To ask you do you consider mortgage debt as such?

[Mortgagequest]

Basically, that, I have signed for my first mortgage at the grand old age of 40. I have never had any debt. I’ve never even had a credit card. And all of a sudden, I’m thinking holy crap I have debt. I mean, I’m so excited because I finally have a home but it’s a big deal all the same.
So do you consider your mortgage a debt? If you do, do you consider it a “good debt”? Or how do you feel about it?

Technically it's a debt, but I don't regard it the same as putting a load of stuff on my credit card because I can't be bothered to wait to save up for it, or to cover a short term cash flow issue.

If I wadto try and save up the full price of a house in cash I'd be near retirement till it was done!

Yes it’s debt. It’s the most serious debt for me because if you don’t pay it you can lose your home.

Firstly, congratulations! 🎉
No, I don't class it as debt.
You have the asset of your house to sell of you want to pay it back.
Debt is more you've spent it on a holiday etc.

It's secured debt. If you were putting it on a balance sheet, there'd be your house on the other side to balance it out. With credit card debt there'd just be a debt on one side and nothing on the other.

More of an obligation really. Its a monthly payment we must meet along with other essentials like utilities, council tax, groceries etc.

Debts are unnecessary things like car finance, holidays, credit cards etc. (Although I appreciate we are fortunate we don't need to go into debt to pay for those!)

Consider the difference between an asset, which gains value, and a liability, which loses value.

A debt on a growing asset makes sense. A debt on a liability (such as a car which depreciates) doesn’t make sense.

Never even think about it tbh.

And mine is pretty enormous.

Yes, it's debt, but it's secured debt. If, god forbid, I fell on really hard times, I could pay off the debt in full and still have money left over by selling the asset. Low-interest long term secured debt is a whole different ballgame to credit card debt.

There's nothing intrinsically wrong with debt. All successful businesses of any size are ultimately built on debt, because you invest to grow.

Nope, I think it’s life. People who live mortgage free are the privileged few.

It’s a debt but we never over stretched ourselves (luck because of ages etc) so we now have a lot of equity - probably £500k so we’re well insulated against prices falling.

I don’t count it when thinking about our debt levels - I just look at credit cards and any finance agreements etc.

Of course.

I think it's essential and necessary debt for most people - good debt.

Living in your overdraft, credit cards max & holiday loans - usually not good to have.

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It’s a debt in that it’s money I owe, but I don’t worry about it in the way I would if I had other types of debt.

I am like you, OP, never really had debt, hate the thought of debt (to the point I paid my first property outright, even though economically speaking it makes and made more sense to take on a mortgage as didn’t want debt), and now just bought a second (more expensive) property with a mortgage and I try hard to remind myself that worst case scenario I can always sell the property and put an end to the debt.

It’s different from buying stuff you don’t need and that have no resale value and getting indebted for it, personally I have bought in an area that is still cheap, under market price and at a location where prices are rising steeply (my first property bought in 2023 in the same city is now worth double what I paid for for example.) , so it’s very very very unlikely that I would ever sell at a loss, so I think the only way to really lose money or go wrong with a mortgage is to overpay for a home in a market that is likely to collapse or likely to have already reached its peak resale value. Or buy a home that is so unique it might only appeal to a few/you.

If you have bought at a reasonable price, a standard home that likely to easily resale if need be then I would consider that good and fairly safe debt, even if it remains daunting (for me anyway).

Thanks all. It’s my dream home, it’s in a great location so it’s value will hold hopefully 🤞 it’s just a big thing to get used to the fact that I owe money, but I do have a fab house in exchange for that i suppose.

I consider it “good debt”. The difference for me is that debt is good if it is money spent on an appreciating asset, one that will reliably be worth more long term than it costs including the interest payments. So a house definitely qualifies, because it saves you the rent you would otherwise pay lifelong as well as the house price itself going up. Other things that can be good debt under my definition are qualifications to get a better job, a car if necessary for work and you can’t pay cash. That’s probably about it, although I’m sure there are a few more!

Oh and many, many congratulations. I hope you love your new home💕. As soon as you can try to save up at least 6 months expenses as an emergency fund, it will help you feel a bit less “oh shit” 🤣

Not really, because I have an asset (the house) that could clear the debt if needed.

Obviously it's a debt, but it's not one I think about unless it's remortgage time.

Its a debt but like any debt it can be managed, sometimes positively.

In terms of money management and living, most people of a certain age are committed to paying a mortgage or paying someone elses.

At least a mortgage had an end date and you're buying stability.

I mean it is. But it’s better than the alternative of renting.

And it’s balanced by the value of your home, so you know you could always repay it if needed. I think it’s only true debt in the same way as other debts if you go into negative equity.

Mort / gage - literally translates as death grip. Yes, it's a debt.

A long time ago, after the catastrophic housing crash in the mid-1990s that saw many people with huge debts and no assets to offset them, we decided not to buy and instead continue with social housing. My house is technically worth £600k. My monthly rent is less than £400.

Presumably you've been renting for the past 20 years or so then? In which case you have been paying off debt - you've just been paying other people's debts instead of your own!

Now you have a home that's shared between you and the bank, but every payment you make to the mortgage means you own an extra percentage of your home that you didn't the previous month. Sooner or later it will all be yours!

Yes it’s a debt but it’s one that I’m happy to have. It’s a debt on an asset which appreciates in value and if I didn’t have this debt, I’ll basically be renting and paying more than I currently do for someone else’s mortgage debt on their appreciable asset whilst I’m not getting any security in return. So I don’t consider it as a debt like a credit card or car loan is

Sadly most people don’t get the option of social housing though, as there isn’t enough to go around. Pre buying our house we were paying £1200 a month in private rent for a damp 2 bed terrace. I now pay £860 a month mortgage on a 4 bed detached house, and have £200k equity. So buying vs private rent was definitely the right choice.