What expenses are there owning a home?

SarahMollie

regi3457 wrote: »

For a while but you will save more over the coming months without the debt, why would you need liquid after you purchase a house? for groceries?

it is backward thinking that has somehow become normal thinking in our society to take a debt just to have money in case of something happening, really backward, seriously

As others have already told you, for anything and everything. Just because youve bought the house, it doesnt give you some exemption period where things will automatically go your way. You can lose your job, have an accident at any time, so having zero cash is never a good idea.

Also, its about lifestyle. The fact that I have a bit of cash enables me to do what I want, when I want. If I want to go to Australia for a months holidays - no problem! If I want to upgrade my car - sure, no issue! If I want to buy a designer handbag - why not?

Added to that, having money enabled me to get the place furnished pretty quickly. I'm an adult with a good job, so I want to have a nice house. Why should I live like a student on beanbags because I've ploughed everything into the house purchase itself, when I can easily afford the mortgage amount and still maintain my lifestyle, living the way I want to live.

The difference in my repayments is nominal, yet my lifestyle is maintained to the standard I want.

As my savings grow, (yes - I'm building them up again even though I have a mortgage) then I'll just knock lumps off the principle.

Its all about timing. About spending when suits your circumstances and using borrowed money when it to your benefit. Your approach is very simplistic.

regi3457

CruelCoin wrote: »

It's simple cost-benefit analysis.

Which do you value more? Reduction of monies paid or security?

You're placing value on the former when others are placing it on the latter.

I place value on freedom, freedom of debt. Once your debt is paid you are in a totally different ball game. Your expenses are low and you save a ton more. You will not be without cash in the bank for too long and when you have it there again it is yours not the banks. Do you have 25k sitting in your account right now just in case? Who does? Seriously?

Michael D Not Higgins

regi3457 wrote: »

I place value on freedom, freedom of debt. Once your debt is paid you are in a totally different ball game. Your expenses are low and you save a ton more. You will not be without cash in the bank for too long and when you have it there again it is yours not the banks. Do you have 25k sitting in your account right now just in case? Who does? Seriously?

Prudent financial planning would have 6 months expenses available in cash for unforeseen circumstances. I have emergency savings which I delineate from my regular savings. The exact amount depends on your level of outgoings and how much you can afford to keep saved but should be at least 3 months expenses.

regi3457

SarahMollie wrote: »

Added to that, having money enabled me to get the place furnished pretty quickly. I'm an adult with a good job, so I want to have a nice house. Why should I live like a student on beanbags because I've ploughed everything into the house purchase itself, when I can easily afford the mortgage amount and still maintain my lifestyle, living the way I want to live.

Because the house isn't yours. You, like the rest of society, is living above their means because they feel entitled to something they have not earned yet. Banks provide this for you but at a cost.

I am not going to agree with you and you are not going to agree with me which is just fine by me. I quite enjoy thinking differently to people with your set of values. It is encouraging.

sKeith

My personal safety net is much smaller than 25k. I keep bank balance at minimum 3k, that my initial safety net. I also have another 7k aside in a month notice account if I need more. That's enough for my piece of mind. that will allow me to service my loan for over a year while seeking new employment if i lose my job.

regi3457

Michael D Not Higgins wrote: »

Prudent financial planning would have 6 months expenses available in cash for unforeseen circumstances. I have emergency savings which I delineate from my regular savings. The exact amount depends on your level of outgoings and how much you can afford to keep saved but should be at least 3 months expenses.

ok well if you have savings and no debt that is great for, your situation is more fortunate than for many people out there. But you probably know that.

CruelCoin

regi3457 wrote: »

Do you have 25k sitting in your account right now just in case? Who does? Seriously?

According to the local bank teller, loads!

regi3457

CruelCoin wrote: »

According to the local bank teller, loads!

Well that is great, and that is the way it should be. No debt and a bank account full of cash. That must be a good feeling. I can't say I am there just yet but I will be!

SarahMollie

regi3457 wrote: »

Because the house isn't yours. You, like the rest of society, is living above their means because they feel entitled to something they have not earned yet. Banks provide this for you but at a cost.

I am not going to agree with you and you are not going to agree with me which is just fine by me. I quite enjoy thinking differently to people with your set of values. It is encouraging.

I'm delighted that you are encouraged.

I have a mortgage, and its the only debt I've ever had. I can easily afford it and in the end I'll have an asset. I don't expect to live for free, so I don't want to
a)sponge off my parents forever
b)sponge off the state
c)live in a mud hut in the forest
so therefore I expect to pay for the roof over my head. My mortgage is cheaper than my rent would be so it just makes sense.

I am well aware that the bank is charging me for the money I've borrowed, but guess what, life costs money! And I'm fine with that.

With regards to the piece I've bolded, thats the one thing youre right about.

