a 15 year mortgage, I was never required to pay above £500 a month.

I think that would have jumped with the interest rate increase but I paid off the mortgage with the money I’d saved as a result of the low mortgage payment instead.

Even with maintenance, I’m clearly better off having bought in my 20s. That’s even with the fact my first flat sold for only £17,000 more than I paid after 12 years. I probably could have made more investing my mortgage payments but I would then have had to pay rent, leaving me overall worse off.

When you compare the cost of owning to renting, you should really just look at the interest part of the mortgage (plus the interest that you could earn on your equity if you invested it somewhere else). Plus of course any maintenance costs that you wouldn't have if renting. The part of the mortgage that goes towards paying off the mortgage and building up equity isn't really a cost in the long run. You are saving and building up an asset that later you could live in rent-free, rent out, or sell.

So if, for example, you live in a 200k house and interest rates are 4% the real cost of the mortgage is just 8k a year.

🙄🙄

the house HAS been paid for. Do you think the vendors wait 25 years to be paid??

@decionsdecisions62

you OWN the home from the day you buy it, a mortgage is a loan. The bank does not own or co own your house.

I don't 'brag' about my owned home, but I do appreciate the security owning gives me & the freedom owning it gives me, No one can tell me to leave, no one can make me live with magnolia walls, I can hang as many pictures as I want, I can have pets.

Actually we bought ours off our landlord (on a 100% mortgage, back in 2001. Our rental fees had been £800pcm, our mortgage costs were £600pcm.

And we paid it off in 15 years (we have now moved, but we had ten years mortgage free, and will be mortgage free again in 15 years’ time).