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.

Ok, @missmollygreen , you were right. I got done. I've met a lot of people who truly don't understand how mortgages and loans work, though, so it did seem plausible to me.

ETA... Unless, maybe, this is the trailing spouse of a high earner/wealthy person who let them deal with everything money related and never troubled their head to learn the absolute basics of how their finances, or indeed finances in general, worked. That is actually quite possible.

I have rented all over London and now own (‘own’) a flat in London. My mortgage payment is nowhere near the rent I was paying i.e. it is considerably lower. This is the same for all my friends who used to rent and now own in London. In almost all cases, renting in London is money down the drain vs buying.

The bigger question is why are you getting into a pissing competition with your friends over what adult children do or don't do?!

Who cares its not a competition and its up to grown up people to decide how they want to live and spend their money!

As a by my mortgage is the same price for a 2 bed cottage as my rent was for a 1 bed 50m2 flat.

A common error of young mortgage holders is they overstretch themselves and take out a debt for the maximum they can afford, leaving then with little to no disposable income. They buy a house and then can do nursing but sit in it essentially, a bit like funding your own prison.

You're wrong OP.

There are two options here, you either pay your own mortgage or you pay someone else's.

The question is, do you want to invest in an asset that can be potentially used to support you or pass on to your children or not? Property is the biggest investment many people have. By renting you are paying down someone else's investment. Yes, you don't have all the liabilities or a property owner, but neither do you have the freedoms or financial benefits.

So, for me, renting is a necessary evil until you can afford to a mortgage yourself. If your child can afford their own property that meets their needs they should invest in it.

It's a difficult balance though. Stretching yourself a bit can pay dividends later on or prevent the additional costs of an extra move to gain that bit more space. But you are right if you tie up too much of your income in a mortgage then you can't really live and may well find yourself in real trouble should interest rates rise.

Finding that sweet spot is a bit of luck over judgement I think, especially at the moment.

This. As a renter, it doesn't matter how well you treat the house, it doesn't matter if you pay your rent on time. At any time a no fault eviction could see you thrown out with a few months notice.

We are renting privately from the best landlord in the world, who is very emotionally attached to this house and will never sell. I am slightly envious of people in social housing, with their ultra-low rents and no threat of eviction, but have no envy of people with mortgages. And if our boiler gives up, it's not us who has to replace it.

I'm not looking down on anyone. I think it's an incredible struggle to own a home now. I think renting is a dreadful struggle too. It's all too expensive.

That's not what this post was about. It was asking if you have a mortgage do you own your home.

My answer is the same. No you don't. Not until you pay the mortgage off - as evidenced by my experience in my home town with lots of very wealthy oil men who mortgaged themselves up to the hilt.

Oil price crashed. Mortgages went to 14%. Their homes went back to the banks who had been lending the money.

Sigh.

I take it you’re one that’s struggling with the big mortgage repayments. Never mind. The place will be yours in 30 years

This. The proper calculation isn’t ’interest on the mortgage each month’ versus ‘amount of rent each month’, it’s ‘total interest on the mortgage over the mortgage term’ versus ‘total rent paid over a lifetime in rented accommodation’.

Many people look at the first and wrongly think renting costs less. They don’t take into account that a mortgage on average lasts 25 years while someone who rents from 20 to 85 will be paying rent for 65 years. It makes a big difference.

Having said that, it’s none of the friends’ business and the OP’s daughter has plenty of time to buy in the future if she wants to (or not if she doesn’t want to).

All right, that does confirm it. Don't feed it, people.

I'm quite happy to swap having to spend a few grand on a new boiler once or twice in a property for ending up with several hundred thousand in equity that I can access in my retirement or pass on to my children. I certainly don't need anyone who rents sympathy.

Until the day comes when you have paid off the loan 🍾 ( yes it happens) and you aren’t paying a mortgage, or interest any more.

Wise up.

Except in London, house prices have risen so much that the PP could have paid a mortgage over that 30 years, sold up and still bought the derelict property, done it up and not touched their pension. A flat costing £70k in the 90s would be worth in excess of £500k now. A house my aunt sold in the 80s for £150k is now worth £5-6million.

Granted, it’s unlikely London prices will skyrocket that much now, but in my part of Z3, it would cost me 3 x my mortgage to rent my house. Even with the interest payments & upkeep, I’m saving my a lot over renting. Plus I get to keep the house at the end.

🙌

YABU. Yes you don’t ‘own’ it until mortgage paid off but you own some of it, and an increasing amount each month. And paying a mortgage is better than rent; even with the interest accounted for.

I don’t think any of these people exist, I think OP - who probably rents / disapproves of mortgages because they think they are propping up extortionate house prices - made them up to allow them to post this thread.

Totally willing to be proven wrong and discover someone does just live surrounded by a bunch of rude people who perfectly mirror arguments on UK housing forums though!

'I, as a renter, am in a better position than homeowners because I don't have to replace my own boiler' has to be my favourite MN take this week.

Also this is nonsense. My dad rented and the landlord refused to upgrade the broken boiler and had to pay to fix it himself.

A lot of people have large amounts of equity in their homes, despite still having a mortgage.

But eventually the mortgage is paid off and you own a property.

That literally never happens when you rent.

FWIW I've always said I own half* the house and the bank own the other half.

*pick the percentage that's closest.

Im 6 months from paying mine off. So I now own 99% . Plus the bank in fact gave me a loan with the house as collateral. If I had rented all this time, I would be looking at many years more renting. Instead I'm in a house worth many times more than what I paid for it.

Always better to buy a proper house, houses always increase in price. There may well be a slump at some point, but it does eventually increase in value and its worth more than you paid.

In addition to this, yes, you do own your home, and the more of that debt you pay off, the larger amount of cash equity you have. Even if the bank does repossess your home, you are returned what's left of the equity after auction.

you do own it, the bank just has a charge on it

anyway, one day, but paying the mortgage for 25 years or whatever, you do end up owning the home and then don't pay mortgage or rent. If your dd rents for 25 years, she'll still have to pay rent after that.

plus houses appreciate.