I don't think anyone with an ounce of knowledge about economics and the way long term debt works would say that I'm living beyond my means.

regi3457

SarahMollie wrote: »

I'm delighted that you are encouraged.

I have a mortgage, and its the only debt I've ever had. I can easily afford it and in the end I'll have an asset. I don't expect to live for free, so I don't want to a)sponge off my parents forever
b)sponge off the state
c)live in a mud hut in the forest
so therefore I expect to pay for the roof over my head. My mortgage is cheaper than my rent would be so it just makes sense.

I am well aware that the bank is charging me for the money I've borrowed, but guess what, life costs money! And I'm fine with that.

With regards to the piece I've bolded, thats the one thing youre right about.

I don't think anyone with an ounce of knowledge about economics and the way long term debt works would say that I'm living beyond my means.

with only an ounce? how about a degree?

armabelle

SarahMollie wrote: »

I'm delighted that you are encouraged.

I have a mortgage, and its the only debt I've ever had. I can easily afford it and in the end I'll have an asset. I don't expect to live for free, so I don't want to a)sponge off my parents forever
b)sponge off the state
c)live in a mud hut in the forest
so therefore I expect to pay for the roof over my head. My mortgage is cheaper than my rent would be so it just makes sense.

I am well aware that the bank is charging me for the money I've borrowed, but guess what, life costs money! And I'm fine with that.

With regards to the piece I've bolded, thats the one thing youre right about.

I don't think anyone with an ounce of knowledge about economics and the way long term debt works would say that I'm living beyond my means.

I think that most people live how you so probably won't say they live above their means. Heck if most people live a certain way it must be right, right?

I am of the no-debt is better school of thought but have had many debates about this with people. People like pretending they own things like houses so they can tell their friends: "I 'own' instead of rent". it is keeping "up" with the jones'

armabelle

regi3457 wrote: »

Because the house isn't yours. You, like the rest of society, is living above their means because they feel entitled to something they have not earned yet. Banks provide this for you but at a cost.

I am not going to agree with you and you are not going to agree with me which is just fine by me. I quite enjoy thinking differently to people with your set of values. It is encouraging.

the problem is that people don't really have an option...debt is life for most of people

regi3457

regi3457 wrote: »

Well that is great, and that is the way it should be. No debt and a bank account full of cash. That must be a good feeling. I can't say I am there just yet but I will be!

Most if not all of the people who have a good amount of savings will also have a mortgage as most people find it prudent to keep a decent amount of savings rather than use everything when getting a mortgage. They will also be building savings while paying their mortgage remember.

SarahMollie

regi3457 wrote: »

with only an ounce? how about a degree?

Yep even an ounce. I happen to have the degree, but obviously I can't hold everyone to that standard.

regi3457

Abel Long Someone wrote: »

Most if not all of the people who have a good amount of savings will also have a mortgage as main people find it prudent to keep a decent amount of savings rather than use everything when getting a mortgage. They will also be building savings while paying their mortgage remember.

Well then I am happy to be not part of the "most" because I can't consider myself having any savings if I have debt. I would pay my mortgage quicker than keeping the money in case

regi3457

SarahMollie wrote: »

Yep even an ounce. I happen to have the degree, but obviously I can't hold everyone to that standard.

Even economists like living above their means. They are people too. You want a more comfortable lifestyle and will pay more for that in the long run but that is simply a matter of choice. Just don't kid yourself about not living above your means. The reason people take debt is to be able to live above their means and have the things they cannot afford yet.

SarahMollie

armabelle wrote: »

I think that most people live how you so probably won't say they live above their means. Heck if most people live a certain way it must be right, right?

I am of the no-debt is better school of thought but have had many debates about this with people. People like pretending they own things like houses so they can tell their friends: "I 'own' instead of rent". it is keeping "up" with the jones'

This is nonsense. I don't know anyone in this day and age who owns purely for the sake of owning.

I bought my property because I see myself living in that area for the medium/long term. I rented happily for years but I'm sick of living in a magnolia box, and wanted somewhere that I could hang the art that I want without asking a landlord, or paint/decorate as I see fit. I also wanted a pet, which is typically a no-no in rented accommodation, so now myself and my OH got ourselves a lovely fluffy cat. As I already mentioned, my mortgage repayments pale in comparison to what the property would achieve in rent, especially at 2016 rates.

Sure, the bank has a stake in the property, but I'm approaching 50% LTV, so even if I had to sell, I'd still have a considerable amount thats all mine.

And I have rainy day money in the bank. And a very comfortable lifestyle. All of my short term discretionary spending is financed by my earnings/savings, the only debt I have is my mortgage. So forgive me if I don't see the error of my ways, as its been working for me pretty well so far.

