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.

Of course you own your own home when you have a mortgage. It is precisely because you own it that you can use it as security for the debt.
YANBU about the snide comments though.

Yes they will and his decision not to buy a property or save for care will impact their and their young children’s lives.

The point I’m making is that while the rental system is better in some countries than others, you still need to make provisions for when you don’t have a large asset to your name in retirement and old age.

This is exactly what I mean.

Since we’re comparing tenancy rights in Germany: yes, tenants have more rights in general, but it’s far from perfect. Few people have lifelong tenancies, especially if they have private landlords. With a new rental contract you’ll start off with three months’ notice and that goes up to a year as the tenancy progresses. But I know two families who got kicked out of long-term rentals they’d invested money in because the houses were sold and the new owners wanted to live there themselves. So it’s no great protection. The big difference in Germany is that a much bigger deposit is needed to buy, and people usually buy a house for life, so there’s less concept of cheapish starter homes.

My opinion is that we own our house despite having a mortgage. It’s our names on the title deeds, not the mortgage companies. We can undertake any work inside or outside that we choose ( excluding restrictions that also exist for an owned house with no mortgage eg extensions), we don’t need the mortgage companies permission to sell our house. I prefer ownership because after 25 years you’re done, with rent you’ll be paying it for 40 plus years. Obviously there is also the benefit of having a higher disposable income once the mortgage is paid. I don’t know why your friends are commenting on your daughter’s choices though, it’s none of their business.

@rollerskatie
Honestly I think I think it's silly to discuss the benefits of buying a house in broad historical terms. Whether for or against.
Not only does it depend on individual earnings and plans at the time of buying. It's also about lifestyle. Unlike stocks which are solely a financial decision.

Personally I've had a terrible time renting, moved 8+ times in over a decade of doing so half of them not by choice. When I rented in London I had no hot water for 2 months in winter, freezing flat etc which made me so depressed I almost failed my professional exams / lost my job. LL's selling up, etc.
I couldn't bear to face any more upheaval especially with wanting a family so I left and bought in the NW. Lord only knows whether I will lose or gain financially by the time of my death. But I have a warm, affordable place that nobody can kick me out of as long as I keep paying the mortgage. That's all I'm concerned with right now.

DH sibling is thinking of buying a place to rent to students in her uni town with the money she earned working throughout and living in a relative's place, however she is going travelling after graduation. I don't think the benefits are clear cut in her situation, especially with the new LL regulations.

It's a very individual decision especially for a younger person getting on the property ladder early may not be as obvious a benefit, as it initially appears.

The interest paid is money thrown away, yes. Capital repayments are not throwing money away. I'm paying £575pcm to my lender. Of which, circa £335 is interest (which had gone up a bit since the previous fix) and the remaining £240 is capital repayments. That's for a two bed semi, bought in 2019. So you could say that I'm pouring £335 down the drain each month.

I've just checked local lettings. The cheapest rental property would cost £595pcm. It's a 1 bed flat. £595pcm down the drain, for which you get less square footage and no garden. If I wanted an actual house I'd need £1,100pcm - until last year I was chucking the difference into overpaying, to reduce my exposure to interest rate hikes.

You could point out that as my house was purchased 5 years ago it's not comparable to current rental values, but that is an important benefit - even with the interest rate increases I'm still more protected from rising prices than someone renting who is reliant upon the goodwill of their landlord (or the landlord's lender) not to put rents up.

I haven't included maintenance as I don't really know how much I spend on that (difficult to seperate maintenance expenditure from enhancements). Rent would include ongoing maintenance which does move the balance slightly, but not a lot. I am saving up for a new bathroom (hence why I stopped overpaying) which is going to cost a considerable amount, but that's partly because I have the freedom to choose what I do with my bathroom, few landlords would be installing underfloor heating.