SarahMollie

regi3457 wrote: »

Even economists like living above their means. They are people too. You want a more comfortable lifestyle and will pay more for that in the long run but that is simply a matter of choice. Just don't kid yourself about not living above your means. The reason people take debt is to be able to live above their means and have the things they cannot afford yet.

Euch, just because you keep repeating it, doesnt make it true. I do not live beyond my means. I can easily afford my repayments on the one (long term) loan that I have., therefore I am the definition of living within my means.

Free lesson.

There is (typically) a little something called inflation. So basically things do not remain at the same price over time. So, in many cases, borrowing and allowing for the cost of interest, is less expensive than waiting and saving.

Google the term "opportunity cost".

armabelle

SarahMollie wrote: »

And I have rainy day money in the bank. And a very comfortable lifestyle. All of my short term discretionary spending is financed by my earnings/savings, the only debt I have is my mortgage. So forgive me if I don't see the error of my ways, as its been working for me pretty well so far.

It is only an error if you see it that way, which you seem to because you jumped to the conclusion on your own.

Michael D Not Higgins

regi3457 wrote: »

The reason people take debt is to be able to live above their means and have the things they cannot afford yet.

So your solution is to save until you can buy outright? Where do they live while saving? How much more will the property cost in 20 years after they've managed to save enough for today's prices?

SarahMollie

armabelle wrote: »

It is only an error if you see it that way, which you seem to because you jumped to the conclusion on your own.

You're not even making sense. Clearly there is nothing wrong with my finances, yet you and one other seem to want repeated drone on about how all debt is bad.

Seems some people need a lesson in how to read sarcasm as well as economics 101.

CiniO

I pretty much agree here with regi3457.

Only time, when borrowing money is a good idea, is when you are actually going to use it on something which is going to gain in value more, than you are going to pay in interest on repayments.

So borrowing money to buy a house in a market where house prices will rise for a good while is probably a good idea.
Borrowing to start a business which is going to bring big profit is a good idea...

Borrowing money to buy a car is usually very bad idea, as well as borrowing to buy a house in times when house prices don't go up, or go down.

Also borrowing just for the sake of having money "just in case" like some people said above is IMO very silly idea. That's even if it's done by borrowing for the house and keeping the savings. Much better IMO to spend the savings on a house, and having no debt, then borrowing and having savings which do nothing.

Different matter, if you have an idea how to make those saving make more money for you, and it they can make more than you are paying in interest on a loan, then sure - why not.

I'm 34 and so far I don't think I ever borrowed any money, neither from the bank, nor from any other institution, or people or friends or even family. Not even a tenner for sweets when I was a kid.

So far, so good

SarahMollie

CiniO wrote: »

I pretty much agree here with regi3457.

Only time, when borrowing money is a good idea, is when you are actually going to use it on something which is going to gain in value more, than you are going to pay in interest on repayments.

So borrowing money to buy a house in a market where house prices will rise for a good while is probably a good idea.
Borrowing to start a business which is going to bring big profit is a good idea...

Borrowing money to buy a car is usually very bad idea, as well as borrowing to buy a house in times when house prices don't go up, or go down.

Well then, on this piece at least then you don't agree with regi, as he seems to think that ALL DEBT IS BAD (read is boogyman voice).

And to pick you up on the last piece in bold - you have to factor in the cost of an alternative, as I've said before - where are you going to live if you don't buy a house/while you save up? Parents? Off the state? Become a recluse who lives in the forest?

Even if prices were pretty stagnant, its still not a bad idea as otherwise you're most likely going to be paying rent.

regi3457

regi3457 wrote: »

Even economists like living above their means. They are people too. You want a more comfortable lifestyle and will pay more for that in the long run but that is simply a matter of choice. Just don't kid yourself about not living above your means. The reason people take debt is to be able to live above their means and have the things they cannot afford yet.

I don't think you understand the term "living beyond your means". If you are able to afford the loans you have or your mortgage then you are living within your means.

Living beyond your means is having debt you can't afford to service etc.

CiniO

SarahMollie wrote: »

Well then, on this piece at least then you don't agree with regi, as he seems to think that ALL DEBT IS BAD (read is boogyman voice).

And to pick you up on the last piece in bold - you have to factor in the cost of an alternative, as I've said before - where are you going to live if you don't buy a house/while you save up? Parents? Off the state? Become a recluse who lives in the forest?

Even if prices were pretty stagnant, its still not a bad idea as otherwise you're most likely going to be paying rent.

That's probably true - if you don't have anywhere else to live, repaying the mortgage is probably better idea than renting.
I wouldn't fancy doing it though.

jmayo

kceire wrote: »

No it's not. It's advisable but not compulsory. Mortgage protection is compulsory.

Ehh any bank would want insurance to protect their asset.

kceire wrote: »

Ohh I'm not saying it's not needed, but I've gone through 3 mortgages and 2 re-mortgages since 2006 and not one bank asked for house insurance. Mortgage protection policy (ie a life policy) is compulsory and funds won't be released without it in place.

If that is true one has to wonder have our banks learned anything.
I have always found lenders look for evidence of both life insurance and house insurance.

CiniO wrote: »

I don't think those are compulsory... Are they?

My understanding is that when buying a house (for cash) person needs to pay solicitor to arrange legal deeds stuff, pay stamp duty, and house is his.

Then after that paying property tax is compulsory once per annum.
And if one would like to keep basic utilities like electricity and water, payment of bills on those is required, as otherwise they will be cut off.

I'm not sure about BER cert.

Would there be anything else?

Jaysus fook I can't believe people have looked on surveyors reports as optional, especially on a 250k outlay.

CiniO wrote: »

I'd strongly argue with that.

From one side you indeed own a property which is worth sh1t load of money, and it would be pity if it all went up with smoke in a fire.

On the other hand - what are the chances like? How many houses get burnt per year in Ireland?
I'd say people have much bigger chance dying in car accident or dying with some disease, than having their house burnt.

Sure why bother with any insurance in that case.
In the grand scheme of things isn't it all a waste of money. :rolleyes:

CiniO wrote: »

If you don't live in flood liable area, there's hardly much more that can damage the whole house.

Anything else, like break in, pipe burst, etc, will probably be cheaper to fix yourself when it happens, than paying house insurance premium for years.

Next time you are in the attic, take a look at some of the pipes, water tank up there.
Then just imagine if they burst and you were away.
Water spreads, it gets everywhere.

BTW do you have form of gas, even the bottled variety ?
But I suppose if you have gas you don't need a certified installer as they cost too much as well, DIY and you will save a fortune.

Hell maybe you might save a fortune over your lifetime by not insuring.

Then again you might be homeless and left with a wreck.

armabelle wrote: »

yes many things are advisable when you can afford then :P

Somethings are just advisable period.

If all you can "afford" or budget for is the actual asking price then you need to buy something cheaper so you can "afford" the extra necessities.

CiniO

CiniO wrote: »

That's probably true - if you don't have anywhere else to live, repaying the mortgage is probably better idea than renting.
I wouldn't fancy doing it though.

You would rather pay rent which is basically money down the drain than repay a mortgage that with every payment you get a step closer to owning the house outright. Especially as mortgage repayment are less than rent in most cases these days.

SarahMollie

Michael D Not Higgins wrote: »

So your solution is to save until you can buy outright? Where do they live while saving? How much more will the property cost in 20 years after they've managed to save enough for today's prices?

Just to put this in perspective. My parents bought our family home in the mid 80's for about £60k. That was a lot at the time.

They paid off the mortage years ago, and I remember my dad saying that towards the end, the mortgage was probably the cheapest monthly bill. They've owned it outright for about 15 years now.

There is currently a similar house on the same street asking around €1m. They achieved more than €1.7m in Celtic Tiger times.

1. By the time they'd have saved £60k - that house would have cost a lot more.
2. They have a (very valuable) asset once the mortgage is paid.

They don't have to worry about having a roof over their heads in old age, so whatever they spent on servicing that mortgage was well worth it IMO.

SarahMollie

jmayo wrote: »

Next time you are in the attic, take a look at some of the pipes, water tank up there.
Then just imagine if they burst and you were away.
Water spreads, it gets everywhere.

BTW do you have form of gas, even the bottled variety ?
But I suppose if you have gas you don't need a certified installer as they cost too much as well, DIY and you will save a fortune.

Hell maybe you might save a fortune over your lifetime by not insuring.

Then again you might be homeless and left with a wreck.

Somethings are just advisable period.


If all you can "afford" or budget for is the actual asking price then you need to buy something cheaper so you can "afford" the extra necessities.

So true. And actually you'd be left homeless with a wreck, and you'd still owe the mortgage.


I totally agree with this. Its like saying you can afford a horse, but if you can't pay for its livery, shoeing, feed, tack etc, then whats the point?! You need to be able to afford the asset and also the cost of maintaining said asset.

HeidiHeidi

SarahMollie wrote: »

So true. And actually you'd be left homeless with a wreck, and you'd still owe the mortgage.


I totally agree with this. Its like saying you can afford a horse, but if you can't pay for its livery, shoeing, feed, tack etc, then whats the point?! You need to be able to afford the asset and also the cost of maintaining said asset.

Not true - this is why mortgage protection is compulsory (whatever about house insurance - I don't ever recall being asked to prove that)

However, in the case of the OP's potential situation, where there is no mortgage and he treats insurance as an optional extra - he could indeed be left with no house and no money. No thanks!