I agree but I do think it is worth asking the question if it isn't better these days to rent and save for your home/future than having a house that takes you over IHT that then has to be sold to free up any equity that may or may not be left after taking into account care home costs. If you add up all of the maintenance over the course of the mortgage, on top of the mortgage - which may be the same or higher than rent these days - does it make long term financial sense to be a home owner? I'm currently looking at 7k+ to replace a boiler and emersion and 5k+ to fix the leak it created in my landing ceiling which needs a platform to repaint. These things happen every few years and if you don't have access to savings or want more loans it won't be sustainable if COL crisis continues.

If you & your DD are happy with her decision, what’s the problem? All my peers have made a fortune on their houses, now with their mortgages paid off. Those who rented own nothing and have ever increasing rents going into middle age and retirement. I know which position I’d prefer.

So the kids owning a 150k home, would be better of renting?

What if they had no plans to move from that area etc?

We purchased at 173k, with a 10% deposit in 2020. Our house is worth 210k now. Not that it makes a scrap of difference as we're not going anywhere

But sure, we'd be better of renting...

Anyone I know with young families in Germany has done exactly this, they’ve bought their own homes but they’re homes they will stay in forever. I know of very very few that stay renting into retirement.

If your name is on the deeds then you are the legal owner

The lady doth protesth too much me thinks.

No you are wrong they are homeowners. Just not outright.

The opposite is true in many areas. It’s getting a deposit together which is often the problem. The mortgage can be significantly lower than the cost of renting the same property.

The bigger issue in this instance is surely the rubbish friends making these comments? Tell them to quit it. Or just don’t speak to them. People that make comments like that are not people to spend time with.

What kind of crystal ball are you using to know the future of house prices and investment returns?

In 30 years time you will know the answer with hindsight but it's just impossible to predict the future like that

Legally YABU as the Land Register will show the proprietor as the person and not the bank. However, the bank will likely have a charge on the property.

Usually the distinction is made between home owner (no mortgage) and home owner (mortgaged).

Your DD has different priorities to many but she is within her rights to rent for her entire life if she wishes. Home ownership regarding mortgage or not is irrelevant to her actions.

Your daughter seems pretty clueless about renting v mortgages to be honest. But she can crack on and pay her rent if that what she chooses 👍🏼 and yes your a home owner if you have a mortgage.

I understand you don't like your friends making snide comments about your daughter's housing situation, which is none of their business anyway. And also you are right that there is no urgent pressure to buy right now, with prices stagnant and interest rates hopefully going to fall a bit over the next year or so.

However in the long run buying is more secure and in most cases builds an asset to leave your children or grandchildren, rather than building an asset for your landlords children and grandchildren. So this is a good time for your daughter to build up a good deposit so she is ready to buy when it suits her. If she can do that and have some holidays while paying her rent then more power to her - let someone else sort out the fecking boiler and clean the gutters and worry about the roof while she enjoys being young!

And yes, you don't own all your house until the mortgage is paid off, but does it matter? Every payment towards your own mortgage gets you closer.

Not always but mostly, people with mortgaged homes are often in a more secure position. A lot of people renting nowadays feel insecure and are at the mercy of their landlords options (whims, choices etc)

And having a mortgage means you are on your way to owning your home outright

It tends to be very expensive whichever route you take. I personally love that my mortgage is paid off, but for a very long time my mortgage monthly payment had been a lot cheaper than what friends have paid in rent

What is your daughter investing in, to ensure she has money/assets in the future if she doesn't wany to get a mortgage?

Your friends shouldn't be commenting.

If she were me I'd get a mortgage so part of my monthly costs were going towards owning a home that i can live in mortgage free / sell one day, rather than having nothing to show for it. She's paying out anyway.

If I didn’t ‘own my own home’ with a mortgage, I’d be homeless when I retire, as
my pension won’t cover the cost of renting.

You making snippy remarks to your 'friends' about their children's house-buying and them to you about your daughter's profligate ways seem...unfriendly.

The 'make more in the stock market' thing could be true - but you can't live in your stocks while you invest, and most people can't both pay rent and invest an equivalent amount in investments every month for 30 years.

Maybe re-think the advice you're giving your daughter?

100% agree. You don't ow it until its paid.